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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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Canada’s big five banks (including Bank of Montreal, see page 118) make up the bulk of most investors’ finance-sector holdings. However, we feel it’s prudent to diversify beyond the banks with stocks like the three we analyze below. All three are leaders in their niche markets, which helps them thrive in good times and hold their own when the economy weakens. We see all three as buys, but only aggressive investors should consider Home Capital Group. GREAT-WEST LIFECO INC. $35 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 993.2 million; Market cap: $34.8 billion; Price-to-sales ratio: 1.0; Dividend Yield: 3.7%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest insurance company, after Manulife Financial (Toronto symbol MFC). It also offers mutual funds, retirement planning and wealth management....
IMPERIAL OIL LTD. $42 (Toronto symbol IMO; Conservative Growth and Income Portfolios, Shares outstanding: 848.0 million; Market cap: $35.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.3%; TSINetwork Rating: Average; www.imperialoil.ca) produced 386,000 barrels of oil equivalent a day in the three months ended September 30, 2015, up 25.7% from 307,000 a year earlier. That’s because Imperial recently completed the second phase of its 71%-owned Kearl oil sands project in northern Alberta. However, lower oil prices cut its revenue by 25.9%, to $7.2 billion from $9.7 billion. Cash flow per share fell 32.9%, to $1.10 from $1.64. Even so, Imperial plans to keep expanding Kearl and Cold Lake, its other main oil sands project. These operations, which should last decades, will prosper when oil prices rebound....
BCE INC. $57 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 849.4 million; Market cap: $48.4 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.6%; TSINetwork Rating: Above Average; www.bce.ca) continues to benefit from strong demand for its wireless and high-speed Fibe Internet and TV services. In the quarter ended September 30, 2015, BCE’s earnings rose 21.9%, to $790 million from $648 million a year earlier. Per-share profits gained just 12.0%, to $0.93 from $0.83, on more shares outstanding. Revenue rose 2.9%, to $5.3 billion from $5.2 billion. The company added 77,655 new wireless subscribers under long-term contracts, net of cancellations, beating the consensus forecast of 77,400. Most of these customers use smartphones, which generate higher monthly fees than regular cellphones....
CENOVUS ENERGY INC. $20 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 833.3 million; Market cap: $16.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.2%; TSINetwork Rating: Average; www.cenovus.com) has cut jobs in response to sharply lower oil and natural gas prices. It has also lowered its 2015 capital spending by 40%, to between $1.8 billion and $1.9 billion. These moves, along with more efficient drilling, will save it $400 million in 2015, up from its earlier forecast of $280 million. Cenovus now plans more job cuts, which should save it a further $100 million a year starting in 2016. Meanwhile, Cenovus’s oil production rose 5.7% in the three months ended September 30, 2015, to 210,422 barrels a day from 199,089 a year earlier. That’s due to the start up of new phases at its 50%-owned Foster Creek and Christina Lake oil sands projects in northern Alberta; U.S.-based ConocoPhillips (New York symbol COP) owns the other 50%....