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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ALGONQUIN POWER & UTILITIES CORP. $8.77 (Toronto symbol AQN; Shares outstanding: 208.0 million; Market cap: $2.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.4%; www.algonquinpower.com) has agreed to buy Park Water Company for $327 million U.S. Algonquin will make the purchase through its Liberty Utilities subsidiary.
Park Water owns and operates three regulated water utilities that produce, treat, store, distribute and sell water in southern California and western Montana. The three utilities collectively serve 74,000 customers and have more than 1,000 miles of distribution pipelines.
Algonquin is also buying the Odell project, a 200-megawatt wind farm in the U.S. that’s currently under construction. The project, which spans Minnesota’s Cottonwood, Jackson, Martin and Watonwan Counties, will cost an estimated $313.5 million U.S. to complete.
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Park Water owns and operates three regulated water utilities that produce, treat, store, distribute and sell water in southern California and western Montana. The three utilities collectively serve 74,000 customers and have more than 1,000 miles of distribution pipelines.
Algonquin is also buying the Odell project, a 200-megawatt wind farm in the U.S. that’s currently under construction. The project, which spans Minnesota’s Cottonwood, Jackson, Martin and Watonwan Counties, will cost an estimated $313.5 million U.S. to complete.
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LOBLAW COMPANIES $55.80 (Toronto symbol L; Shares outstanding: 413.6 million; Market cap: $23.2 billion; TSINetwork Rating: Above Average; Dividend yield: 1.8%; www.loblaw.ca) is testing a smaller version of its discount No Frills supermarkets. These stores, which operate under the Box banner, are cheaper to build than full-sized outlets and can fit in smaller strip malls. That lowers their rental costs.
The new Box stores could also help Loblaw compete with Wal-Mart, which may start opening smaller locations in Canada following successful trials in the U.S.
Loblaw is a buy.
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The new Box stores could also help Loblaw compete with Wal-Mart, which may start opening smaller locations in Canada following successful trials in the U.S.
Loblaw is a buy.
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CENOVUS ENERGY $29.31 (Toronto symbol CVE; Shares outstanding: 757.0 million; Market cap: $22.8 billion; TSINetwork Rating: Average; Dividend yield: 3.6%; www.cenovus.com) has opened the latest phase of its 50%-owned Foster Creek oil sands project in Alberta.
U.S.-based ConocoPhillips (New York symbol COP) owns 50% of both Cenovus’s Foster Creek and Christina Lake projects.
Foster Creek produced an average of 119,000 barrels a day in August 2014. This latest phase should add 30,000 barrels when it reaches fullcapacity in the next 12 to 18 months.
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U.S.-based ConocoPhillips (New York symbol COP) owns 50% of both Cenovus’s Foster Creek and Christina Lake projects.
Foster Creek produced an average of 119,000 barrels a day in August 2014. This latest phase should add 30,000 barrels when it reaches fullcapacity in the next 12 to 18 months.
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BONAVISTA ENERGY $12.54 (Toronto symbol BNP; Shares outstanding: 201.9 million; Market cap: $2.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.7%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and British Columbia. Its production is 67% gas and 33% oil.
In the three months ended June 30, 2014, Bonavista’s cash flow per share gained 6.3%, to $0.67 from $0.63 a year earlier. Production rose just 2.4%, to 74,272 barrels of oil equivalent a day from 72,554. However, that’s because Bonavista sold 2,700 barrels a day of heavy-oil production, which is less of a focus for the company. Bonavista’s realized gas price increased 17.9%, to an average of $4.29 per thousand cubic feet from $3.64. Oil prices fell 1.3%, to $79.34 a barrel from $80.42.
Bonavista plans to spend $580 million to $600 million on exploration and development in 2014. Its plans include drilling 130 to 135 wells, which will let it raise its production to as high as 86,000 barrels of oil equivalent a day at the end of 2014. For all of 2013, Bonavista spent $460 million to drill 126 wells.
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In the three months ended June 30, 2014, Bonavista’s cash flow per share gained 6.3%, to $0.67 from $0.63 a year earlier. Production rose just 2.4%, to 74,272 barrels of oil equivalent a day from 72,554. However, that’s because Bonavista sold 2,700 barrels a day of heavy-oil production, which is less of a focus for the company. Bonavista’s realized gas price increased 17.9%, to an average of $4.29 per thousand cubic feet from $3.64. Oil prices fell 1.3%, to $79.34 a barrel from $80.42.
Bonavista plans to spend $580 million to $600 million on exploration and development in 2014. Its plans include drilling 130 to 135 wells, which will let it raise its production to as high as 86,000 barrels of oil equivalent a day at the end of 2014. For all of 2013, Bonavista spent $460 million to drill 126 wells.
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PEYTO EXPLORATION & DEVELOPMENT CORP. $34.95 (Toronto symbol PEY; Shares outstanding: 153.7 million; Market cap: $5.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.4%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 72,302 barrels of oil equivalent is 90% gas and 10% oil.
In the quarter ended June 30, 2014, Peyto’s cash flow rose 41.9%, to $1.05 a share from $0.74 a year earlier. That’s because the company raised its production by 26.1%. Gas prices also gained 17.5%, to an average of $4.37 per thousand cubic feet from $3.72, while oil prices rose 14.0%, to $77.30 a barrel from $67.82.
Peyto plans to spend $625 million on exploration and development in all of 2014, which will let it drill 110 to 125 wells. To put that in context, the company spent $578 million to drill 99 wells in 2013. This year’s spending should let it finish 2014 with production of over 81,500 barrels a day. The stock trades at 7.4 times Peyto’s forecast 2014 cash flow of $4.73 a share. The company’s long-term debt of $825 million is a low 15.3% of its $5.4-billion market cap.
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In the quarter ended June 30, 2014, Peyto’s cash flow rose 41.9%, to $1.05 a share from $0.74 a year earlier. That’s because the company raised its production by 26.1%. Gas prices also gained 17.5%, to an average of $4.37 per thousand cubic feet from $3.72, while oil prices rose 14.0%, to $77.30 a barrel from $67.82.
Peyto plans to spend $625 million on exploration and development in all of 2014, which will let it drill 110 to 125 wells. To put that in context, the company spent $578 million to drill 99 wells in 2013. This year’s spending should let it finish 2014 with production of over 81,500 barrels a day. The stock trades at 7.4 times Peyto’s forecast 2014 cash flow of $4.73 a share. The company’s long-term debt of $825 million is a low 15.3% of its $5.4-billion market cap.
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ENBRIDGE INC. $53.00 (Toronto symbol ENB; Shares outstanding: 846.2 million; Market cap: $45.4 billion; TSINetwork Rating: Above Average; Dividend yeield:2.6%; www.enbridge.com) plans to transfer its 66.7% stake in the U.S. portion of the Alberta Clipper pipeline to its American affiliate, Enbridge Energy Partners, L.P. (New York symbol EEP).
The 1,600-kilometre Alberta Clipper pipeline moves crude from Alberta’s oil sands to Superior, Wisconsin.
Enbridge will receive $300 million U.S. in cash and $600 million U.S. worth of Enbridge Energy Partners units. The $900-million U.S. total is equal to 2% of Enbridge’s $45.4-billion (Canadian) market cap.
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The 1,600-kilometre Alberta Clipper pipeline moves crude from Alberta’s oil sands to Superior, Wisconsin.
Enbridge will receive $300 million U.S. in cash and $600 million U.S. worth of Enbridge Energy Partners units. The $900-million U.S. total is equal to 2% of Enbridge’s $45.4-billion (Canadian) market cap.
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TRANSCANADA CORP. $56.86 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $40.8 billion; TSINetwork Rating: Above Average; Dividend yield: 3.4%; www.transcanada.com) is facing pressure from U.S.-based activist investors to unlock some of its value by selling or spinning off its electrical
power plants.
These investors also want the company to place more of its U.S. natural gas pipelines into a master limited partnership, which is similar to a Canadian income trust.
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power plants.
These investors also want the company to place more of its U.S. natural gas pipelines into a master limited partnership, which is similar to a Canadian income trust.
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POWERSHARES QQQ ETF $97.21 (Nasdaq symbol QQQQ; buy or sell through brokers; www.invescopowershares.com), formerly called Nasdaq 100 Trust Shares, holds stocks that represent the Nasdaq 100 Index, which consists of the 100 largest shares on the Nasdaq exchange, based on market cap.
The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets.
The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Gilead Sciences, Comcast Corp. and Facebook.
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The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets.
The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Gilead Sciences, Comcast Corp. and Facebook.
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SPDR S&P 500 ETF $194.35 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major U.S. companies that are chosen based on their market cap, liquidity and industry group.
The index’s highest-weighted stocks are Apple, ExxonMobil, Microsoft, Procter & Gamble, Johnson & Johnson, J.P. Morgan Chase, Chevron, General Electric, Berkshire Hathaway, Wells Fargo, IBM, Pfizer, Verizon and AT&T. The fund’s expenses are just 0.10% of its assets.
If you want exposure to the S&P 500 Index, the SPDR S&P 500 ETF is a buy.
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The index’s highest-weighted stocks are Apple, ExxonMobil, Microsoft, Procter & Gamble, Johnson & Johnson, J.P. Morgan Chase, Chevron, General Electric, Berkshire Hathaway, Wells Fargo, IBM, Pfizer, Verizon and AT&T. The fund’s expenses are just 0.10% of its assets.
If you want exposure to the S&P 500 Index, the SPDR S&P 500 ETF is a buy.
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DIVIDEND INDEX FUND $25.38 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.55%. It yields 3.8%.
The fund’s top holdings are CIBC, 7.4%; National Bank, 6.9%; TD Bank, 6.7%; Bank of Montreal, 6.0%; Bonterra Energy, 6.0%; Royal Bank, 5.3%; Bank of Nova Scotia, 4.6%; BCE, 4.1%; Trans- Canada, 3.9%; and Laurentian Bank, 3.8%.
The ETF holds 53.0% of its assets in financial stocks. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.
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The fund’s top holdings are CIBC, 7.4%; National Bank, 6.9%; TD Bank, 6.7%; Bank of Montreal, 6.0%; Bonterra Energy, 6.0%; Royal Bank, 5.3%; Bank of Nova Scotia, 4.6%; BCE, 4.1%; Trans- Canada, 3.9%; and Laurentian Bank, 3.8%.
The ETF holds 53.0% of its assets in financial stocks. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.
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