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LINAMAR CORP. $33 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $2.1 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.0%; TSINetwork Rating: Extra Risk; www.linamar.com) gets 80% of its revenue by making engines, transmissions and other precisionmachined parts for automakers. The company has plants in North America, Europe and Asia.

The remaining 20% of Linamar’s revenue comes from its self-propelled, scissor-type elevating work platforms, which it sells under the Skyjack name, plus consumer products, such as lawn mowers and cargo trailers.

The company continues to benefit from strong car sales. Rising construction activity has also prompted contractors to replace their older Skyjack platforms.
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SHAWCOR LTD. $43 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 59.6 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.2%; TSINetwork Rating: Average; www.shawcor.com) gets 90% of its revenue by making sealants and coatings that keep oil and gas pipelines from rusting. The remaining 10% comes from manufacturing industrial products, such as electrical wire and protective sheaths.

The company continues to benefit from recent acquisitions that have increased its North American manufacturing capacity. As well, demand for its pipeline-coating services continues to rise in Asia, Latin America and Europe. Asia now supplies 39% of ShawCor’s revenue, followed by North America (38%), Europe (15%) and Latin America (8%).

In the three months ended June 30, 2013, ShawCor’s revenue jumped 39.9%, to a record $457.3 million from $326.9 million a year earlier. That’s mainly because the company paid $30 million for the 49% of Socotherm LaBarge LLC that it did not already own. Texas-based Socotherm coats and insulates pipelines for deepwater oil and gas projects. Its clients operate in the Gulf of Mexico and off Africa’s west coast.
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BOMBARDIER INC. (Toronto symbols BBD.A $5.08 and BBD.B $5.06; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $8.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.bombardier.com) is the world’s third-largest commercial aircraft maker, behind Boeing and Airbus. It is also the world’s leading passenger railcar manufacturer.

The company has postponed the first test flight of its new CSeries passenger jet. It had planned to begin flight tests in June, but it needs extra time to upgrade the plane’s software.

Bombardier has firm orders for 177 CSeries jets, plus options for 211 more. If the buyers exercise all these options, the resulting 388 orders would be worth $26 billion (all amounts except share prices and market cap in U.S. dollars).
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ENCANA CORP. $18 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 737.7 million; Market cap: $13.3 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.6%; TSINetwork Rating: Average; www.encana.com) aims to cut its exposure to low natural gas prices by producing more oil and natural gas liquids (NGLs), like butane and propane.

In the three months ended June 30, 2013, Encana’s oil and NGL output rose 68.8%, to 47,600 barrels a day from 28,200 a year earlier. But that’s still just 9% of its overall production. Encana aims to raise its NGL and oil output to 70,000 to 75,000 barrels a day by the end of 2013.

In response to weak gas prices, the company continues to expand its hedging program. For the second half of 2013, it has hedged roughly 75% of its expected production at $4.37 U.S. per thousand cubic feet. That’s 22.8% higher than today’s price of $3.56 U.S. For 2014, Encana has hedged 55% of its forecast output at $4.19 U.S. per thousand cubic feet.
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CENOVUS ENERGY INC. $31 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.8 million; Market cap: $23.4 billion; Priceto- sales ratio: 1.3; Dividend yield: 3.1%; TSINetwork Rating: Average; www.cenovus.com) operates three heavy oil projects in Alberta and one in Saskatchewan. It gets about half of its output from the oil sands. Conventional oil and natural gas wells supply the other half. The company’s reserves should last 23 years.

U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects in Alberta. These properties produce heavy bitumen, which Cenovus ships to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these refineries.

Owning refineries helps cut Cenovus’s risk, because they earn higher profits when crude oil prices fall, which offsets lower profits from its main oil production businesses. In 2012, refining accounted for 67% of Cenovus’s revenue and 46% of its earnings.
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GLOBAL X COPPER MINERS ETF $9.36 (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Copper Miners Index, which includes 20 to 40 international companies that mine, refine or explore for copper. Germany-based Structured Solutions AG created this index.

Canadian firms make up 46.1% of the fund’s holdings. It also includes companies based in Australia (7.3%), Poland (4.3%), Peru (4.8%) and Mexico (4.4%). Global X Copper Miners ETF’s MER is 0.65%.

Its top 10 holdings are Capstone Mining at 5.5%; Freeport Copper, 5.7%; Vendanta Resources, 5.6%; Imperial Metals, 5.6%; Lundin Mining, 5.5%; Jiangxi Copper Company, 5.4%; First Quantum Minerals, 5.3%; Taseko Mines, 5.3%; Antofagasta plc, 5.2%; and Turquoise Hill Resources, 5.2%.
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GLOBAL X SILVER MINERS ETF $15.30 (New York symbol SIL; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Silver Miners Index.

This index includes 30 international companies that mine, refine or explore for silver. Germany-based Structured Solutions AG developed the Global X Silver Miners Index.

Canadian companies make up 56.2% of the fund’s holdings, but it also includes miners based in the U.S. (16.2%) and Mexico (10.4%). The fund’s MER is 0.65%.
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ISHARES S&P/TSX GLOBAL GOLD INDEX FUND $12.52 (Toronto symbol XGD; buy or sell through brokers; ca.ishares.com) aims to mirror the performance of the S&P/TSX Global Gold Index.

This index is made up of 49 gold stocks from Canada and around the world. The fund’s MER is 0.60%. iShares S&P/TSX Global Gold Index Fund began trading on March 23, 2001.

The fund’s top 10 holdings are Goldcorp at 16.7%; Barrick Gold, 13.3%; Newmont Mining, 11.0%; Yamana Gold, 6.0%; Randgold Resources (ADR), 5.0%; Franco Nevada, 4.7%; Kinross, 4.4%; Eldorado Gold, 4.2%; Agnico-Eagle Mines, 3.6%; and AngloGold Ashanti (ADR), 3.6%.
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IMPERIAL OIL $44.62 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $38.0 billion; TSINetwork Rating: Average; Div. yield: 1.1%; www.imperialoil.ca) has teamed up with its parent, ExxonMobil (New York symbol XOM), to buy 226,000 acres of undeveloped oil sands properties near Fort McMurray, Alberta. (Exxon owns 69.9% of Imperial.)

Imperial will hold 27.5% of these properties, while Exxon will own the remaining 72.5%. Imperial’s share of the $751-million cost is $206.5 million. That’s equal to 63% of the $327 million, or $0.38 a share, that the company earned in the second quarter of 2013.

Purchases like this will help Imperial achieve its goal of raising its daily production from 276,000 barrels of oil equivalent (including gas) in the latest quarter to 600,000 barrels by 2020.
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PENN WEST PETROLEUM $11.75 (Toronto symbol PWT; Shares outstanding: 485.0 million; Market cap: $5.7 billion; TSINetwork Rating: Average; Dividend yield: 4.8%; www.pennwest.com) is one of North America’s largest oil and gas producers. Its output is 63% oil and 37% gas.

In the quarter ended June 30, 2013, Penn West’s cash flow per share was unchanged at $0.57 from a year earlier. A 14.2% fall in daily output, to 140,083 barrels of oil equivalent from 163,181, offset higher oil and gas prices.

Penn West continues to shore up its finances and take measures to boost its value after it appointed Rick George as chairman and Allan Markin as vice-chairman.
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PEYTO EXPLORATION & DEVELOPMENT CORP. $28.10 (Toronto symbol PEY; Shares outstanding: 148.5 million; Market cap: $4.2 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 58,145 barrels of oil equivalent is 89% gas and 11% oil.

In the three months ended June 30, 2013, the company’s cash flow was $0.74 a share, up 57.4% from $0.47 a year earlier. That’s because Peyto increased its production by 40.6% from the yearearlier quarter, and natural gas prices rose.

The stock trades at 9.1 times Peyto’s forecast 2013 cash flow of $3.12 a share. The company’s long-term debt of $750 million is a low 17.9% of its $4.2-billion market cap.
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BELL ALIANT INC. $26.76 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $6.1 billion; TSINetwork Rating: Average; Dividend yield: 7.1%; www.aliant.ca) sells telephone services and Internet access to 2.4 million customers in Atlantic Canada and rural parts of Ontario and Quebec. It also provides wireless services through an alliance with BCE.

The company continues to replace its copperwire cables with fibre optic lines. That’s letting it sell more high-speed Internet and digital TV services, which is offsetting falling demand for land lines. (Traditional phones still supply 52% of Bell Aliant’s overall revenue.)

In the three months ended June 30, 2013, revenue rose 0.6%, to $691.8 million from $687.7 million a year ago.
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VANGUARD FTSE EMERGING MARKETS ETF $38.53 (New York symbol VWO; buy or sell through brokers) aims to track the FTSE Emerging Transitions Index, which is made up of common stocks of companies located in developing countries around the world. The fund has an MER of just 0.18%.

Vanguard FTSE Emerging Markets ETF’s top holdings include Taiwan Semiconductor (Taiwan: computer chips), China Mobile (China: wireless), Petroleo Brasileiro SA (Brazil: oil and gas), Vale SA (Brazil: mining), Banco Bradesco (Brazil: banking), Gazprom (Russia: gas utility), China Construction Bank, Tencent Holdings (China: Internet), Industrial & Commercial Bank of China and Cia de Bebidas das Americas (Brazil: beer and other beverages).

The $65.2-billion fund’s breakdown by country is as follows: China (20.7%), Brazil (13.7%), Taiwan (13.3%), South Africa (9.2%), India (8.7%), Russia (7.0%), Mexico (5.9%), Malaysia (5.0%), Indonesia (3.2%), Thailand (3.2%), Turkey (2.1%), Chile (2.0%), Poland (1.7%) and others (4.3%).
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VANGUARD GROWTH ETF $82.43 (New York symbol VUG; buy or sell through brokers) aims to track the CRSP U.S. Large Cap Growth Index, a broadly diversified index that mainly consists of shares of large U.S. companies. The fund’s MER is just 0.10%.

The $32.6-billion Vanguard Growth ETF’s top holdings are Apple, IBM, Google, Coca-Cola, Philip Morris International, Oracle, Comcast, Qualcomm and Intel.

The fund’s breakdown by industry is as follows: Technology (26.1%), Consumer Services (20.9%), Financials (12.0%), Consumer Goods (10.6%), Industrials (11.5%), Health Care (9.3%), Oil and Gas (7.2%), Materials (1.6%), Telecommunication Services (0.4%) and Utilities (0.4%).
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TRANSCANADA CORP. $45.56 (Toronto symbol TRP; Shares outstanding: 707.0 million; Market cap: $32.2 billion; TSINetwork Rating: Above Average; Dividend yield: 4.0%; www.transcanada.com) has announced two major new pipeline projects.

First, the company says it will proceed with its $12-billion Energy East oil pipeline now that it has received enough support from producers. When completed, this new system will pump crude oil from Western Canada to refineries in Quebec and New Brunswick.

In addition, TransCanada will spend $1.5 billion to expand its gas pipeline network in B.C. This will help it pump more natural gas from northeastern B.C. to a planned liquefied natural gas terminal near Prince Rupert.
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CANADIAN REIT $41.04 (Toronto symbol REF.UN; Units outstanding: 68.5 million; Market cap: $2.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.0%; www.creit.ca) owns 194 properties, including retail, industrial and office buildings, across Canada and in Chicago. These holdings contain over 19.7 million square feet of leasable area. The trust’s occupancy rate is 94.9%.

In the three months ended June 30, 2013, Canadian REIT’s revenue rose 7.9%, to $93.2 million from $86.4 million a year earlier. Cash flow per unit gained 18.9%, to $0.63 from $0.53.

Canadian REIT added $197.6 million worth of new buildings in the latest quarter and $11.3 million worth in the first quarter. 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.
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H&R REIT $20.96 (Toronto symbol HR.UN; Units outstanding: 268.3 million; Market cap: $5.6 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.4%; www.hr-reit.com) owns stakes in 41 office buildings, 112 industrial properties and 165 shopping malls across Canada. The trust has a 98.7% occupancy rate.

In March 2013, H&R finished building The Bow, a $1.33-billion, two-million-square-foot office complex in Calgary. Encana Corp. has already leased the entire building for 25 years.

H&R recently completed the purchase of 27 properties from Primaris REIT for about $3.1 billion. These assets include the aging 567,000-square-foot Dufferin Mall in Toronto’s west end, which has huge redevelopment potential. As well, eight of the 27 properties will have Target stores as their main tenants by the end of this year.
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MANITOBA TELECOM $33.90 (Toronto symbol MBT; Shares outstanding: 67.8 million; Market cap: $2.3 billion; TSINetwork Rating: Average; Dividend yield: 5.0%; www.mts.ca) recently sold its Allstream subsidiary for $405 million in a deal that closes later this year.

Without Allstream, Manitoba Tel earned $28.2 million, or $0.42 a share, in the three months ended June 30, 2013. That’s down 12.7% from $32.3 million, or $0.49, a year earlier.

However, revenue rose 0.2%, to $247.4 million from $246.8 million, as strong demand for wireless and Internet services offset lower revenue from the company’s regular telephone services.
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VERESEN $11.74 (Toronto symbol VSN; Shares outstanding: 199.9 million; Market cap: $2.4 billion; TSINetwork Rating: Average; Yield: 8.5%) owns pipelines, power plants and gas-processing facilities across North America. A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Enbridge owns the other 50%. Veresen also owns the Alberta Ethane Gathering System, and Veresen and Enbridge together hold 85.4% of the Aux Sable NGL plant.

In February 2012, Veresen paid Encana Corp. $920 million for the Hythe/Steeprock natural gas gathering and processing complex. Encana signed a long-term deal to buy most of this facility’s gas.

To diversify beyond pipelines and gas-processing plants, Veresen continues to expand its power generation business. This includes hydroelectric facilities, wind farms, natural gas fired plants and waste-heat facilities.
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PEMBINA PIPELINE $32.36 (Toronto symbol PPL; Shares outstanding: 310.3 million; Market cap: $10.1 billion; TSINetwork Rating: Average; Div. yield: 5.2%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil output, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil production.

In the quarter ended June 30, 2013, Pembina’s revenue rose 34.9%, to $1.2 billion from $870.9 million a year earlier. In April 2012, the company paid $3.2 billion for rival Provident Energy, which extracts, transports and stores NGLs. Provident was the main reason for the higher revenue.

Cash flow rose 60.9%, to $144.0 million from $89.5 million. Cash flow per share gained 51.6%, to $0.47 from $0.31, because Pembina issued more shares to pay for Provident.
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ISHARES S&P INDIA NIFTY 50 INDEX FUND $19.09 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities.

The stocks held by most emerging market ETFs have weakened this year, but the iShares S&P India Fund has been hit especially hard.

That’s because the Indian currency, the rupee, has fallen sharply. It’s down more than 31% against the U.S. dollar since January of this year. That fall cuts the value of declining Indian stocks even further for foreign investors.
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ENCANA CORP. $18.09 (Toronto symbol ECA; Shares outstanding: 737.9 million; Market cap: $13.3 billion; TSINetwork Rating: Average; Dividend yield: 4.6%; www.encana.com) is one of North America’s largest natural gas producers.

In the three months ended June 30, 2013, Encana’s cash flow per share fell 16.7%, to $0.90 from $1.08 a year earlier (all amounts except share price and market cap in U.S. dollars). The decline came from lower realized gas prices.

The company continues to expand its hedging program, which helps shield it from volatile gas prices. For the rest of 2013, it has hedged roughly 75% of its expected output at $4.37 per thousand cubic feet, 19% higher than today’s price of $3.67. For 2014, Encana has hedged 55% of its forecast production at $4.19.
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Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks to buy 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 one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....

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