Search

target="_blank">www.blackberry.com) dropped 10% in response to a new alliance between Apple and IBM. Under the terms of the deal, IBM will develop business-related apps for Apple’s popular iPhone and iPad mobile devices. That could hurt sales of BlackBerry’s smartphones....

PRECISION DRILLING CORP. $15 (www.precisiondrilling.com) has sold some of its trucking operations in Texas and New Mexico for an undisclosed sum. These assets included trucks and related equipment that Precision uses to move its drilling rigs....

NORDION INC. $14 (www.nordion.com) recently accepted a $13.00 U.S.-a-share friendly takeover bid from Sterigenics, a privately held Illinois firm that sterilizes surgical tools, drug ingredients and other materials....

LINAMAR CORP. $64 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.8 million; Market cap: $4.1 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.6%; TSINetwork Rating: Average; www.linamar.com) gets around 80% of its revenue by making engines, transmissions and other precision-machined parts for automakers. It has 44 plants in North America, Europe and Asia.

The remaining 20% of Linamar’s revenue mainly comes from self-propelled, scissor-type elevating work platforms, which it sells under the Skyjack name. The company also makes other industrial machinery, such as parts for wind farms.

Pent-up car demand boosted results

...

BOMBARDIER INC. (Toronto symbols BBD.A $3.81 and BBD.B $3.75; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.4 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.5%; TSINetwork Rating: Average; www.bombardier.com) has received new orders for up to 48 of its CSeries passenger jets.

These are the first orders since a problem with the plane’s engine forced Bombardier to suspend test flights in May 2014. The engine’s maker, Pratt & Whitney, has addressed this issue, and Bombardier expects to begin delivering these planes in 2015.

Including these new deals, the company now has firm orders for 205 CSeries planes. If buyers exercise all their options to buy additional aircraft, Bombardier’s total orders would rise to 495 planes and be worth about $35 billion U.S.

...

ENBRIDGE INC. $52 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 834.8 million; Market cap: $43.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.enbridge.com) had hoped to complete its new Flanagan South pipeline in the third quarter of 2014, but the company now says it will start up in the fourth quarter.

Flanagan South will connect Enbridge’s main oil-export pipeline in Illinois with storage facilities in Cushing, Oklahoma. From there, the company will pump the oil to refineries in Texas. The new line will let Enbridge transport up to 775,000 barrels a day on this route, up from just 175,000 on its existing Spearhead line.

Demand for this extra capacity should be strong, because it will let oil producers ship more of their crude from Western Canada and North Dakota’s Bakken area to the U.S. Gulf Coast.

...

TORSTAR CORP. $7.98 (Toronto symbol TS.B; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 79.9 million; Market cap: $637.6 million; Price-to-sales ratio: 0.5; Dividend yield: 6.6%; TSINetwork Rating: Average; www.torstar.com) is closing its free Metro daily newspapers in Regina, Saskatoon and London, Ontario, after they failed to attract enough advertisers. The company will keep publishing Metro papers in larger cities, including Toronto, Ottawa, Vancouver, Calgary, Edmonton, Halifax and Winnipeg. Torstar has also shut down The Grid, a money-losing free weekly paper in Toronto.

The company didn’t say how much it would pay in severance and other costs, but these moves should free up cash that it can invest in its websites.

Torstar is a buy.

...

ENCANA CORP. $24 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 740.9 million; Market cap: $17.8 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.3%; TSINetwork Rating: Average; www.encana.com) has agreed to sell its operations in Alberta’s Bighorn area to privately held Jupiter Resources.

Encana will get $1.8 billion when the sale closes in the next few weeks (all amounts except share price and market cap in U.S. dollars). To put that in context, the company earned $515 million, or $0.70 a share, in the quarter ended March 31, 2014.

The company is also selling a gas-fired power plant and its 50% stake in a second plant, both in Alberta, for an undisclosed sum.

...

CAE INC. $14 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 264.0 million; Market cap: $3.7 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.7%; TSINetwork Rating: Average; www.cae.com) has received orders for seven flight simulators and related equipment. In all, these deals are worth $120 million, or 6% of CAE’s $2.1 billion of annual revenue.

The company has sold 11 flight simulators since its 2015 fiscal year began on April 1, 2014. In fiscal 2014, the company sold a record 48 simulators.

CAE is our #1 buy for 2014.

...

TIM HORTONS INC. $60 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 134.2 million; Market cap: $8.1 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.1%; TSINetwork Rating: Average; www.timhortons.com) operates 3,610 coffee-and-donut stores in Canada, 870 in the U.S. and 44 in the Persian Gulf.

In the quarter ended March 30, 2014, the company’s revenue rose 4.8%, to $766.4 million from $731.5 million a year earlier. That’s mainly because it opened 23 outlets in Canada and 11 in the U.S. Same-store sales rose 1.6% at its Canadian locations and 1.9% in the U.S.

Earnings gained 5.5%, to $90.9 million from $86.2 million. Per-share earnings jumped 17.9%, to $0.66 from $0.56, on fewer shares outstanding.

...

CANADIAN TIRE CORP. $103 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.7 million; Market cap: $8.2 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.canadiantire.ca) operates 492 Canadian Tire stores, which specialize in automotive, household and sporting goods. It also owns other retail chains, such as Mark’s (casual clothing) and SportChek.

The company is selling 20% of its credit card operations to Bank of Nova Scotia (see page 74) for $500 million. Canadian Tire has an option to sell an additional 29% to the bank over the next 10 years.

Meanwhile, Canadian Tire earned $70.6 million in the quarter ended March 29, 2014, down 3.3% from $73.0 million a year earlier. Earnings per share fell 2.2%, to $0.88 from $0.90, on fewer shares outstanding.

...

POTASH CORP. OF SASKATCHEWAN $39 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 837.9 million; Market cap: $32.7 billion; Price-to-sales ratio: 4.6; Dividend yield: 3.9%; TSINetwork Rating: Average; www.potashcorp.com) is up 10% since the start of 2014. That’s mainly because potash miners cut their output in response to the July 2013 breakup of a marketing alliance between producers in Russia and Belarus. These reductions have increased prices from their recent low of $310 U.S. a tonne to $350.

Prices should remain steady, particularly because North American farmers will need more fertilizer to replenish their soil after last year’s record crops. However, the stock trades at a high 22.0 times the $1.65 U.S. a share the company will probably earn in 2014.

Potash Corp. is still a hold.

...

CGI GROUP INC. $38 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 309.6 million; Market cap: $11.8 billion; Price-to-sales ratio: 1.1; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) has won a contract to help modernize the Michigan state government’s computer systems.

The revenue from this deal—$89.4 million U.S.—is small next to the company’s annual revenue of $10 billion. Still, deals like this enhance CGI’s reputation in the wake of the well-publicized problems it had launching the Obamacare website.

CGI Group is a buy.

...

EMERA INC. $34 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 142.6 million; Market cap: $4.8 billion; Price-to-sales ratio: 1.8; Dividend yield: 4.2%; TSINetwork Rating: Average; www.emera.com) has agreed to pay $390 million for 34.9% of a line that will transmit power from a new hydro-electric plant in Labrador to the island of Newfoundland. In addition, Emera will spend $1.6 billion on an undersea line that will transmit 20% of this facility’s power to Nova Scotia.

These projects, which should start up in 2017, will help Emera comply with new Nova Scotia regulations that require it to get 40% of its power from renewable sources by 2030, up from 17% today.

Emera is a buy.

...

CANADIAN IMPERIAL BANK OF COMMERCE $98 (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 397.4 million; Market cap: $38.9 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.cibc.com) is Canada’s fifth-largest bank, with $397.1 billion of assets.

CIBC prefers to focus on domestic banking instead of expanding internationally; Canada accounts for around 85% of its revenue.

The bank recently teamed up with Tim Hortons (see page 76) to launch a new loyalty credit card called the Double Double Visa. This card lets users earn points toward coffee and food at Tim Hortons.

...

BANK OF MONTREAL $81 (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 645.2 million; Market cap: $52.3 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with $582.0 billion of assets.

In the quarter ended April 30, 2014, the bank’s earnings rose 12.1%, to $1.1 billion from $966 million a year ago. Per-share earnings rose 13.2%, to $1.63 from $1.44, on fewer shares outstanding.

Earnings from Canadian retail banking (42% of the total) rose 14.2%, as low interest rates spurred demand for mortgages and business loans. The U.S. retail banking division (14%) reported a 5.0% profit decline due to fewer gains on mortgage loan sales.

...

BANK OF NOVA SCOTIA $73 (Toronto symbol BNS; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.2 billion; Market cap: $87.6 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.scotiabank.com) is the third-largest bank in Canada, with $791.8 billion of assets.

The bank continues to expand overseas. It recently agreed to pay $300 million for 51% of the credit card operations of Cencosud S.A., Chile’s largest retailer. The deal will make the bank Chile’s third-largest credit card issuer.

In the quarter ended April 30, 2014, Bank of Nova Scotia’s earnings rose 13.9%, to $1.8 billion, or $1.39 a share. A year earlier, it earned $1.6 billion, or $1.22 a share. Revenue gained 9.8%, to $5.7 billion from $5.2 billion.

...

ROYAL BANK OF CANADA $79 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $110.6 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s second-largest bank, with $895.9 billion of assets.

Royal recently completed the sale of its moneylosing Jamaican operations, which included 13 branches. The bank will record a one-time loss of $97 million on the deal, up from its earlier estimate of a $60-million loss.

Meanwhile, Royal earned $2.2 billion in the quarter ended April 30, 2014, up 15.3% from $1.9 billion a year ago. Per-share earnings rose 17.6%, to $1.47 from $1.25, on fewer shares outstanding.

Overall revenue gained 7.2%, to $8.3 billion from $7.7 billion. Revenue at Royal’s retail banking division (which supplied 40% of the total) gained 5.1%, thanks to stronger loan demand in Canada. The lower Canadian dollar also improved the results of its U.S. and Caribbean operations.

...

TORONTO-DOMINION BANK $56 (Toronto symbol TD; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.8 billion; Market cap: $99.0 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.td.com) is Canada’s largest bank, with $896.5 billion of assets.

On January 1, 2014, the bank became the primary credit card issuer for the hugely popular Aeroplan travel reward program run by Aimia Inc. (Toronto symbol AIM). As part of the deal, TD acquired half of the existing Aeroplan accounts from the previous issuer, CIBC (see page 75). It paid $162.5 million upfront and will pay $37.5 million annually over the next three years.

Thanks to this purchase, as well as steady loan demand in Canada and the U.S., TD’s earnings rose 13.5% in the quarter ended April 30, 2014, to $2.1 billion from $1.8 billion a year earlier. Per-share earnings gained 14.7%, to $1.09 from $0.95, on fewer shares outstanding. Revenue rose 12.5%, to $7.4 billion from $6.6 billion.

...

DUNDEE CORP. $17 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 53.5 million; Market cap: $909.5 million; Price-to-sales ratio: 4.5; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) owns businesses in the wealth management, real estate, natural resource and agriculture industries.

Dundee is more risky than most of the stocks we recommend. Many brokers avoid it due to its complex holding company structure, so it has little following among institutional investors. Irregular earnings from real estate and resource operations also add to its risk, and the lack of a dividend hurts its appeal.

However, like most holding companies, Dundee typically trades at a discount to the market value of the assets it held. Occasionally, it would unlock some of this value, as it did in 2011 when it sold its Dynamic mutual fund operations. In 2013, it spun off its commercial real estate subsidiary —DREAM Unlimited (Toronto symbol DRM)—as a separate company.

...

IMPERIAL OIL LTD. $57 (Toronto symbol IMO; Conservative Growth and Income Portfolios, Shares outstanding: 847.6 million; Market cap: $48.3 billion; Price-to-sales ratio: 1.5; Dividend yield: 0.9%; TSINetwork Rating: Average; www.imperialoil.ca) is Canada’s third-largest publicly traded oil company, after Suncor Energy and Canadian Natural Resources. Imperial is a 69.6%- owned subsidiary of U.S.-based ExxonMobil Corp. (New York symbol XOM).

About 80% of Imperial’s oil production comes from its oil sands operations in Alberta, including its 25% stake in the Syncrude project.

It also has conventional oil and natural gas operations in Western Canada and owns interests in offshore projects in Atlantic Canada. Based on its current daily output, Imperial’s 3.6 billion barrels of proven reserves should last 35 years.

...

DragonWave Inc. (symbol DWI on Toronto; www.dragonwaveinc.com) makes equipment that wirelessly transmits broadband voice, video and other data. That lets customers send and receive data in places that fibre optic networks haven’t yet reached. The company’s clients are mainly high-speed Internet and wireless providers. It also sells to organizations that operate their own networks, such as universities, hospitals, cities and businesses. DragonWave prefers to focus on product design and support; it outsources most of its manufacturing to other firms....

The Successful Investor organization was something of a pioneer, in print and online, in the Canadian investment advisory newsletter publishing industry. I launched the company in 1994 with one goal in mind: to give Canadian investors a source of investment advice (and, ultimately, portfolio management) that would differ from the alternatives in one key measure. Our Successful Investor service is free of the conflicts of interest that warp other sources of investment advice. I expected a big market for this kind of service. After all, our best business prospects have always been informed investors who understand that conflicts of interest can taint investment advice and make it costly and dangerous to investors....

Thinking of buying Aecon Group Inc. stocks. Get answers why or why not.

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 advice on successful investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Tip of the week: “With short selling, you have to balance the slim chance of making money fast against the greater probability that you will lose money—possibly a lot of it.” There are plenty of references in the financial media to “shorts”—those seeking to profit from stocks that fall in price. But this strategy comes with considerable risk....