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Nutrien Ltd. offers exposure to potash and nitrogen prices, a stable retail base and strong profitability.
Toromont Industries Ltd. should see continued earnings growth thanks to its leading market share and Canada’s plan to increase spending on infrastructure projects.
Top pick Barrick Mining just raised its dividend a whopping 140% as it generates record earnings and continues its strategic asset reorganization.
Warner Music Group Corp. is well-positioned for higher-margin catalog revenues, added streaming adoption, and new AI monetization opportunities.
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TRANSCANADA CORP. $49 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 702.3 million; Market cap: $34.4 billion; Price-to-sales ratio: 3.1; Dividend yield: 4.6%; TSINetwork Rating: Above Average; www.transcanada.com) has cancelled its contracts to buy electricity from three coal-fired power plants in Alberta. That’s because higher costs to comply with the province’s new carbon taxes and emission controls have hurt the profitability of these deals. As a result, TransCanada will record a non-cash, after-tax charge of $175 million. That’s equal to 10% of its 2015 earnings of $1.8 billion, or $2.48 a share. However, cancelling these deals will improve its cash flow and earnings. TransCanada is a buy.
TORONTO-DOMINION BANK $55 (Toronto symbol TD; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.9 billion; Market cap: $104.5 billion; Price-to-sales ratio: 3.3; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.td.com) earned $2.4 billion, or $1.18 a share, in its fiscal 2016 first quarter, which ended January 31, 2016. That’s up 5.8% from $2.1 billion, or $1.12, a year earlier. Earnings for its Canadian banks (62% of the total) rose 4.4%, thanks to strong loan demand and gains from the wealthmanagement and insurance businesses. Earnings from U.S. banking (31%) jumped 20.2%. That’s largely because the low Canadian dollar enhanced its profits. However, earnings from wholesale banking (7%) fell 16.1%. Lower stock trading volumes offset higher advisory fees on mergers and acquisitions. Revenue rose 13.1%, to $8.6 billion from $7.6 billion. However, TD set aside $642 million to cover potential future loan losses, up 77.3% from $362 million. That’s mainly because it recently acquired the U.S. credit card portfolio of department store Nordstrom’s (New York symbol JWN). As well, low oil prices could hurt the ability of energy producers to repay their loans. These borrowers represent less than 1% of TD’s overall loan portfolio....
SUNCOR ENERGY INC. $35 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $52.5 billion; Price-to-sales ratio: 1.8; Dividend yield: 3.3%; TSINetwork Rating: Average; www. suncor.com) has now acquired 84.2% of Canadian Oil Sands (Toronto symbol COS). That firm owns 36.74% of the Syncrude oil sands project in northern Alberta. The takeover gives Suncor 48.74% of Syncrude, and allows it to improve the project’s efficiency and profits. Under the terms of its takeover offer, Canadian Oil Sands investors each received 0.28 of a Suncor share for every share they own. If you include Canadian Oil Sands’ debt, the deal is worth $6.6 billion. Suncor expects to acquire the remaining shares in the next few weeks. Suncor is a buy.
EMERA INC. $47 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 145.3 million; Market cap: $6.8 billion; Price-to-sales ratio: 2.5; Dividend yield: 4.0%; TSINetwork Rating: Average; www.emera.com) has reached a deal to increase its ownership of Emera (Caribbean) Inc. From 95.6% to 100.0%. This publicly traded subsidiary holds Emera’s interests in power utilities in Barbados, Dominica and St. Lucia. Emera will cut administrative costs by taking full control. The company will pay roughly $16.5 million in cash and Emera stock for the additional stake. To put that in context, Emera earned $330.0 million, or $2.26 a share, in 2015....