Latest Stock Advice
Toromont Industries Ltd. should see continued earnings growth thanks to its leading market share and Canada’s plan to increase spending on infrastructure projects.
ARC Resources keeps returning its cash flow to shareholders through a growing dividend and substantial share buybacks.
These aren’t space startups: discover 7 dividend-paying aerospace and defense contractors tied to NASA’s Artemis mission (from TSI’s latest Globe and Mail column).
Top pick Linamar Corp. is trading cheaply despite delivering higher sales and profits.
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ENBRIDGE INC. $51 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 928.9 million; Market cap: $47.4 billion; Price-to-sales ratio: 1.3; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www. enbridge.com) has asked regulators to extend its permit to build the Northern Gateway pipeline by three years. This $7.9 billion project would pump crude oil from Alberta to the B.C. coast. However, the permit will expire if Enbridge does not begin construction by the end of 2016. The extra time would also help the company address significant political opposition to the project. For example, it will now give Aboriginal groups a 33% stake in the project, up from 10% under the original proposal. Even so, Ottawa’s plan to ban tanker traffic on B.C.’s northern coast hurts the project’s viability. Enbridge is still a hold.
TRANSCANADA CORP. $52 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 702.4 million; Market cap: $36.5 billion; Price-to-sales ratio: 3.2; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.transcanada.com) has received the final permits necessary for its $4.8 billion Coastal GasLink pipeline. It would pump natural gas from northeastern B.C. to a proposed liquefied natural gas (LNG) terminal in Kitimat, B.C. From there, tankers would ship the LNG to Asia. The companies behind the LNG plant will make a final decision by the end of 2016. If they proceed, TransCanada will begin building the pipeline and related facilities in early 2017. TransCanada is a buy.
MAPLE LEAF FOODS INC. $30 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 134.6 million; Market cap: $4.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.2%; TSINetwork Rating: Average; www.mapleleaffoods.com) is Canada’s largest food processor. It mainly sells its products, including fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. The company recently completed a multi-year restructuring plan that involved closing older meat processing plants and shifting their operations to newer, more efficient ones. Thanks to the success of this plan, Maple Leaf earned $42.3 million, or $0.31 a share, in the three months ended March 31, 2016. The results are a big improvement over the $2.9 million, or $0.02, it lost a year earlier. If you factor out unusual items, earnings per share jumped to $0.28 from $0.05....
HOME CAPITAL GROUP INC. $32 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 66.0 million; Market cap; $2.1 billion; Price-to-sales ratio: 3.9; Dividend yield: 3.0%; TSINetwork Rating: Average; www.homecapital.com) offers most of its loans through 4,000 independent mortgage brokers. In July 2015, it cut ties with 45 of them after it uncovered inaccurate information on loan applications. Allegedly, these brokers falsified borrowers’ annual incomes but not their credit scores and property values. The company has now reviewed 75% of these loans. So far, it has not found any unusual problems. It expects to complete the process by the end of 2016. Home Capital also cuts its credit losses down by identifying problem loans early and adjusting the repayment terms. In the first quarter of 2016, it set aside $1.4 million to cover potential loan losses, down 42.0% from a year earlier....