Search

SAPUTO INC. $33 (www.saputo.com) has raised its quarterly dividend by 13.0%, to $0.13 a share (split adjusted) from $0.115. The new annual rate of $0.52 yields 1.6%. Hold.

BOMBARDIER INC. $3.71 (www.bombardier.com) has received a firm order for 40 of its upcoming CSeries passenger jets from Macquarie AirFinance, as well as options for an additional 10 aircraft. Including this order, the company now has firm orders for 243 CSeries planes, plus options for 320 more....

SNC-LAVALIN GROUP INC. $51 (www.snclavalin.com) designed and built Montreal’s Maison symphonique concert hall, which houses the Montreal Symphony Orchestra, in 2009. The company also operates the hall under a long-term deal with the Quebec government....

CGI GROUP INC. $38 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 311.7 million; Market cap: $11.8 billion; Price-to-sales ratio: 1.1; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is Canada’s largest provider of computer outsourcing services. CGI helps its clients automate routine functions, like accounting and buying supplies. That makes them more efficient and lets them focus on their main businesses.

Two-pronged strategy spurs results

CGI follows what it calls a “Build and Buy” strategy. The “Build” part refers to expanding relationships with existing clients and attracting new ones. The company’s long-term outsourcing contracts give it steady, predictable revenue streams. They also let CGI sell these clients other services.

...

TECK RESOURCES LTD. $19 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 566.8 million; Market cap: $10.8 billion; Price-to-sales ratio: 1.2; Dividend yield: 4.7%; TSINetwork Rating: Average; www.teck.com) has dropped 25% in the past three months, mainly due to the U.S. dollar’s recent rise and slowing economic growth in China and other parts of Asia. These factors have depressed the prices of metallurgical coal (which supplies 42% of Teck’s revenue) and copper (32%).

However, the company continues to benefit from rising zinc prices (26%). Thanks to better-than-expected production at its Red Dog mine in Alaska, Teck expects to produce 600,000 to 615,000 tonnes of zinc in 2014, up from its original forecast of 555,000 to 585,000. The company also plans to reopen its Pend Oreille zinc mine in Washington State by the end of 2014.

Meanwhile, Teck continues to aggressively cut its operating costs. It lowered its annual expenses by $360 million in 2013 and should achieve additional savings of $180 million a year by the end of 2014. The company has also reduced this year’s spending on new projects and upgrades by $150 million.

...

EMERA INC. $36 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 142.6 million; Market cap: $5.1 billion; Price-to-sales ratio: 1.8; Dividend yield: 4.3%; TSINetwork Rating: Average; www.emera.com) is Nova Scotia’s main power supplier. It also holds interests in electrical utilities in the U.S. and the Caribbean.

The company has raised its quarterly dividend by 6.9%, to $0.3875 a share from $0.3625. The new annual rate of $1.55 yields 4.3%.

In addition, Emera announced that it expects to increase its dividend by 6% annually for the next five years.

...

SHAWCOR LTD. $54 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.5 million; Market cap: $3.5 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.1%; TSINetwork Rating: Average; www.shawcor.com) recently won contracts to coat underwater pipelines for the Shah Deniz project, which pumps natural gas under the Caspian Sea to Azerbaijan. From there, other pipelines transport the gas to southern Europe.

The total value of these deals—$200 million U.S.—is equal to 12% of the company’s 2013 revenue of $1.8 billion (Canadian). ShawCor expects to complete these jobs from 2015 to 2018.

ShawCor is a buy.

...

CANADIAN PACIFIC RAILWAY LTD. $231(Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.5 million; Market cap: $39.6 billion; Price-to-sales ratio: 6.4; Dividend yield: 0.6%; TSINetwork Rating: Above Average; www.cpr.ca) prefers to use its excess cash to buy back shares instead of raising its dividend. That’s because many of its investors live in the U.S. and are subject to withholding taxes on dividends from Canadian firms.

The company could repurchase up to 5.3 million shares under its latest authorization. It has now reached this limit, so it has increased its target to 12.65 million shares, or 7% of the total outstanding. It expects to complete these purchases by March 16, 2015.

CP Rail is a buy.

...

PENGROWTH ENERGY CORP. $5.02 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 528.1 million; Market cap: $2.7 billion; Price-to-sales ratio: 2.0; Dividend yield: 9.6%; TSINetwork Rating: Average; www.pengrowth.com) is shifting away from its traditional oil and natural gas operations and into projects with better long-term potential, such as its Lindbergh oil sands development in Alberta’s Cold Lake region.

Pengrowth is spending $630 million on Lindbergh’s first phase, which should start up in early 2015 and produce 12,500 barrels a day. That’s equal to 16.9% of Pengrowth’s second quarter output of 73,823 barrels a day (56% oil and natural gas liquids, 44% natural gas). Future phases will raise the project’s daily production to 50,000 barrels by 2020. Lindbergh’s reserves should last 25 years. The company’s cash flow per share will probably fall from $1.09 in 2013 to $1.01 in 2014. However, it should improve to $1.38 in 2015. The stock trades at a low 3.6 times that forecast.

Pengrowth’s improving cash flow should also let it keep paying monthly dividends of $0.04 a share, for an 9.6% annualized yield.

...

TORSTAR CORP. $7.11 (Toronto symbol TS.B; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 80.1 million; Market cap: $569.5 million; Price-to-sales ratio: 0.5; Dividend yield: 7.4%; TSINetwork Rating: Average; www.torstar.com) publishes the Toronto Star, Canada’s largest daily newspaper by circulation. It also publishes three other daily papers and over 100 weeklies.

The slow economy continues to hurt advertising sales at Torstar’s newspapers. In the quarter ended June 30, 2014, the company’s revenue fell 7.4%, to $225.6 million from $243.6 million a year earlier.

Earnings jumped 44.2%, to $18.1 million, or $0.23 a share, from $12.6 million, or $0.16 a share. However, if you disregard restructuring costs and other unusual items, earnings per share fell 4.8%, to $0.20 from $0.21.

...

METRO INC. $75 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 85.1 million; Market cap: $6.4 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.metro.ca) operates 600 grocery stores and 250 drugstores in Quebec and Ontario.

In its fiscal 2014 third quarter, which ended July 5, 2014, Metro earned $144.5 million, unchanged from a year earlier. The company spent $147.2 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share gained 9.4%, to $1.63 from $1.49. Sales rose 1.4%, to $3.62 billion from $3.57 billion. Same-store sales gained 1.0%.

The company continues to benefit from the recent reorganization of its Ontario operations, including converting certain Metro outlets to the discount Food Basics banner.

...

LOBLAW COMPANIES LTD. $56 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 413.5 million; Market cap: $23.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer, with about 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills.

In March 2014, Loblaw bought the 1,250-store Shoppers Drug Mart chain for $12.3 billion in cash and stock.

Thanks to Shoppers, Loblaw’s sales jumped 37.1%, to $10.3 billion, in the second quarter of its 2014 fiscal year, which ended June 14. It earned $7.5 billion a year earlier.

...

TRANSCANADA CORP. $56 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.9 million; Market cap: $39.6 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.transcanada.com) recently completed the purchase of three more Ontario solar power plants from Canadian Solar Inc. (Nasdaq symbol CSIQ).

TransCanada now owns seven of the nine solar farms it agreed to buy from Canadian Solar in 2011. It will probably take possession of the remaining two in 2015. In all, it will pay about $500 million. To put that in context, TransCanada earned $332 million, or $0.47 a share, in the three months ended June 30, 2014.

The company has 20-year deals to sell the power from these solar farms, which cuts this investment’s risk.

...

MANITOBA TELECOM SERVICES INC. $29 (Toronto symbol MBT; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 77.8 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 5.9%; TSINetwork Rating: Average; www.mts.ca) gets 60% of its revenue from its MTS division, which has 1.3 million telephone and wireless clients in Manitoba. The other 40% comes from Allstream, which sells telephone, Internet and other communication services to businesses across Canada.

In the three months ended June 30, 2014, the company’s revenue fell 1.7%, to $403.3 million from $410.1 million a year earlier.

The MTS division’s revenue rose 1.1%, as strong demand for high-speed Internet and TV services offset lower revenue from traditional telephones. Wireless revenue also fell 4.8%, as smaller carriers continue to develop their own networks, which cuts the roaming fees they pay Manitoba Telecom.

...

BCE INC. $48 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 827.7 million; Market cap: $39.7 billion; Price-to-sales ratio: 1.8; Dividend yield: 5.1%; TSINetwork Rating: Above Average; www.bce.ca) is Canada’s largest provider of telephone services, with 5.0 million customers in Ontario and Quebec. It also has 2.2 million high-speed Internet customers and 2.3 million TV subscribers.

BCE also sells wireless services to 7.8 million customers across Canada, and its Bell Media segment owns CTV Television, specialty channels and radio stations.

The company recently offered to buy the 56% of Bell Aliant (Toronto symbol BA) that it doesn’t already own. Bell Aliant sells phone and Internet services to 2.3 million clients in Atlantic Canada and rural Ontario and Quebec. It also provides wireless services through an alliance with BCE.

...

FORTIS INC. $35 (Toronto symbol FTS; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 215.4 million; Market cap: $7.5 billion; Price-to-sales ratio: 1.6; Dividend yield 3.7%; TSINetwork Rating: Above Average; www.fortis.ca) is the main electricity supplier in Newfoundland and P.E.I. It also distributes natural gas in B.C. and operates power plants in other parts of Canada, the U.S. and the Caribbean.

The company recently completed its purchase of UNS Energy Corp., which operates power plants and distributes electricity and natural gas to 657,000 customers in Arizona.

Fortis paid $4.5 billion U.S., which includes assuming $2.0 billion U.S. of UNS’s debt. The new operations will add $1.5 billion U.S. to Fortis’s annual revenue of $4.7 billion (Canadian). The purchase also lowers Fortis’s reliance on Atlantic Canada.

...

TELUS CORP. $39 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 615.5 million; Market cap: $24.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest wireless carrier, after Rogers Communications, with 7.9 million subscribers. Wireless now supplies 54% of Telus’s revenue and 66% of its earnings.

The remaining 46% of revenue and 34% of earnings come from its wireline division, which mainly consists of 3.2 million traditional phone customers in B.C., Alberta and eastern Quebec. This business also includes 1.4 million Internet users and 865,000 TV customers.

Telus’s revenue rose 18.7%, from $9.6 billion in 2009 to $11.4 billion in 2013. Revenue will probably improve to $12.0 billion in 2014.

...

IMPERIAL OIL $52.18 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $44.9 billion; TSINetwork Rating: Average; Div. yield: 1.0%; www.imperialoil.ca) has begun converting its 95-year-old refinery in Dartmouth, Nova Scotia, into a storage facility for refined petroleum products, such as gasoline, diesel and home heating oil....

ALGONQUIN POWER & UTILITIES CORP. $8.77 (Toronto symbol AQN; Shares outstanding: 208.0 million; Market cap: $2.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.4%; www.algonquinpower.com) has agreed to buy Park Water Company for $327 million U.S. Algonquin will make the purchase through its Liberty Utilities subsidiary.

Park Water owns and operates three regulated water utilities that produce, treat, store, distribute and sell water in southern California and western Montana. The three utilities collectively serve 74,000 customers and have more than 1,000 miles of distribution pipelines.

Algonquin is also buying the Odell project, a 200-megawatt wind farm in the U.S. that’s currently under construction. The project, which spans Minnesota’s Cottonwood, Jackson, Martin and Watonwan Counties, will cost an estimated $313.5 million U.S. to complete.

...

LOBLAW COMPANIES $55.80 (Toronto symbol L; Shares outstanding: 413.6 million; Market cap: $23.2 billion; TSINetwork Rating: Above Average; Dividend yield: 1.8%; www.loblaw.ca) is testing a smaller version of its discount No Frills supermarkets. These stores, which operate under the Box banner, are cheaper to build than full-sized outlets and can fit in smaller strip malls. That lowers their rental costs.

The new Box stores could also help Loblaw compete with Wal-Mart, which may start opening smaller locations in Canada following successful trials in the U.S.

Loblaw is a buy.

...

CENOVUS ENERGY $29.31 (Toronto symbol CVE; Shares outstanding: 757.0 million; Market cap: $22.8 billion; TSINetwork Rating: Average; Dividend yield: 3.6%; www.cenovus.com) has opened the latest phase of its 50%-owned Foster Creek oil sands project in Alberta.

U.S.-based ConocoPhillips (New York symbol COP) owns 50% of both Cenovus’s Foster Creek and Christina Lake projects.

Foster Creek produced an average of 119,000 barrels a day in August 2014. This latest phase should add 30,000 barrels when it reaches fullcapacity in the next 12 to 18 months.

...

BONAVISTA ENERGY $12.54 (Toronto symbol BNP; Shares outstanding: 201.9 million; Market cap: $2.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.7%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and British Columbia. Its production is 67% gas and 33% oil.

In the three months ended June 30, 2014, Bonavista’s cash flow per share gained 6.3%, to $0.67 from $0.63 a year earlier. Production rose just 2.4%, to 74,272 barrels of oil equivalent a day from 72,554. However, that’s because Bonavista sold 2,700 barrels a day of heavy-oil production, which is less of a focus for the company. Bonavista’s realized gas price increased 17.9%, to an average of $4.29 per thousand cubic feet from $3.64. Oil prices fell 1.3%, to $79.34 a barrel from $80.42.

Bonavista plans to spend $580 million to $600 million on exploration and development in 2014. Its plans include drilling 130 to 135 wells, which will let it raise its production to as high as 86,000 barrels of oil equivalent a day at the end of 2014. For all of 2013, Bonavista spent $460 million to drill 126 wells.

...

PEYTO EXPLORATION & DEVELOPMENT CORP. $34.95 (Toronto symbol PEY; Shares outstanding: 153.7 million; Market cap: $5.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.4%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 72,302 barrels of oil equivalent is 90% gas and 10% oil.

In the quarter ended June 30, 2014, Peyto’s cash flow rose 41.9%, to $1.05 a share from $0.74 a year earlier. That’s because the company raised its production by 26.1%. Gas prices also gained 17.5%, to an average of $4.37 per thousand cubic feet from $3.72, while oil prices rose 14.0%, to $77.30 a barrel from $67.82.

Peyto plans to spend $625 million on exploration and development in all of 2014, which will let it drill 110 to 125 wells. To put that in context, the company spent $578 million to drill 99 wells in 2013. This year’s spending should let it finish 2014 with production of over 81,500 barrels a day. The stock trades at 7.4 times Peyto’s forecast 2014 cash flow of $4.73 a share. The company’s long-term debt of $825 million is a low 15.3% of its $5.4-billion market cap.

...

ENBRIDGE INC. $53.00 (Toronto symbol ENB; Shares outstanding: 846.2 million; Market cap: $45.4 billion; TSINetwork Rating: Above Average; Dividend yeield:2.6%; www.enbridge.com) plans to transfer its 66.7% stake in the U.S. portion of the Alberta Clipper pipeline to its American affiliate, Enbridge Energy Partners, L.P. (New York symbol EEP).

The 1,600-kilometre Alberta Clipper pipeline moves crude from Alberta’s oil sands to Superior, Wisconsin.

Enbridge will receive $300 million U.S. in cash and $600 million U.S. worth of Enbridge Energy Partners units. The $900-million U.S. total is equal to 2% of Enbridge’s $45.4-billion (Canadian) market cap.

...

TRANSCANADA CORP. $56.86 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $40.8 billion; TSINetwork Rating: Above Average; Dividend yield: 3.4%; www.transcanada.com) is facing pressure from U.S.-based activist investors to unlock some of its value by selling or spinning off its electrical
power plants.

These investors also want the company to place more of its U.S. natural gas pipelines into a master limited partnership, which is similar to a Canadian income trust.

...