Search

BANK OF NOVA SCOTIA $66.73 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $80.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.1%, www.scotiabank.com) is the third-largest of Canada’s five big banks, with $837.2 billion of assets.

In its fiscal 2015 second quarter, which ended April 30, 2015, Bank of Nova Scotia earned $1.74 billion, or $1.42 a share. That’s up 2.5% from $1.70 billion, or $1.39 a share, a year earlier. Revenue rose 3.7%, to $5.9 billion from $5.7 billion.

The bank set aside $448 million to cover potential bad loans in the latest quarter, up 19.5% from $375 million a year earlier. That’s mainly because it’s loaning more funds to consumers in Canada and Latin America.

...

TD BANK $54.90 (Toronto symbol TD; Shares outstanding: 1.8 billion; Market cap: $100.5 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.td.com) is Canada’s largest bank, with $1.03 trillion of assets. It also operates more branches in the U.S. than Canada (1,302 vs. 1,165) and owns 40.72% of TD Ameritrade (New York symbol AMTD), a leading online brokerage.

Excluding one-time items, TD’s earnings per share rose 4.6% in its fiscal second quarter ended April 30, 2015, to $1.14 from $1.09 a year earlier. Revenue gained 4.4%, to $7.8 billion from $7.4 billion, as low interest rates continue to spur loan demand.

The bank’s loan-loss provisions fell 4.3%, to $375 million from $392 million, because more U.S. credit card customers are repaying their loans on time.

...

TORSTAR $6.12 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $492.2 million; TSINetwork Rating: Average; Dividend yield: 8.6%; www.torstar.com) reported revenue of $192.3 million in the three months ended March 31, 2015. That was down 9.0% from $211.3 million a year earlier, mainly due to to lower ad revenue across its newspapers.

However, cost cutting, including layoffs, kept its per-share earnings unchanged at $0.02, before one-time items.

The company plans to launch a digital version of The Toronto Star for tablet computers in the fall of 2015. That should help it attract younger readers and spur online ad sales.

...

LOBLAW COMPANIES $64.10 (Toronto symbol L; Shares outstanding: 412.6 million; Market cap: $26.0 billion; TSINetwork Rating: Above Average; Dividend yield: 1.6%; www.loblaw.ca) saw its sales jump 37.8% in the three months ended March 28, 2015, to $10.0 billion from $7.3 billion a year earlier.

Shoppers Drug Mart contributed $2.6 billion to the latest quarterly sales. Even so, same-store sales at Loblaw’s supermarkets rose 4.0%, while Shoppers’ same-store sales gained 3.1%.

Earnings per share rose 35.2%, to $0.73 from $0.54, mostly due to successful cost cutting. The strong earnings prompted Loblaw to raise its dividend by 2.0%. The new rate yields 1.6%.

...

ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $18.22 (New York symbol ESR; buy or sell through brokers) has 66.4% of its assets invested in Russia, followed by Poland at 26.2%; Hungary, 3.7%; and the Czech Republic, 3.1%.

The fund’s top holdings are Gazprom (Russia: gas utility), 13.4%; Lukoil (Russia: oil), 10.2%; Magnit PJSC (Russia: retailing), 5.7%; MMC Norilsk Nickel (Russia: mining), 4.2%; Sberbank (Russia: bank), 4.0%; and Novatek (Russia: natural gas), 4.0%. The iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.67%.

The fund’s concentration in Russia adds considerable risk. The country’s currency, the ruble, is near record lows against the U.S. dollar. This comes in the wake of falling oil prices, Western sanctions after Russia’s takeover of Crimea and the country’s continued threats against the rest of Ukraine.

...

ISHARES MSCI BRAZIL INDEX FUND $33.27 (New York symbol EWZ; buy or sell through brokers) is an ETF that’s designed to track the Brazilian stock market.

Its top holdings are Cia Itau Unibanco Holding (banking), 9.6%; AmBev SA (beer and beverages), 8.8%; Petrobras (oil and gas), 8.7%; Banco Brandesco SA, 7.1%; Vale do Rio Doce (mining), 5.3%; BRF SA (food), 4.2%; and Cielo SA (payment processing), 3.8%.

The ETF was launched on July 10, 2000. It has a 0.62% expense ratio.

...

ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $40.22 (New York symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that mainly trade on the Santiago Stock Exchange.

The fund’s top holdings are S.A.C.I. Falabella (retail), 10.9%; Enersis SA (electricity), 9.9%; Empresas Copec SA (conglomerate), 7.6%; Empresa Nacional de Electricidad (electricity), 7.1%; Banco Santander Chile (banking), 5.0%; Empresas CMPC (pulp and paper), 4.9%; Cencosud SA (retailer), 4.6%; Banco de Chile, 4.5%; Colbun SA (utility), 4.1%; and LATAM Airlines, 3.9%.

The fund’s industry breakdown consists of Utilities, 28.6%; Financials, 18.0%; Consumer Discretionary, 12.9%; Materials, 11.0%; Consumer Staples, 9.3%; Energy, 8.0%; Industrials, 7.0%; Telecommunications, 2.3%; and Information Technology, 2.2%.

...

ISHARES MSCI GERMANY FUND $29.74 (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index.

This index aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.

The ETF’s top holdings are Bayer (diversified chemicals), 9.8%; Daimler (autos), 7.5%; BASF (chemicals), 7.1%; Siemens (engineering conglomerate), 6.9%; SAP (software), 6.1%; Allianz (insurance), 6.0%; Deutsche Telekom, 4.5%; Deutsche Bank AG, 3.5%; Volkswagen AG, 3.3%; and BMW AG, 3.1%.

...

ISHARES MSCI SOUTH KOREA INDEX FUND $56.70 (New York symbol EWY; buy or sell through brokers) aims to track the MSCI Korea Index.

The ETF’s top holdings are Samsung Electronics, 19.8%; SK Hynix Semiconductor, 4.6%; Hyundai Motor, 3.9%; Shinhan Financial, 2.8%; Naver (Internet), 2.7%; Posco (steel), 2.5%; KB Financial, 2.5%; Hyundai Mobis (auto parts), 2.4%; AmorePacifi

c (cosmetics), 2.0%; and Kia Motors, 2.0%. The fund’s industry breakdown is as follows: Information Technology, 36.1%; Consumer Discretionary, 15.7%; Financials, 14.0%; Industrials, 11.6%; Materials, 7.8%; Consumer Staples, 7.6%; Utilities, 2.1%; Energy, 1.8%; Telecommunication Services, 1.2%; and Health Care, 1.0%.

...

ISHARES MSCI EMERGING MARKETS INDEX FUND $40.91 (New York symbol EEM; buy or sell through brokers) aims to track the MSCI Emerging Markets Index. The fund’s geographic breakdown includes China, 24.8%; South Korea, 14.6%; Taiwan, 12.9%; South Africa, 7.4%; Brazil, 7.2%; India, 7.0%; Mexico, 4.6%; Russia, 3.9%; Malaysia, 3.3%; Indonesia, 2.5%; Thailand, 2.1%; and Turkey, 1.5%.

Its top holdings are Samsung Electronics (South Korea), 3.2%; Taiwan Semiconductor (computer chips), 2.9%; Tencent Holdings (China: Internet), 2.6%; China Mobile, 2.0%; China Construction Bank, 1.8%; Industrial & Commercial Bank of China, 1.6%; Naspers (South Africa: media and Internet), 1.4%; Hon Hai Precision Industry (Taiwan), 1.0%; and Ping An Insurance of China, 1.0%.

Its industry breakdown includes Financials, 28.1%; Information Technology, 19.0%; Consumer Discretionary, 9.3%; Consumer Staples, 8.0%; Energy, 7.8%; Telecommunication Services, 7.3%; Materials, 7.0%; and Industrials, 6.8%.

...

PENGROWTH ENERGY $3.26 (Toronto symbol PGF; Shares outstanding: 534.6 million; Market cap: $1.8 billion; TSINetwork Rating: Average; Dividend: 7.4%; www.pengrowth.com) has started up its Lindbergh oil sands project in Alberta, which should produce 16,000 barrels a day by the end of 2015. Excluding Lindbergh, Pengrowth produced 69,334 barrels of oil equivalent a day in the first quarter of 2015.

As well, for the remainder of 2015, the company has hedged 78% of its oil production at $93.87 (Canadian) a barrel, well above today’s price of $60.16 U.S. It has also hedged 57% of its gas output at $3.72 (Canadian) per thousand cubic feet, compared to the current price of $2.94 U.S. The company’s hedges were worth $354.3 million as of March 31, 2015.

Pengrowth is still a buy.

...

INNERGEX RENEWABLE ENERGY $11.65 (Toronto symbol INE; Shares outstanding: 101.1 million; Market cap: $1.2 billion; TSINetwork Rating: Extra Risk; Dividend yield 5.3%; www.innergex.com) operates 26 hydroelectric plants, six wind farms and one solar power facility in Quebec, Ontario, B.C. and Idaho. The company gets 73% of its power from hydroelectric plants. Wind supplies 26% and solar generates 1%.

In contrast to Algonquin, Innergex is growing slowly, mostly by building its own hydroelectric and wind facilities, rather than through acquisitions. Right now, the company has five projects under construction.

But like Algonquin, Innergex makes sure it has firm long-term power-purchase contracts in place before it starts building new plants.

...

ALGONQUIN POWER & UTILITIES CORP. $9.58 (Toronto symbol AQN; Shares outstanding: 238.9 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.9%; www.algonquinpower.com) has nearly tripled in size over the past three years through acquisitions. It plans to expand further with more purchases.

The company’s regulated utility businesses now provide water, electricity and natural gas to over 489,000 customers, up sharply from 120,000 three years ago. In addition, its hydroelectric, thermal energy, solar and wind facilities generate 1,150 megawatts, up from 460.

Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 21.0% of Algonquin.

...

CRESCENT POINT ENERGY CORP. $28.03 (Toronto symbol CPG; Shares outstanding: 449.5 million; Market cap: $12.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.9%; www.crescentpointenergy.com) produces oil and natural gas in Western Canada, with a focus on its Bakken light oil development in southeastern Saskatchewan.

The company is now buying heavily indebted Legacy Oil + Gas (Toronto symbol LEG) for $563 million plus the assumption of $967 million in debt. Activist investors put a lot of pressure on Legacy to complete a deal.

The move will add about 22,000 barrels of oil a day to Crescent Point’s current output of 150,000 barrels. About 15,000 barrels of Legacy’s output is in Crescent Point’s core Bakken area.

...

IMPERIAL OIL $49.32 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $41.9 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; www.imperialoil.ca) is a major integrated oil company with oil sands projects in Alberta and conventional oil and gas operations across Western Canada. It also operates three refineries and 1,700 Esso gas stations.

Oil prices hit a high of $147 U.S. a barrel in July 2008, but then plummeted to a low of $32 in December 2008 as the recession took hold. Prices climbed back to over $100 in 2010, and remained near there until mid-2014 when oil plunged from $110 to less than half that price by the end of the year. Oil is now at $60 a barrel.

Strong oil prices for most of 2014 let Imperial report cash flow of $5.3 billion, or $6.26 a share. This year, low oil prices will likely push cash flow down by more than half, to $2.6 billion, or $3.02 a share.

...

Quick to take the lead in changing trends, Google continues to rate as one of our best tech stocks

Long-term contracts support these high-yielding power firms that we like as two of the fastest growing stocks for conservative investors.

There are two basic approaches to investing in stocks: bottom-up and top-down. Bottom-up investing is the better of the two by far.

Every Monday we feature “A Stock to Sell” as our daily post. With every stock or investment we recommend as a sell, we give you a full explanation of why we advise against investing in it at this time. Today an organic food store operator that has been among the most active stocks in the past year—but has seen its share price tumble.

Sprouts Farmers Market Inc. (symbol SFM on Nasdaq; www.sprouts.com) opened its first organic and natural food store in Arizona in 2002. It now has 200 outlets, mainly in the western U.S.

Sprouts first sold shares to the public at $18.00 each and began trading on Nasdaq in August 2013.

The company has grown quickly in the past few years. In 2011, it merged with Henry’s Holdings, which operated 43 stores. It later purchased 37 outlets operating under the Sunflower Farmers Market banner.

In addition to acquisitions, Sprouts continues to add new stores, opening 10 in the three months ended March 29, 2015. That increased its sales by 18.7% in the quarter, to $857.6 million from $722.6 million a year earlier. Same-store sales (which exclude recently opened and closed outlets) gained 4.8%.

...

Pat McKeough responds to many requests from members of his Inner Circle. Every week, his comments on the most intriguing questions of the past week go out to all Inner Circle members. Each week, we offer you a highlight from these Q&A sessions. This week, why the world’s largest farm equipment maker isn’t among our U.S. stocks to buy.

Q: How do you see things shaping up for Deere & Co.? Is it a buy? Thanks.

A: Deere & Co. (symbol DE on New York; www.deere.com) started up in 1837 when its founder, John Deere, began making polished-steel plows at his blacksmith shop in Grand Detour, Illinois.

Today, the company is the world’s largest maker of agricultural equipment, with plants in the U.S., Canada, France, Germany, Spain, South Africa, Mexico and Argentina. In addition to John Deere, its top brands include Frontier, Kemper, Green Systems and SABO.

Deere mainly sells these products through independent dealers and home-improvement chains like Home Depot and Lowe’s. It has three divisions:

...

TEXAS INSTRUMENTS INC. $54 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $54.0 billion; Price-to-sales ratio: 4.3; Dividend yield: 2.5%; TSINetwork Rating: Average; www.ti.com) gets 65% of its revenue from analog chips, which convert inputs like touch, sound and pressure into signals computers can understand. Manufacturers use these chips in a variety of products, such as cars, medical devices and appliances.

The company gets a further 20% of its revenue by making embedded processor chips, which perform mathematical calculations. Many clients supply their own software for these chips. This gives Texas Instruments an opportunity to form long-term relationships with these users, as it helps them adapt their software to the new chips. That makes these customers less likely to switch to other chipmakers.

Handheld calculators, specialized chips and licensing fees provide the remaining 15% of revenue.

...

PEPSICO INC. $95 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $142.5 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.pepsico.com) earned $1.25 billion in the three months ended March 21, 2015, down 1.6% from $1.27 billion a year earlier. The company spent $1.1 billion on share buybacks in the latest quarter. As a result, earnings per share were unchanged at $0.83.

Sales declined 3.2%, to $12.2 billion from $12.6 billion. If you exclude businesses PepsiCo bought and sold in the past year, as well as unfavourable currency exchange rates (overseas markets supply 40% of the company’s sales), revenue rose 4.4%.

PepsiCo is still seeing strong demand for its snack foods, particularly in developing countries. However, soft drink sales have suffered as increasingly health-conscious consumers drink less soda.

...

EBAY INC. $62 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.2 billion; Market cap: $74.4 billion; Price-to-sales ratio: 4.2; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) has settled a long-standing dispute with classified advertising website Craigslist.

In 2004, eBay acquired a 28.4% stake in the privately held company for $32 million. However, Craigslist accused eBay of using its confidential information to launch a rival classified ad service in the U.S. in 2007. Under the settlement, eBay has sold its shares back to Craigslist for an undisclosed amount.

The deal should help speed up eBay’s plan spin off its PayPal online payments division as a separate company later this year. The remaining firm will focus on auction websites.

...

Home renovations spurred by an improved real estate market help keep Stanley Black and Decker one on our best stocks to buy in the U.S.

MACY’S INC. $70 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 336.4 million; Market cap: $23.5 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.1%; TSINetwork Rating: Average; www.macysinc.com) has formed a partnership with zTailors to provide tailoring services to customers who buy clothes from Macy’s websites.

For an extra fee, a tailor will come to the customer’s home or office for a fitting and complete the alterations within a week. If initial trials in three test cities are successful, Macy’s and zTailors will expand the service to all of the U.S. by the end of 2015.

Macy’s is a buy.

...