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Today we look at the energy stock that remains our best buy among oil and gas companies....

Today, we look at a value stock that has the potential for a strong rebound when oil and gas prices recover. Enerflex, an independent company since it was spun off by Toromont Industries (Toronto symbol TIH) in 2011, is a major supplier of equipment to the natural gas industry. A timely U.S. acquisition in 2014 has helped Enerflex generate positive earnings despite a decline in orders, and also enhances the company’s international growth prospects. And the dividend, which yields 3.2%, appears safe.

ENERFLEX LTD. (Toronto symbol EFX; www.enerflex.com) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration gear and power generators.

On June 30, 2014, the company closed its $431- million U.S. acquisition of two businesses owned by privately held Axip Energy Services: an international contract compression and processing subsidiary and a division that provides aftermarket services.

In the three months ended June 30, 2015, Enerflex’s revenue fell 8.3%, to $389.7 million from $424.9 million a year earlier. But earnings per share more than doubled, to $0.34 from $0.15. International contributions from the Axip businesses pushed up earnings and almost offset weaker revenue in the U.S. and Canada. However, falling oil and gas prices are now hurting the company’s orders.

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Building profits with its financial information products since the crisis of 2008, Thomson-Reuters remains one of our top dividend stocks.

Mitel Networks strengthens its niche market with more telecom products in the cloud

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CANADIAN UTILITIES LTD. $36 (www.canadianutilities.com) has spent $617 million in the first half of 2015 to expand its power plants, transmission lines and pipelines in Alberta. However, higher corporate taxes in that province, as well as writedowns, offset the extra revenue from these operations....

MOLSON COORS CANADA INC. $94 (www.molsoncoors.com) earned $1.41 a share in the three months ended June 30, 2015, down 10.2% from $1.57 a year earlier (all amounts expect share price in U.S. dollars). Its worldwide beer volumes fell 1.9%, mainly due to the termination of deals to brew certain beers in Canada and the U.K....

GREAT-WEST LIFECO INC. $35 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 996.9 million; Market cap: $35.0 billion; Priceto- 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. Power Financial (Toronto symbol PWF) owns 67.1% of Great-West.

As of June 30, 2015, the company had $1.15 trillion of assets under administration, up 7.9% from $1.06 trillion at the end of 2014.

Diversified operations cut risk

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LINAMAR CORP. $71 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.1 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.0; Dividend yield: 0.6%; TSINetwork Rating: Average; www.linamar.com) saw its sales rise 23.8% in the three months ended June 30, 2015, to a record $1.4 billion from $1.1 billion a year earlier.

Sales at the company’s powertrain and driveline division (79% of the total) rose 22.5%, thanks to acquisitions and the launch of new transmissions and other automotive products. The industrialproducts division’s sales (21%) gained 28.9%, mainly due to strong demand for the company’s Skyjack self-propelled, scissor-type elevating work platforms.

Earnings jumped 33.3%, to a record $1.84 a share from $1.38. In addition to the higher sales, Linamar’s earnings benefited from efficiency improvements and favourable currency exchange rates.

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RIOCAN REAL ESTATE INVESTMENT TRUST $26 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 318.3 million; Market cap: $8.3 billion; Price-to-sales ratio: 6.5; Dividend yield: 5.4%; TSINetwork Rating: Average; www.riocan.com) has found new tenants for seven of the 26 former Target stores in its malls. It will have to remodel the remaining 19, but it expects to lease them all within the next two years.

Target’s U.S. parent company guaranteed the leases on the Canadian stores, but it has not yet paid RioCan the lost rental payments. If RioCan is unable to find new tenants, Target may have to pay the trust up to $250 million.

RioCan is a buy.

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MANITOBA TELECOM SERVICES INC. $29 (Toronto symbol MBT; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 78.9 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 4.5%; TSINetwork Rating: Average; www.mtsallstream.com) has acquired AWS-1 radio frequencies (or spectrum) in Manitoba from rival wireless carrier WIND Mobile. The purchase will boost its wireless networks’ speed and capacity.

Manitoba Telecom paid $45 million for these frequencies. To put that in context, it earned $10.4 million, or $0.13 a share, in the three months ended June 30, 2015. Excluding unusual items, such as costs related to a restructuring of its Allstream business communications subsidiary, the company earned $0.31 a share in the quarter, down 16.2% from $0.37 a share a year earlier.

Manitoba Telecom is a hold.

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POTASH CORP. OF SASKATCHEWAN $34 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 834.7 million; Market cap: $28.4 billion; Price-to-sales ratio: 4.5; Dividend yield: 5.8%; TSINetwork Rating: Average; www.potashcorp.com) has offered to buy leading German fertilizer producer K+S AG for around $8.6 billion U.S.

K+S has rejected the offer, as it feels the price discounts the potential value of its new Legacy potash mine in Saskatchewan, which will open in 2016. As a result, K+S has indicated that Potash Corp. would have to raise its bid by roughly 22%.

In response, Potash Corp. may launch a hostile takeover offer. However, German regulators would probably block an acquisition, particularly if Potash Corp. plans to close some of K+S’s mines. Potash Corp. is still a hold.

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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ IGM FINANCIAL INC. $38 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 247.5 million; Market cap: $9.4 billion; Price-to-sales ratio: 3.1; Dividend yield: 5.9%; TSINetwork Rating: Above Average; www.igmfinancial.com) had $137.9 billion worth of assets under management as of July 31, 2015, down 3.0% from $142.1 billion a year earlier. The company’s fee income rises and falls with the value of the mutual funds and other securities it manages, so its revenue and earnings decline when the price of these assets falls.

However, IGM sells most of its funds through its own salesforce. This leaves it less dependent on selling through the brokerage industry than its competitors. This salesforce also lets IGM form close relationships with clients, and keep redemption rates down.

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TORONTO-DOMINION BANK $53 (Toronto symbol TD; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.8 billion; Market cap: $95.4 billion; Price-to-sales ratio: 3.4; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.td.com) recently agreed to pay an undisclosed sum to department store operator Nordstrom (New York symbol JWN) for its U.S. credit card portfolio. These loans total $2.2 billion U.S.; TD expects to complete the purchase by the end of 2015.

Separately, TD has agreed to become the exclusive issuer of Nordstrom-branded Visa and privatelabel credit cards.

Under the deal, which is similar to the bank’s March 2013 purchase of Target’s credit card portfolio, Nordstrom will keep receiving most of the earnings from its card operations. However, TD will also get a share, and it stands to benefit as more Nordstrom shoppers adopt the cards.

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ROYAL BANK OF CANADA $76 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $106.4 billion; Price-to-sales ratio: 3.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) continues to sell its less promising overseas operations as it shifts its international focus to the U.S., U.K. and Asia.

For example, it recently sold its retail banking business in the country of Suriname, South America.

It’s also selling its Swiss private banking operations to SYZ Group for an undisclosed sum. This subsidiary offers wealth management services to wealthy investors from emerging markets like Latin America, Africa and the Middle East.

Meanwhile, Royal aims to complete its purchase of Los Angeles-based City National (New York symbol CYN) by the end of 2015. City National focuses on wealthy individuals and lending to businesses in the entertainment, technology and health care industries. Royal plans to merge it with its U.S. wealth management operations.

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Overall earnings fell 1.2%, to $410 million from $415 million, while per-share profits gained 2.0%, to $0.52 from $0.51, on fewer shares outstanding. Excluding currency rates, the company’s earnings per share jumped 14%.

Thomson’s sound balance sheet will let it keep developing new products, particularly ones it can deliver over the Internet or through mobile devices. As of June 30, 2015, the company held cash of $1.1 billion, or $1.44 a share. Its long-term debt of $7.0 billion is a manageable 21% of its market cap.

The stock has gained 30% in the past year and now trades at 20.5 times Thomson’s likely 2015 earnings of $2.03 a share. That’s still an acceptable multiple in light of its high market share, unique products and improving profit margins. The $1.34 dividend yields 3.2%.

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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.

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ENCANA CORP. $9.45 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 842.5 million; Market cap: $8.0 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.8%; TSINetwork Rating: Average; www.encana.com) continues to sell less important properties as it narrows its focus on four higher-margin projects: Montney (B.C.), Duvernay (Alberta) and Eagle Ford and Permian (Texas).

These sales cut its daily output by 21.0% in the three months ended June 30, 2015, to 388,700 barrels a day (67% gas, 33% oil and natural gas liquids) from 491,800 a year earlier. As well, the company’s realized gas prices, which include the benefit of hedging contracts, fell 13.7%, while oil prices dropped 37.0%.

As a result, Encana lost $167 million, or $0.20 a share (all amounts except share price and market cap in U.S. dollars). A year earlier, it earned $171 million, or $0.23. Cash flow per share dropped 75.3%, to $0.22 from $0.89, while revenue declined 47.7%, to $830 million from $1.6 billion.

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Successful expansion in Ireland is just one reason Great-West Lifeco gets our nod as one of Canada’s top financial blue chip stocks.

CENOVUS ENERGY INC. $19 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 833.2 million; Market cap: $15.8 billion; Price-to-sales ratio: 1.0; Dividend yield: 3.4%; TSINetwork Rating: Average) gets 35% of its revenue from its Western Canadian oil sands properties and conventional oil and gas wells. Chief among these assets are its 50%-owned Christina Lake and Foster Creek oil sands projects; ConocoPhilips (New York symbol COP) owns the remaining 50%.

Refining supplies the remaining 65% of Cenovus’s revenue. The company ships its oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these operations. Cenovus’s refineries help cut its exposure to falling oil prices, as cheaper crude lowers their operating costs.

Cenovus still plans to spend $1.8 billion to $2.0 billion on expansions and upgrades in 2015, unchanged from its previous estimate. These projects should add 50,000 barrels a day to its production by the end of 2016.

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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.

Lower oil and gas prices cut these properties’ contribution to just 39% of Suncor’s revenue and 31% of its earnings in the three months ended June 30, 2015.

However, low oil prices are a plus for Suncor’s four refineries and 1,500 Petro-Canada gas stations. As a result, these businesses supplied 61% of revenue and 69% of earnings.

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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.

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POWER CORP. $31.00 (Toronto symbol POW; Shares outstanding: 414.0 million; Market cap: $14.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.0%; www.powercorporation.com) is a diversified holding company. It holds its financial assets through 65.7%-owned Power Financial.

These financial assets include 69.5% of Great-West Lifeco, one of Canada’s largest life insurers, and 58.7% of IGM Financial, a leading Canadian mutual fund provider.

As well, Power Financial owns 50% of holding company Parjointco, which holds a 55.5% stake in Switzerland-listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European firms. Power Corp. also has interests in Asia.

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