How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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ISHARES MSCI BRAZIL INDEX FUND $39.87 (New York symbol EWZ; buy or sell through brokers) is an ETF that is designed to track the Brazilian stock market.
Its top holdings are Cia Itau Unibanco Holding (banking), 9.2%; Petrobras (oil and gas), 8.1%; Banco Brandesco SA, 7.9%; AmBev (beer and beverages), 7.5%; Vale do Rio Doce (mining), 5.8%; BRF SA (food), 4.3%; and Cielo SA (payment processor), 3.3%.
The ETF was launched on July 10, 2000. It has a 0.61% expense ratio.
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Its top holdings are Cia Itau Unibanco Holding (banking), 9.2%; Petrobras (oil and gas), 8.1%; Banco Brandesco SA, 7.9%; AmBev (beer and beverages), 7.5%; Vale do Rio Doce (mining), 5.8%; BRF SA (food), 4.3%; and Cielo SA (payment processor), 3.3%.
The ETF was launched on July 10, 2000. It has a 0.61% expense ratio.
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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $41.09 (New York symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that mainly trade on the Santiago Stock Exchange.
The fund’s top holdings are S.A.C.I. Falabella (retail), 10.3%; Enersis SA (electricity), 9.6%; Empresas Copec SA (conglomerate), 7.8%; Empresa Nacional de Electricidad (electricity), 7.2%; LATAM Airlines, 5.5%; Banco Santander Chile (banking), 5.0%; Empresas CMPC (pulp and paper), 4.6%; Banco de Chile, 4.5%; Cencosud SA (retailer), 4.4%; and Quimica y Minera de Chile (mining), 3.9%.
The fund’s industry breakdown is: Utilities, 25.9%; Financials, 18.7%; Materials, 12.8%; Consumer Discretionary, 12.5%; Consumer Staples, 9.5%; Energy, 7.9%; Industrials, 7.8%; Telecommunications, 2.4%; and Information Technology, 2.0%.
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The fund’s top holdings are S.A.C.I. Falabella (retail), 10.3%; Enersis SA (electricity), 9.6%; Empresas Copec SA (conglomerate), 7.8%; Empresa Nacional de Electricidad (electricity), 7.2%; LATAM Airlines, 5.5%; Banco Santander Chile (banking), 5.0%; Empresas CMPC (pulp and paper), 4.6%; Banco de Chile, 4.5%; Cencosud SA (retailer), 4.4%; and Quimica y Minera de Chile (mining), 3.9%.
The fund’s industry breakdown is: Utilities, 25.9%; Financials, 18.7%; Materials, 12.8%; Consumer Discretionary, 12.5%; Consumer Staples, 9.5%; Energy, 7.9%; Industrials, 7.8%; Telecommunications, 2.4%; and Information Technology, 2.0%.
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ISHARES MSCI GERMANY FUND $28.57 (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index. This index aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.
The ETF’s top holdings are Bayer (diversified chemicals), 10.2%; Siemens (engineering conglomerate), 7.9%; BASF (chemicals), 7.2%; Daimler (autos), 6.7%; Allianz (insurance), 6.5%; SAP (software), 5.5%; Deutsche Telekom, 4.5%; Deutsche Bank AG, 3.8%; BMW AG, 3.1%; and Volkswagen AG, 3.1%.
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The ETF’s top holdings are Bayer (diversified chemicals), 10.2%; Siemens (engineering conglomerate), 7.9%; BASF (chemicals), 7.2%; Daimler (autos), 6.7%; Allianz (insurance), 6.5%; SAP (software), 5.5%; Deutsche Telekom, 4.5%; Deutsche Bank AG, 3.8%; BMW AG, 3.1%; and Volkswagen AG, 3.1%.
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ISHARES MSCI SOUTH KOREA INDEX FUND $56.34 (New York symbol EWY; buy or sell through brokers) aims to track the MSCI Korea Index.
The ETF’s top holdings are Samsung Electronics, 23.1%; SK Hynix Semiconductor, 4.5%; Hyundai Motor Co., 4.4%; Naver (Internet content), 3.5%; Posco (steel), 3.2%; Shinhan Financial, 3.1%; Hyundai Mobis (auto parts), 2.7%; Kia Motors, 2.4%; KB Financial, 2.3%; and Korea Electric Power, 1.9%.
The fund’s industry breakdown is as follows: Information Technology, 34.5%; Consumer Discretionary, 17.5%; Financials, 14.7%; Industrials, 12.3%; Materials, 8.6%; Consumer Staples, 6.5%; Utilities, 2.3%; Energy, 1.5%; Telecommunication Services, 1.3%; and Health Care, 0.8%.
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The ETF’s top holdings are Samsung Electronics, 23.1%; SK Hynix Semiconductor, 4.5%; Hyundai Motor Co., 4.4%; Naver (Internet content), 3.5%; Posco (steel), 3.2%; Shinhan Financial, 3.1%; Hyundai Mobis (auto parts), 2.7%; Kia Motors, 2.4%; KB Financial, 2.3%; and Korea Electric Power, 1.9%.
The fund’s industry breakdown is as follows: Information Technology, 34.5%; Consumer Discretionary, 17.5%; Financials, 14.7%; Industrials, 12.3%; Materials, 8.6%; Consumer Staples, 6.5%; Utilities, 2.3%; Energy, 1.5%; Telecommunication Services, 1.3%; and Health Care, 0.8%.
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ISHARES MSCI EMERGING MARKETS INDEX FUND $40.89 (New York symbol EEM; buy or sell through brokers) aims to track the MSCI Emerging Markets Index.
Its geographic breakdown includes China, 19.9%; South Korea, 14.1%; Taiwan, 12.1%; Brazil, 9.8%; South Africa, 8.0%; India, 7.1%; Mexico, 5.2%; Russia, 4.3%; Malaysia, 3.7%; Indonesia, 2.6%; Thailand, 2.5%; and Turkey, 1.8%.
The fund’s top holdings are Samsung Electronics (South Korea), 2.9%; Taiwan Semiconductor (computer chips), 2.8%; Tencent Holdings (China: Internet), 2.1%; China Mobile, 1.9%; Naspers (South Africa: media and Internet), 1.3%; China Construction Bank, 1.3%; Industrial & Commercial Bank of China, 1.2%; Itau Unibanco Holding (Brazil: banking), 1.1%; and America Movil (Mexico: wireless).
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Its geographic breakdown includes China, 19.9%; South Korea, 14.1%; Taiwan, 12.1%; Brazil, 9.8%; South Africa, 8.0%; India, 7.1%; Mexico, 5.2%; Russia, 4.3%; Malaysia, 3.7%; Indonesia, 2.6%; Thailand, 2.5%; and Turkey, 1.8%.
The fund’s top holdings are Samsung Electronics (South Korea), 2.9%; Taiwan Semiconductor (computer chips), 2.8%; Tencent Holdings (China: Internet), 2.1%; China Mobile, 1.9%; Naspers (South Africa: media and Internet), 1.3%; China Construction Bank, 1.3%; Industrial & Commercial Bank of China, 1.2%; Itau Unibanco Holding (Brazil: banking), 1.1%; and America Movil (Mexico: wireless).
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IMPERIAL OIL $53.20 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $43.9 billion; TSINetwork Rating: Average; Div. yield: 1.0%; www.imperialoil.ca) has suspended production at its Kearl oil sands project in northern Alberta due to problems with a machine that separates bitumen (heavy oil) from sand.
Kearl produced 92,000 barrels a day in the third quarter of 2014, or 30% of Imperial’s total daily output of 307,000 barrels. Kearl’s second phase will add another 78,100 barrels per day to Imperial’s output in 2015.
The company expects to complete the repairs at Kearl in the next few weeks. Due to the recent drop in oil prices, the outage will have only a small impact on Imperial’s fourth-quarter earnings.
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Kearl produced 92,000 barrels a day in the third quarter of 2014, or 30% of Imperial’s total daily output of 307,000 barrels. Kearl’s second phase will add another 78,100 barrels per day to Imperial’s output in 2015.
The company expects to complete the repairs at Kearl in the next few weeks. Due to the recent drop in oil prices, the outage will have only a small impact on Imperial’s fourth-quarter earnings.
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ENERPLUS CORP. $14.89 (Toronto symbol ERF; Shares outstanding: 205.2 million; Market cap: $3.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.6%) produces an average of 104,035 barrels of oil equivalent a day (58% gas and 42% oil). The company’s properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus shale, which passes through Pennsylvania, New York, Ohio and West Virginia.
In the quarter ended September 30, 2014, Enerplus’s production rose 18.6% from a year earlier. Cash flow per share gained just 6.1%, to $1.04 from $0.98, as it realized lower prices for its oil.
Enerplus plans to spend $830 million on exploration and development for all of 2014 and about the same amount next year. By the end of 2015, it aims to produce over 111,000 barrels a day.
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In the quarter ended September 30, 2014, Enerplus’s production rose 18.6% from a year earlier. Cash flow per share gained just 6.1%, to $1.04 from $0.98, as it realized lower prices for its oil.
Enerplus plans to spend $830 million on exploration and development for all of 2014 and about the same amount next year. By the end of 2015, it aims to produce over 111,000 barrels a day.
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CRESCENT POINT ENERGY CORP. $29.65 (Toronto symbol CPG; Shares outstanding: 443.3 million; Market cap: $13.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.3%; www.crescentpointenergy.com) produces oil and natural gas in Western Canada, with a focus on its Bakken light oil development in southeastern Saskatchewan. Its output is 91% oil and 9% gas.
In the three months ended September 30, 2014, Crescent Point’s cash flow rose 11.6%, to $618.4 million from $554.1 million a year earlier.
The company raised its daily output by 19.7%, to 141,183 barrels of oil equivalent from 117,963. That, plus higher oil and gas prices, was the main reason for the rising cash flow. Cash flow per share rose at a slower rate of 2.1%, to $1.45 from $1.42, because Crescent Point issued shares to pay for acquisitions.
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In the three months ended September 30, 2014, Crescent Point’s cash flow rose 11.6%, to $618.4 million from $554.1 million a year earlier.
The company raised its daily output by 19.7%, to 141,183 barrels of oil equivalent from 117,963. That, plus higher oil and gas prices, was the main reason for the rising cash flow. Cash flow per share rose at a slower rate of 2.1%, to $1.45 from $1.42, because Crescent Point issued shares to pay for acquisitions.
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LOBLAW COMPANIES $60.00 (Toronto symbol L; Shares outstanding: 412.7 million; Market cap: $25.2 billion; TSINetwork Rating: Above Average; Dividend yield: 1.6%; www.loblaw.ca) is Canada’s largest food retailer, with about 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills. George Weston Ltd. owns 46% of the company.
Loblaw completed its acquisition of the Shoppers Drug Mart chain in March 2014. It paid $12.3 billion: $6.6 billion in cash and $5.7 billion in Loblaw common shares.
In the quarter ended October 4, 2014, Loblaw’s sales rose 35.9%, to $13.6 billion from $10.0 billion a year earlier. Without Shoppers’ contribution, sales rose 2.0%. Before one-time items, Loblaw’s earnings gained 23.3%, to $0.90 a share from $0.73.
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Loblaw completed its acquisition of the Shoppers Drug Mart chain in March 2014. It paid $12.3 billion: $6.6 billion in cash and $5.7 billion in Loblaw common shares.
In the quarter ended October 4, 2014, Loblaw’s sales rose 35.9%, to $13.6 billion from $10.0 billion a year earlier. Without Shoppers’ contribution, sales rose 2.0%. Before one-time items, Loblaw’s earnings gained 23.3%, to $0.90 a share from $0.73.
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Pat McKeough responds to many requests from Members of his Inner Circle for specific stock tips well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle Members. And each week we offer you a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday.
Recently we had a question from an Inner Circle Member about the biggest defense contractor in the U.S., and the world, Lockheed Martin. Well-known for its fighter jets, Lockheed also supplies many more defense needs, including rockets and satellites, missiles and information systems. Pat looks at the company’s financial results and its expanding program of share buybacks. He also assesses the risk of depending heavily on military budgets against possible shifts in U.S. government policy.
Q: Pat: What is your opinion on Lockheed Martin Corp.? Thanks.
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Recently we had a question from an Inner Circle Member about the biggest defense contractor in the U.S., and the world, Lockheed Martin. Well-known for its fighter jets, Lockheed also supplies many more defense needs, including rockets and satellites, missiles and information systems. Pat looks at the company’s financial results and its expanding program of share buybacks. He also assesses the risk of depending heavily on military budgets against possible shifts in U.S. government policy.
Q: Pat: What is your opinion on Lockheed Martin Corp.? Thanks.
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