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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MANITOBA TELECOM $30.63 (Toronto symbol MBT; Shares outstanding: 77.4 million; Market cap: $2.4 billion; TSINetwork Rating: Average; Dividend yield: 5.6%; www.mts.ca) jumped to just over $33 in response to BCE’s plan to buy 100% of Bell Aliant (see box on page 57). Investors believed Manitoba Telecom could also become a takeover target.
However, as part of the company’s 1997 privatization, the Manitoba government limits any single shareholder’s ownership to 20%. The shares have since moved down to where they were before BCE’s announcement.
Manitoba Telecom is still a hold.
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However, as part of the company’s 1997 privatization, the Manitoba government limits any single shareholder’s ownership to 20%. The shares have since moved down to where they were before BCE’s announcement.
Manitoba Telecom is still a hold.
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TORSTAR $7.59 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $608.2 million; TSINetwork Rating: Average; Dividend yield: 6.9%; www.torstar.com) reports that in the quarter ended June 30, 2014, revenue fell 7.4%, to $225.6 million from $243.6 million. Earnings per share fell 4.8%, to $0.20 from $0.21.
Torstar is still deciding what to do with the $455 million in cash from the sale of its Harlequin book-publishing subsidiary.
The company will use some of the funds to pay down its $180.8-million debt. But with sales and earnings still weakening as the slow economy hurts advertising revenue at its newspapers, it’s unlikely to reinvest much of the remaining cash in its newspaper operations. Instead, Torstar will probably focus on businesses with more growth potential, including web sites it owns, or perhaps new acquisitions.
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Torstar is still deciding what to do with the $455 million in cash from the sale of its Harlequin book-publishing subsidiary.
The company will use some of the funds to pay down its $180.8-million debt. But with sales and earnings still weakening as the slow economy hurts advertising revenue at its newspapers, it’s unlikely to reinvest much of the remaining cash in its newspaper operations. Instead, Torstar will probably focus on businesses with more growth potential, including web sites it owns, or perhaps new acquisitions.
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GEORGE WESTON LTD. $87.68 (Toronto symbol WN; Shares outstanding: 128.1 million; Market cap: $11.2 billion; TSINetwork Rating: Above Average; Dividend yield: 1.9%) makes a number of products through Weston Foods. Its businesses include fresh and frozen bakery and cookie operations in Canada and facilities that make frozen bakery items, biscuits, cookies, cones and wafers in the U.S. Weston also owns 46% of Loblaw (see left).
In the quarter ended June 14, 2014, Weston’s revenue rose 36.0%, to $10.6 billion from $7.8 billion a year earlier. Excluding Shoppers Drug Mart’s contribution to Loblaw’s sales, Weston’s revenue rose 2.5%.
Without one-time items, earnings per share gained 16.7%, to $1.26 from $1.08. A bigger contribution from Loblaw offset weaker results at Weston Foods due to higher commodity prices and plant start-up costs.
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In the quarter ended June 14, 2014, Weston’s revenue rose 36.0%, to $10.6 billion from $7.8 billion a year earlier. Excluding Shoppers Drug Mart’s contribution to Loblaw’s sales, Weston’s revenue rose 2.5%.
Without one-time items, earnings per share gained 16.7%, to $1.26 from $1.08. A bigger contribution from Loblaw offset weaker results at Weston Foods due to higher commodity prices and plant start-up costs.
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LOBLAW COMPANIES $53.05 (Toronto symbol L; Shares outstanding: 413.9 million; Market cap: $21.9 billion; TSINetwork Rating: Above Average; Dividend yield: 1.9%; 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.
In March 2014, the company completed the acquisition of the 1,250-store Shoppers Drug Mart chain. Loblaw paid $12.3 billion; $6.6 billion in cash and $5.7 billion in Loblaw common shares.
Loblaw’s parent company, George Weston Ltd. (see below), helped it pay for Shoppers by purchasing $500 million of new Loblaw shares. Due to the extra shares outstanding, Weston now owns 46% of Loblaw, down from 63% before the acquisition.
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In March 2014, the company completed the acquisition of the 1,250-store Shoppers Drug Mart chain. Loblaw paid $12.3 billion; $6.6 billion in cash and $5.7 billion in Loblaw common shares.
Loblaw’s parent company, George Weston Ltd. (see below), helped it pay for Shoppers by purchasing $500 million of new Loblaw shares. Due to the extra shares outstanding, Weston now owns 46% of Loblaw, down from 63% before the acquisition.
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ENBRIDGE INC. $53.46 (Toronto symbol ENB; Shares outstanding: 834.8 million; Market cap: $45.2 billion; TSINetwork Rating: Above Average; Dividendyield: 2.6%; www.enbridge.com) recently won Ottawa’s approval for its Northern Gateway pipeline.
The project faces strong opposition from environmentalists and First Nations. As well, the Supreme Court recently issued a ruling that makes it easier for aboriginal groups to claim title to their traditional lands.
However, Enbridge does not expect the ruling to block Northern Gateway. There are no land claims along the pipeline’s route, and the company has signed equity-sharing deals with 26 First Nations.
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The project faces strong opposition from environmentalists and First Nations. As well, the Supreme Court recently issued a ruling that makes it easier for aboriginal groups to claim title to their traditional lands.
However, Enbridge does not expect the ruling to block Northern Gateway. There are no land claims along the pipeline’s route, and the company has signed equity-sharing deals with 26 First Nations.
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INNERGEX RENEWABLE ENERGY $10.66 (Toronto symbol INE; Shares outstanding: 100.1 million; Market cap: $1.1 billion; TSINetwork Rating: Extra Risk; Dividend yield 5.6%; www.innergex.com) operates 25 hydroelectric plants, six wind farms and one solar power facility in Quebec, Ontario, B.C. and Idaho. Innergex gets 73% of its power from hydroelectric plants. Wind supplies 26%, and solar generates 1%.
In contrast to Brookfield Renewable, Innergex is growing slowly, mostly by building its own hydroelectric and wind facilities, rather than through acquisitions. Right now, it is developing or building five projects.
But like Brookfield, Innergex makes sure it has firm long-term power-purchase contracts in place before it starts building new facilities.
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In contrast to Brookfield Renewable, Innergex is growing slowly, mostly by building its own hydroelectric and wind facilities, rather than through acquisitions. Right now, it is developing or building five projects.
But like Brookfield, Innergex makes sure it has firm long-term power-purchase contracts in place before it starts building new facilities.
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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $31.75 (Toronto symbol BEP.UN; Units outstanding: 265.2 million; Market cap: $8.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.5%; www.brpfund.com) owns 196 hydroelectric generating stations, 11 wind farms and two natural-gas-fired plants. In all, it has 6,500 megawatts of generating capacity.
Roughly 31% of that capacity is in Canada, with another 52% in the U.S. and 17% in Brazil.
In the quarter ended June 30, 2014, revenue fell 2.1%, to $474 million from $484 million a year earlier. However, cash flow gained 5.9%, to $198 million, or $0.74 a share, from $187 million, or $0.71. The increase was due to the contribution of new acquisitions.
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Roughly 31% of that capacity is in Canada, with another 52% in the U.S. and 17% in Brazil.
In the quarter ended June 30, 2014, revenue fell 2.1%, to $474 million from $484 million a year earlier. However, cash flow gained 5.9%, to $198 million, or $0.74 a share, from $187 million, or $0.71. The increase was due to the contribution of new acquisitions.
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CANADIAN PACIFIC $202.20 (Toronto symbol CP; Shares outstanding: 175.1 million; Market cap: $35.7 billion; TSINetwork Rating: Average; Dividend yield: 0.7%; www.cpr.ca) reports that its earnings jumped 47.2% in the three months ended June 30, 2014, to $371 million, or $2.11 a share. A year earlier, the company earned $252 million, or $1.43 a share.
The higher earnings mainly resulted from CP’s plan to improve its efficiency with new locomotives, better tracks and software that optimizes train loads and speeds. Revenue rose 12.3%, to $1.7 billion from $1.5 billion.
The company’s operating ratio improved to 65.1% from 71.9% a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) CP now feels it can cut its full-year operating ratio to 63% or lower in 2014.
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The higher earnings mainly resulted from CP’s plan to improve its efficiency with new locomotives, better tracks and software that optimizes train loads and speeds. Revenue rose 12.3%, to $1.7 billion from $1.5 billion.
The company’s operating ratio improved to 65.1% from 71.9% a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) CP now feels it can cut its full-year operating ratio to 63% or lower in 2014.
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MARKET VECTORS VIETNAM ETF $21.48 (New York symbol VNM; buy or sell through brokers) holds shares of Vietnamese companies or foreign firms that get a significant amount of their revenue from Vietnam.
The ETF’s top holdings are Saigon Thuong Tin Commercial Bank, 7.8%; Bank for Foreign Trade of Vietnam, 7.4%; Masan Group (food, resources and banking conglomerate), 7.3%; Vincom Corp. (real estate), 6.3%; PetroVietnam Fertilizer & Chemical, 5.7%; Baoviet Holdings (finance and insurance), 5.6%; and PetroVietnam Technical Services (oilfield services), 5.4%.
Market Vectors Vietnam ETF’s industry breakdown is as follows: Financials, 35.8%; Energy, 23.4%; Industrials, 12.6%; Consumer Staples, 11.6%; Consumer Discretionary, 8.3%; Materials, 5.7%; and Utilities, 1.3%. Its expense ratio is 0.72%.
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The ETF’s top holdings are Saigon Thuong Tin Commercial Bank, 7.8%; Bank for Foreign Trade of Vietnam, 7.4%; Masan Group (food, resources and banking conglomerate), 7.3%; Vincom Corp. (real estate), 6.3%; PetroVietnam Fertilizer & Chemical, 5.7%; Baoviet Holdings (finance and insurance), 5.6%; and PetroVietnam Technical Services (oilfield services), 5.4%.
Market Vectors Vietnam ETF’s industry breakdown is as follows: Financials, 35.8%; Energy, 23.4%; Industrials, 12.6%; Consumer Staples, 11.6%; Consumer Discretionary, 8.3%; Materials, 5.7%; and Utilities, 1.3%. Its expense ratio is 0.72%.
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ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $40.21 (New York symbol FXI; buy or sell through brokers) is an exchange traded fund that aims to track the FTSE/Xinhua China 25 Index, which is made up of the 25 largest, most liquid Chinese stocks. All of the stocks in the index trade on the Hong Kong exchange. Some also trade as American Depositary Receipts (ADRs) on New York.
The fund’s top holdings are Tencent Holdings, 10.2%; China Construction Bank, 8.4%; China Mobile, 8.3%; Industrial & Commercial Bank, 6.9%; Bank of China, 5.4%; China Overseas Land & Investment, 4.3%; China Life, 4.0%; Ping An Insurance, 4.0%; China Shenhua Energy, 3.9%; PetroChina, 4.2%; China Merchants Bank, 3.7%; and CNOOC Ltd., 3.7%.
The fund’s holdings give it the following industry breakdown: Financials, 54.1%; Telecommunications, 14.4%; Oil and Gas, 12.1%; Technology, 10.1%; Basic Materials, 4.0%; Industrials, 1.8%; and Consumer Goods, 1.7%. Its expense ratio is 0.73%.
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The fund’s top holdings are Tencent Holdings, 10.2%; China Construction Bank, 8.4%; China Mobile, 8.3%; Industrial & Commercial Bank, 6.9%; Bank of China, 5.4%; China Overseas Land & Investment, 4.3%; China Life, 4.0%; Ping An Insurance, 4.0%; China Shenhua Energy, 3.9%; PetroChina, 4.2%; China Merchants Bank, 3.7%; and CNOOC Ltd., 3.7%.
The fund’s holdings give it the following industry breakdown: Financials, 54.1%; Telecommunications, 14.4%; Oil and Gas, 12.1%; Technology, 10.1%; Basic Materials, 4.0%; Industrials, 1.8%; and Consumer Goods, 1.7%. Its expense ratio is 0.73%.
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