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Perimeter Solutions Inc. reported strong revenue and earnings as it benefits from its unique position in aerial retardants backed by a multi‑year government contract base.
IBM Corp. offers double-digit software and AI-fueled growth as its leadership in quantum computing could be a major growth spur.
Campbell’s Co. offers a high 7.2% yield at a cheap valuation with plenty of upside if the company can stabilize volumes, extract synergies, and defend margins.
Kratos Defense & Security Solutions offers high growth in an expanding market, but is expensive at the current price.
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Oil prices have dropped 50% in the past year, but Imperial Oil’s shares are down just 10%. That’s mainly because cheaper crude cuts its refineries’ input costs and increases their profit margins. New oil sands projects are also adding to its production. In addition to low oil prices, Imperial faces potentially higher royalties and tougher environmental regulations. Still, we feel the company’s high-quality reserves will help it overcome these short-term challenges. Plus, its operating costs per barrel will keep falling as its new projects reach full capacity....
SNC-LAVALIN GROUP INC. $40 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.6 million; Market cap: $6.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.5%; TSINetwork Rating: Average; www.snclavalin.com) earned $26.5 million in the second quarter of 2015, down 17.3% from $32.1 million a year earlier. Earnings per share declined 19.0%, to $0.17 from $0.21, on fewer shares outstanding. The drop was largely because SNC ran into unstable soil while building a mass-transit project, which increased its costs. Expenses at a separate highway project were also higher than expected, further hurting its earnings. However, revenue jumped 32.7%, to $2.25 billion from $1.7 billion, thanks to U.K.-based Kentz, which SNC bought in August 2014. Kentz provides engineering and construction services to the oil and gas industry and now supplies a third of SNC’s revenue....
The past year’s plunge in oil prices has forced all three of these producers to slash their costs and delay new projects. Like Imperial Oil (see page 81), Suncor and Cenovus have refineries that help offset oil’s drop. Encana doesn’t have refineries, but it has narrowed its operations to four main projects that give it a better balance between oil and natural gas. We see all three firms as buys for patient investors. SUNCOR ENERGY INC. $37 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.4 billion; Market cap: $51.8 billion; Price-to-sales ratio: 1.6; Dividend yield: 3.1%; TSINetwork Rating: Average; www.suncor.com) gets 80% of its crude production from its huge Alberta oil sands projects. The remaining 20% comes from traditional oil and gas wells....
PENGROWTH ENERGY CORP. $1.71 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 540.7 million; Market cap: $924.6 million; Price-to-sales ratio: 0.9; Dividend yield: 14.0%; TSINetwork Rating: Average; www.pengrowth.com) plans to spend $190 million to $210 million on its oil and gas properties in 2015, down from its earlier forecast of $220 million to $240 million. The company also wants to sell $600 million worth of less important assets. It will use the cash to pay down its debt of $1.9 billion, which is a high 2.1 times its market cap. Meanwhile, Pengrowth continues to benefit from its hedging program, which locks in selling prices above today’s low oil and gas prices. That should help it keep paying monthly dividends of $0.02 a share. The annual rate of $0.24 yields a high 14.0% due to the stock’s depressed price....