Search

RUSSEL METALS $37.45 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 61.4 million; Market cap: $2.3 billion; Dividend yield: 4.1%) is one of North America’s largest metal distributors. It serves 39,000 clients at 53 locations in Canada and 12 in the U.S.

In the quarter ended June 30, 2014, Russel’s revenue rose 17.8%, to $893.3 million from $758.1 million a year earlier. Higher demand and selling prices pushed up revenue at its metal services business by 11%. The energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue rise 17%.

Earnings gained 53.3%, to $30.5 million, or $0.50 a share. A year earlier, the company earned $19.9 million, or $0.33. Russel has invested in new plants and processing equipment over the past three years, which has cut its costs and improved its efficiency. That’s paying off with higher profits.

...

DEVON ENERGY CORP. $78.50 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 407.9 million; Market cap: $31.9 billion; Dividend yield: 1.2%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 53% gas and 47% oil.

In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop.

The company is narrowing its focus even further with its recent agreement to sell some of its properties to Linn Energy LLC for $2.3 billion. The sale includes Devon’s holdings in the Rockies, the onshore Gulf Coast and the Mid-Continent region (which includes Oklahoma, Kansas and Texas).

...

Pat McKeough responds to many requests from members of his Inner Circle for advice on specific stocks, as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week we offer you a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of our new approach offering you regular and specific buy, hold and sell advice in our daily posts. Every week you’ll get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday. This week an Inner Circle member asked us about one of the top tech stocks competing for market share in online search and content. Two years ago, Yahoo hired a new president and CEO away from rival Google to help the company make up lost ground against Google and Facebook. Pat examines the measures Marissa Mayer has taken to improve Yahoo’s competitive position. He also discusses Yahoo’s big stake in Alibaba, the Chinese “Amazon.com”, and the impact that company’s upcoming IPO will have on Yahoo’s prospects. Q: I would like your evaluation on the prospects for Yahoo. Thank you....

Every Thursday we bring you “Our Top U.S. Stocks” as our daily post. In these new posts, you’ll get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about covered in our newsletter on U.S. investing, Wall Street Stock Forecaster. “Our Top U.S. Stocks” is part of our new approach offering you regular buy, hold and sell advice in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday and on Friday, our advice on one of the stocks our Inner Circle members have asked about in their weekly Question & Answer sessions FEDEX CORP. (New York symbol FDX; www.fedex.com) delivers packages and documents in the U.S. and over 220 other countries through its fleet of 650 planes and over 108,000 trucks and other surface vehicles....

Every Tuesday we bring you “Best Canadian Stocks” as our daily post. In these new posts, you’ll get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves that are profiled in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor. “Best Canadian Stocks” is part of our new approach offering you regular buy, hold and sell advice in our daily posts. Every week you get “A Stock to Sell” on Monday, “Our Top U.S. Stocks” on Thursday and on Friday, our advice on one of the stocks our Inner Circle members have asked about in their weekly Question & Answer sessions. LINAMAR CORP. (Toronto symbol LNR; www.linamar.com) survived the 2008 financial crisis, plus the bankruptcies of GM and Chrysler. The company has emerged stronger than ever, and we’ve now upgraded its TSINetwork Rating from “Extra Risk” to “Average.” (See below for a description of how we award our TSINetwork ratings.)...

Every Monday we now feature “A Stock to Sell” as our daily post. With each sell, we give you a full explanation of why we advise against investing in these stocks. This is part of our new approach offering you buy, hold and sell advice in our daily posts. You also get “Best Canadian Stocks” on Tuesday, “Our Top U.S. Stocks” on Thursday, and every Friday, our advice on one of the stocks that members of Pat’s Inner Circle have asked about in their weekly Question & Answer sessions. Rite Aid (symbol RAD on New York; www.riteaid.com), is one of the largest drugstore chains in the U.S., with 4,623 outlets in 31 states and Washington, D.C....

Beginning today, we launch Our Top U.S. Stocks, a feature which will appear every Thursday as our daily post. We are also launching a new approach—you will get our specific advice on whether to buy, hold or sell the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about covered in our newsletter on U.S. investing, Wall Street Stock Forecaster. On Monday, look for our new weekly feature on stocks we believe investors should avoid, A Stock to Sell. YUM! BRANDS INC. (New York symbol YUM; www.yum.com) has 40,324 fast-food restaurants in over 110 countries. Its main banners include KFC (fried chicken), Pizza Hut and Taco Bell (Mexican food). Franchisees operate 80% of these outlets....

PENGROWTH ENERGY $7.35 (Toronto symbol PGF; Shares outstanding: 527.5 million; Market cap: $3.9 billion; TSINetwork Rating: Average; Dividend yield: 6.5%; www.pengrowth.com) produces oil and natural gas in Western Canada and off the Nova Scotia coast. Gas accounts for 55% of its production; the other 45% is oil.

Pengrowth produced 75,102 barrels a day (including gas) in the first quarter of 2014, down 16.3% from 89,702 a year earlier. That’s mainly because it sold several less important oil and gas properties in Western Canada. It’s investing the proceeds in more promising projects, including its Lindbergh oil sands development in Alberta’s Cold Lake region.

The company’s cash flow fell 6.9%, to $0.27 a share from $0.29.

...

ENBRIDGE INC. $50.81 (Toronto symbol ENB; Shares outstanding: 834.8 million; Market cap: $4242 billion; TSINetwork Rating: Above Average; Dividend yield: 2.8%; www.enbridge.com) has won approval from Ottawa for its Northern Gateway pipeline.

The line will pump crude from Alberta’s oil sands to Kitimat, B.C. From there, tankers would ship the oil to customers in Asia.

It will cost $7.9 billion to build this project. However, that estimate is sure to rise as other oil sands and pipeline projects drive up labour and material costs.

...

SPDR S&P CHINA ETF $76.51 (New York symbol GXC; buy or sell through brokers; www.spdrs.com) aims to track the S&P China BMI Index, which is made up of all publicly traded Chinese stocks available to foreign investors. Right now, this ETF holds 269 stocks.

The $841.1-million fund’s top holdings are Tencent Holdings, 8.5%; China Construction Bank, 6.0%; Industrial & Commercial Bank, 5.3%; China Mobile, 5.2%; Baidu, 5.2%; Bank of China, 3.4%; CNOOC Ltd., 2.9%; PetroChina, 2.8%; China Petroleum & Chemical, 2.4%; and China Life, 2.0%.

The ETF was launched on March 19, 2007. It has a 0.59% MER and yields 2.5%.

...

POWERSHARES QQQ ETF $94.06 (Nasdaq symbol QQQQ; buy or sell through brokers; www.invescopowershares.com), formerly called Nasdaq 100 Trust Shares, holds stocks that represent the Nasdaq 100 Index, which consists of the 100 largest shares on the Nasdaq exchange, based on market cap.

The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets.

The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Gilead Sciences, Comcast Corp. and Facebook.

...

SPDR DOW JONES INDUSTRIAL AVERAGE ETF $169.58 (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average.

The SPDR Dow Jones ETF’s top holdings are Visa, IBM, Goldman Sachs Group, ExxonMobil, Chevron, 3M, McDonald’s, Caterpillar, United Technologies and Boeing. The fund’s expenses are about 0.17% of its assets.

SPDR Dow Jones ETF is a buy.

...

SPDR S&P 500 ETF $197.12 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major in U.S. companies that are chosen based on their market cap, liquidity and industry group.

The index’s highest-weighted stocks are Apple, ExxonMobil, Microsoft, Procter & Gamble, Johnson & Johnson, J.P. Morgan Chase, IBM, Chevron, General Electric, Pfizer, Berkshire Hathaway, Verizon, Wells Fargo and AT&T. The fund’s expenses are just 0.10% of its assets.

If you want exposure to the S&P 500 Index, the SPDR S&P 500 ETF is a buy.

...

ISHARES S&P/TSX 60 INDEX FUND $21.94 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets.

The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include.

The index’s top holdings are Royal Bank, 8.1%; TD Bank, 7.4%; Bank of Nova Scotia, 6.4%; Suncor Energy, 4.8%; CN Railway, 4.2%; Canadian Natural Resources, 3.9%; Bank of Montreal, 3.7%; Enbridge, 3.1%; Valeant Pharmaceuticals, 3.0%; Manulife Financial, 2.9%; CIBC, 2.8%; BCE, 2.7%; TransCanada Corp., 2.6%; Potash Corp., 2.5%; CP Rail, 2.2%; and Cenovus, 1.9%.

...

TRANSCANADA CORP. $51.93 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $36.3 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.transcanada.com) has agreed to build a $1.9-billion, 260-kilometre pipeline that would pump natural gas from northeastern B.C.’s Dawson Creek area to a proposed liquefied natural gas (LNG) plant at Kitimat, on the
province’s coast.

The plant is a joint venture between Chevron Corp. (New York symbol CVX) and Apache Corp. (New York symbol APA). Both are recommendations of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks.

...

CANADIAN REIT $44.97 (Toronto symbol REF.UN; Units outstanding: 69.2 million; Market cap: $3.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.9%; www.creit.ca) owns 197 properties, including retail, industrial and office buildings, across Canada and in Chicago. These holdings contain almost 24.0 million square feet of leasable area. The trust’s occupancy rate is 95.1%.

In the three months ended March 31, 2014, Canadian REIT’s revenue rose 6.9%, to $102.8 million from $96.1 million a year earlier. Cash flow per unit gained 8.2%, to $0.66 from $0.61.

Canadian REIT added $191.1 million worth of new buildings in 2013. That followed property purchases totalling $401.9 million in 2012, including a 50% stake in Calgary Place, a 575,000-square-foot office and retail complex, for $156.0 million. So far this year, it has not made any acquisitions.

...

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $34.31 (Toronto symbol AP.UN; Units outstanding: 69.5 million; Market cap: $2.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.1%; www.alliedpropertiesreit.com) owns 138 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.9 million square feet of leasable area.

Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to retail space. They usually feature exposed beams, interior brick and hardwood floors.

The trust bought $400 million worth of properties in 2012 and $182.4 million more in 2013. So far in 2014, it has added five more for $101.7 million.

...

GREAT-WEST LIFECO $30.65 (Toronto symbol GWO; Shares outstanding: 999.0 million; Market cap: $30.6 billion; TSINetwork Rating: Above Average; Yield: 4.0%; www.greatwestlifeco.com) is Canada’s largest insurance company. It also offers mutual funds and wealth management.

In the quarter ended March 31, 2014, earnings per share rose 9.3%, to $0.59 from $0.54 a year earlier. Great-West has $805.9 billion of assets under administration.

Earnings at the Canadian division (50% of the total) rose 10.9%. The European division (44%)—including Irish Life, acquired in July 2013—saw 34.9% higher profits. Losses widened at the U.S. division’s Putnam mutual fund business, cutting overall U.S. earnings by 42.3%, but the U.S. makes up just 6% of total profits.

...

MANULIFE FINANCIAL $21.67 (Toronto symbol MFC; Shares outstanding: 1.9 billion; Market cap: $40.2 billion; TSINetwork Rating: Above Average; Dividend yield: 2.4%; www.manulife.ca) sells life and other forms of insurance, as well as mutual funds and investment management services. The company operates globally and has $635 billion of assets under management.

In the three months ended March 31, 2014, Manulife’s earnings per share rose 15.6%, to $0.37 from $0.32 a year earlier. Revenue gained 2.1%, to $9.0 billion from $8.8 billion, as its assets under management grew and its foreign operations benefited from favourable currency movements.

Manulife has made substantial progress cutting its U.S. insurance business’s exposure to unpredictable stock markets and interest rates.

...

SUN LIFE FINANCIAL $39.88 (Toronto symbol SLF; Shares outstanding: 610.6 million; Market cap: $24.2 billion; TSINetwork Rating: Above Average; Dividend yield: 3.6%; www.sunlife.ca) sells savings, retirement, pension and life insurance products to individuals and corporations.

The company mainly operates in Canada, the U.S. and the U.K., but it continues to expand into Asia. It has $671.1 billion of assets under management.

In August 2013, Sun Life sold its riskier, money-losing U.S. annuity business, which offers products that guarantee minimum long-term returns, even if markets fall.

...

BANK OF NOVA SCOTIA $72.16 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $87.8 billion; TSINetwork Rating: Above Average; Dividend yield: 3.6%, www.scotiabank.com) began expanding in Latin America in the 1990s. It’s now focused on Peru, Mexico, Chile and Colombia, but it has a strong presence across the region.

There’s still lots of room to expand banking services throughout Latin America, especially as its growing middle class looks for stable deposit and consumer-lending services.

Bank of Nova Scotia now gets 34% of its revenue from its international division, which provides financial services not just in Latin America and the Caribbean, but also in Asia and other emerging markets.

...

BCE INC. $48.28 (Toronto symbol BCE; Shares outstanding: 777.3 million; Market cap: $37.5 billion; TSINetwork Rating: Above Average; Dividend yield: 5.1%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also offers satellite and Internet TV across the country.

In the three months ended March 31, 2014, BCE’s earnings per share rose 5.2%, to $0.81 from $0.77 a year earlier. Revenue increased 4.4%, to $4.54 billion from $4.35 billion.

Revenue from wireless services (32% of total revenue) rose 4.6%. The company’s network upgrades continue to attract new wireless subscribers, and it’s benefiting from rising use of smartphones, which generate higher monthly fees than regular cellphones.

...

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific stock market advice that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “If you rely on one or two simple rules to cut your risk when you pick stocks, you may simply cut your profits.” Investors are always looking for simple ways to avoid risk in their investments. They want a rule that is easy to follow, foolproof, and compact enough to fit on a T-shirt....

RIOCAN REAL ESTATE INVESTMENT TRUST $27 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 304.8 million; Market cap: $8.2 billion; Price-to-sales ratio: 5.9; Dividend yield: 5.2%; TSINetwork Rating: Average; www.riocan.com) continues to work with joint venture partners to buy mixed-use properties, particularly in urban areas. This way, the trust can apply its expertise to the retail portion of these developments, while leaving the residential and office aspects to its partners.

In the first quarter of 2014, RioCan paid $138 million for interests in six properties under development. It also bought two existing retail properties for $21 million.

Thanks to these moves, RioCan’s cash flow rose 2.4% in the quarter, to $127 million, or $0.42 a unit. A year earlier, its cash flow was $124 million, or $0.41 a unit. The lower Canadian dollar also boosted its U.S. properties’ contribution.

...

Beginning today, we launch Best Canadian Stocks, a feature which will appear every Tuesday as our daily post. We also launch a new approach—you will get our specific advice on whether to buy, hold or sell the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about covered in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor. On Thursday, look for our first weekly feature on U.S. stocks, complete with our specific buy, hold and sell advice. PENGROWTH ENERGY (Toronto symbol PGF; www.pengrowth.com) produces oil and natural gas in Western Canada and off the Nova Scotia coast. Gas accounts for 55% of its production; the other 45% is oil....