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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PENN WEST $8.14 (Toronto symbol PWT; Shares outstanding: 492.6 million; Market cap: $4.0 billion; TSINetwork Rating: Average; Divd. yield: 6.9%; www.pennwest.com) appointed former Suncor CEO Rick George as chairman in May 2013 to bring in much-needed measures to shore up its finances and boost its value.
The company’s shares traded at $10 when George took over, down from a peak of $47 in 2006. The shares moved up to as high as $13.50 last year, but had moved back down to $10 in mid-July 2014. That’s when they dropped a further 19%, to today’s price, after the company announced it was re-examining its
accounting practices going back several years.
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The company’s shares traded at $10 when George took over, down from a peak of $47 in 2006. The shares moved up to as high as $13.50 last year, but had moved back down to $10 in mid-July 2014. That’s when they dropped a further 19%, to today’s price, after the company announced it was re-examining its
accounting practices going back several years.
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CENOVUS ENERGY $33.41 (Toronto symbol CVE; Shares outstanding: 756.9 million; Market cap: $25.3 billion; TSINetwork Rating: Average; Dividend yield: 3.2%; www.cenovus.com) gets 40% of its output from its Alberta oil sands projects. Conventional oil and gas supplies 60%.
U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects.
In the quarter ended June 30, 2014, cash flow per share jumped 36.5%, to $1.57 from $1.15 a year ago.
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U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects.
In the quarter ended June 30, 2014, cash flow per share jumped 36.5%, to $1.57 from $1.15 a year ago.
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ENCANA CORP. $22.86 (Toronto symbol ECA; Shares outstanding: 741.0 million; Market cap: $16.9 billion; TSINetwork Rating: Average; Dividend yield: 1.3%; www.encana.com) is one of North America’s largest natural gas producers.
Encana continues to benefit from its new plan to focus on six main properties: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico), the Tuscaloosa Marine Shale (Louisiana) and Texas’s Eagle Ford oil shale.
These fields produce oil and natural gas liquids (NGLs), such as butane and propane, and should last decades. That cuts Encana’s natural gas exposure.
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Encana continues to benefit from its new plan to focus on six main properties: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico), the Tuscaloosa Marine Shale (Louisiana) and Texas’s Eagle Ford oil shale.
These fields produce oil and natural gas liquids (NGLs), such as butane and propane, and should last decades. That cuts Encana’s natural gas exposure.
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IMPERIAL OIL $54.20 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $45.9 billion; TSINetwork Rating: Average; Div. yield: 1.0%; www.imperialoil.ca) recently opened the first phase of its massive Kearl oil sands project in Alberta, and the second phase should start up next year. This project will help the company double its production, to 600,000 barrels a day, by 2020.
Oil sands projects are harder to operate than conventional properties, and they need high oil prices to earn a profit. However, Imperial’s refineries help shield it from a drop in oil prices because they pay less for the crude they need.
The stock trades at a moderate 12.2 times Imperial’s likely 2014 earnings of $4.45 a share.
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Oil sands projects are harder to operate than conventional properties, and they need high oil prices to earn a profit. However, Imperial’s refineries help shield it from a drop in oil prices because they pay less for the crude they need.
The stock trades at a moderate 12.2 times Imperial’s likely 2014 earnings of $4.45 a share.
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ISHARES DEX UNIVERSE BOND INDEX FUND $31.05 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 821 bonds in the portfolio have an average term-to-maturity of 10.13 years. The fund’s MER is 0.33%.
The bonds in the index are 68.2% government and 31.8% corporate.
The fund yields 3.1%, compared to the Short-Term Bond Fund’s 2.6%. Its yield-to-maturity is 2.37%, 0.79% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.
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The bonds in the index are 68.2% government and 31.8% corporate.
The fund yields 3.1%, compared to the Short-Term Bond Fund’s 2.6%. Its yield-to-maturity is 2.37%, 0.79% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.
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ISHARES DEX SHORT-TERM BOND INDEX FUND $28.63 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through brokers) mirrors the performance of the DEX Short-Term Bond Index.
This index consists of a wide range of investmentgrade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 386 bonds with an average term to maturity of 2.98 years. The bonds in the index are 60.7% government and 39.3% corporate. The fund’s MER is 0.28%.
iShares DEX Short-Term Bond Index Fund yields 2.6%. However, this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, which means the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields.
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This index consists of a wide range of investmentgrade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 386 bonds with an average term to maturity of 2.98 years. The bonds in the index are 60.7% government and 39.3% corporate. The fund’s MER is 0.28%.
iShares DEX Short-Term Bond Index Fund yields 2.6%. However, this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, which means the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields.
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BCE INC. $48.88 (Toronto symbol BCE; Shares outstanding: 777.3 million; Market cap: $38.0 billion; TSINetwork Rating: Above Average; Dividend yield: 5.1%; www.bce.ca) has agreed to pay $3.95 billion in cash and stock for the 56% of BELL ALIANT $30.88 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $7.0 billion; TSINetwork Rating: Average; Dividend yield: 6.2%; www.bellaliant.ca) that it doesn’t already own. The deal should close by November 30, 2014.
Merging the two firms will make it easier for BCE to expand its high-speed wireless and Fibe TV networks in Atlantic Canada.
Bell Aliant shareholders will have three options when they tender their shares: $31.00 in cash; 0.6371 of a BCE share (worth $31.14 at today’s price for BCE); or $7.75 in cash plus 0.4778 of a BCE share ($31.10).
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Merging the two firms will make it easier for BCE to expand its high-speed wireless and Fibe TV networks in Atlantic Canada.
Bell Aliant shareholders will have three options when they tender their shares: $31.00 in cash; 0.6371 of a BCE share (worth $31.14 at today’s price for BCE); or $7.75 in cash plus 0.4778 of a BCE share ($31.10).
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TRANSCANADA CORP. $54.00 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $38.2 billion; TSINetwork Rating: Above Average; Dividend yield: 3.6%; www.transcanada.com) operates 68,500 kilometres of natural gas pipelines and over 11,800 megawatts of power generation in Canada and the U.S.
In the three months ended June 30, 2014, TransCanada’s revenue rose 11.2%, to $2.2 billion from $2.0 billion a year earlier. Excluding one-time items, earnings per share fell 7.8%, to $0.47 from $0.51. That was mostly due to maintenance outages at its Bruce Power plant in Ontario and weaker power prices in Alberta.
The company completed $6.1 billion worth of growth projects in 2013 and another $1.7 billion in the first half of this year. It plans to complete $36 billion of additional projects secured by long-term contracts by 2018 (an amount almost equal to its current $38.2-billion market cap). That includes $3.0 billion more for Keystone XL.
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In the three months ended June 30, 2014, TransCanada’s revenue rose 11.2%, to $2.2 billion from $2.0 billion a year earlier. Excluding one-time items, earnings per share fell 7.8%, to $0.47 from $0.51. That was mostly due to maintenance outages at its Bruce Power plant in Ontario and weaker power prices in Alberta.
The company completed $6.1 billion worth of growth projects in 2013 and another $1.7 billion in the first half of this year. It plans to complete $36 billion of additional projects secured by long-term contracts by 2018 (an amount almost equal to its current $38.2-billion market cap). That includes $3.0 billion more for Keystone XL.
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Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves you should know about, from coverage in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor. HOME CAPITAL GROUP INC. (Toronto symbol HCG; www.homecapital.com) gets 90% of its revenue by offering mortgages to borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks. Clients include self-employed people and recent immigrants with limited credit histories. The remaining 10% of its revenue mainly comes from credit cards and other loans to consumers and businesses....
