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HOME CAPITAL GROUP INC. $57 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.6 million; Market cap; $2.0 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.8%; TSINetwork Rating: Average; www.homecapital.com) caters to borrowers who don’t meet the stricter standards of larger banks.

Even so, the company continues to do a good job of identifying problem loans before borrowers fall behind on their payments. In the latest quarter, loan-loss provisions rose just 3.8% from a year earlier. Home Capital also limits its risk by keeping its mortgage loans below 80% of a property’s market value.

Home Capital Group is a buy....

IGM FINANCIAL INC. $46 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 255.1 million; Market cap: $11.7 billion; Price-to-sales ratio: 3.7; Dividend yield: 4.7%; TSINetwork Rating: Above Average; www. igmfinancial.com) is Canada’s largest independent mutual fund company. Power Financial owns 58.7% of IGM.

As of June 30, 2013, the company had $124.8 billion of assets under management, including mutual funds. That’s down 1.8% from $127.1 billion on May 31, 2013. Recent volatility in world stock markets is the main reason for the decline. However, IGM’s assets under administration are still up 5.8% from a year earlier.

IGM’s fee income rises and falls with the value of the securities it manages, so its revenue and earnings gain when the value of these assets rises.
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GREAT-WEST LIFECO INC. $31 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 951.4 million; Market cap: $29.5 billion; Price-to-sales ratio: 1.0; Dividend Yield: 4.0%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest insurance company after Manulife, with $581.9 billion of assets under administration. It also sells mutual funds and retirement planning and wealth management services. Power Financial (Toronto symbol PFC) owns 68.2% of Great-West.

The company expects to complete its $1.75- billion purchase of Irish Life Group in the next few weeks. This business is Ireland’s largest pension manager and life insurance provider.

Meanwhile, Great-West continues to benefit from rising equity markets, which have raised the value of the assets it manages. Mutual fund sales at U.S. subsidiary Putnam Investments are also improving.
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CGI GROUP INC. $31 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 309.3 million; Market cap: $9.6 billion; Price-to-sales ratio: 1.5; 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.

CGI continues to profit from its August 2012 acquisition of Logica plc, a U.K.-based firm that provides computer-outsourcing services in 36 countries.

Thanks to this $2.7-billion purchase, CGI’s earnings rose 66.3% in its 2013 second quarter, which ended March 31, 2013, to $175.9 million from $105.7 million a year earlier. Due to more shares outstanding, earnings per share rose at a slower rate of 40.0%, to $0.56 from $0.40. These figures exclude unusual items, such as costs to integrate Logica.
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BCE INC. $43 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 775.9 million; Market cap: $33.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.4%; TSINetwork Rating: Above Average; www.bce.ca) has completed its $3.2-billion purchase of Astral Media, which owns 22 TV stations, 84 radio stations and several pay TV and specialty channels, such as the Movie Network, Family Channel and Teletoon.

To win approval for the takeover, BCE agreed to sell several of Astral’s specialty TV channels and radio stations. Still, the new operations should immediately add to the company’s earnings.

BCE is a buy.

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CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.6 million; Market cap: $24.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.0%; TSINetwork Rating: Average; www.cenovus.com) plans to ship more of the heavy bitumen from its Alberta oil sands projects by rail, in response to a lack of pipeline capacity and uncertainty over the Keystone XL project (see page 71).

By the end of 2013, the company expects to ship 10,000 barrels a day by rail, mostly lighter oil from its properties in Saskatchewan. It aims to boost that total to 30,000 barrels a day by the end of 2014. That’s equal to 17% of Cenovus’s current daily output of 180,000 barrels. The company has leased 800 railcars to support this expansion.

Cenovus is a buy....

EMERA INC. $33 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 147.9 million; Market cap: $4.9 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.4%; 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. Other operations include the Brunswick pipeline, which pumps natural gas from the U.S. to a liquefied natural gas plant in New Brunswick.

Emera aims to start working on a new hydroelectric project on Labrador’s Churchill River by the end of this year. It will invest $600 million for a 29% stake in a new regulated utility, which will transmit power from Churchill River to the island of Newfoundland.

In addition, Emera will spend $1.5 billion to build an undersea cable, called the Maritime Link, that will transmit 20% of the plant’s power to Nova Scotia. Emera will own 100% of this cable. These two projects should begin operating by 2017.
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FORTIS INC. $32 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 248.9 million; Market cap: $8.0 billion; Price-to-sales ratio: 1.7; Dividend yield 3.9%; TSINetwork Rating: Above Average; www.fortis.ca) is the main electricity supplier in Newfoundland and Prince Edward Island. It also operates power plants in other parts of Canada, the U.S. and the Cayman Islands. In addition, wholly owned FortisBC Energy distributes natural gas in B.C.

Fortis recently completed its takeover of CH Energy Group, which supplies gas and power in New York State. Fortis paid $1.5 billion U.S., including the assumption of $500 million U.S. of CH’s debt.

The company made several concessions to win regulatory approval, including freezing electricity rates until June 2015. It also extended the contract of CH’s main union by one year, to April 30, 2017. These moves will hurt CH’s contribution to Fortis’s earnings, at least in the short term.
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ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $44 and ACO.Y [class II voting] $44; Income Portfolio, Utilities sector; Shares outstanding: 115.2 million; Market cap: $5.1 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.atco.com) is a holding company. Its main subsidiary is 52.9%-owned Canadian Utilities (see left). It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction companies and energy exploration firms; Canadian Utilities owns the remaining 24.5%.

In the three months ended March 31, 2013, ATCO’s revenue rose 5.6% to $1.1 billion from $1.0 billion a year earlier. That’s mainly due to the higher contribution from Canadian Utilities. Revenue at its Structures division fell 0.9% after it completed several major projects in 2012.

Earnings fell 1.7%, to $117 million, or $1.01 a share, from $119 million, or $1.03. (All per-share amounts adjusted for a 2-for-1 stock split in May 2013.)
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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $36 and CU.X [class B voting] $36; Income Portfolio, Utilities sector; Shares outstanding: 258.2 million; Market cap: $9.3 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www. canadianutilities.com) distributes electricity and natural gas in Alberta and Australia. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see right) owns 52.9% of the company.

In the quarter ended March 31, 2013, Canadian Utilities earned $183 million, down 3.7% from $190 million a year earlier. Earnings per share fell 4.2%, to $0.68 from $0.71. (All per-share amounts adjusted for a 2-for-1 stock split in May 2013.)

Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 3.4%. Revenue gained 8.0%, to $876 million from $811 million. Colder-than-normal winter weather increased demand for electricity and natural gas. Higher rates in Australia also contributed to the gain.
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CANADIAN PACIFIC RAILWAY LTD. $129 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 175.0 million; Market cap: $22.6 billion; Price-to-sales ratio: 3.9; Dividend yield: 1.1%; TSINetwork Rating: Above Average; www.cpr.ca) expects to ship 70,000 carloads of crude oil in 2013, up sharply from just 13,000 in 2011.

However, the crash could hurt the oil-by-rail boom. (Note: Montreal, Maine and Atlantic Ltd., operated the train involved in the crash, not CP.)

It seems likely that regulators will require railways to replace their current tanker cars with models that can better withstand collisions. They may also demand that railways place more workers on their trains, and install automatic-braking equipment.
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TRANSCANADA CORP. $46 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 707.0 million; Market cap: $32.5 billion; Priceto- sales ratio: 3.9; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.transcanada.com) operates a 57,000- kilometre pipeline network that pumps natural gas from Alberta to Eastern Canada and the U.S. The company’s pipelines supply 20% of North America’s natural gas. In 2012, they provided 53% of TransCanada’s revenue and 60% of its earnings.

The company also owns or invests in 21 power plants in Alberta, Ontario, Quebec and the northeastern U.S. In all, these facilities have over 11,800 megawatts of generating capacity. TransCanada’s electricity operations now supply 34% of its revenue and 21% of its earnings.

In 2011, the company started up its oil-pipeline division. This business mainly consists of the Keystone pipeline, which pumps oil from Alberta to refineries in Illinois, and a distribution hub in Cushing, Oklahoma. Oil pipelines supply the remaining 13% of TransCanada’s revenue and 19% of its earnings.
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CGI GROUP INC. (Toronto symbol GIB.A; 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. CGI is a long-term recommendation of our Successful Investor newsletter. We made it our #1 Canadian stock of the year in 2010 at $15. The stock has risen 107% for our subscribers since then. We also made it our stock of the year in 2011. The stock is up 73% since then....

ENBRIDGE INC. $44.53 (Toronto symbol ENB; Shares outstanding: 809.3 million; Market cap: $36.3 billion; TSINetwork Rating: Above Average; Dividend yield: 2.8%; www.enbridge.com) has shut down three of its oil pipelines near Fort McMurray, Alberta, after heavy rain weakened the ground beneath one of them, causing a minor spill.

The company has since reopened two of these lines and expects to restart the third in the next few days. The shutdown is costing Enbridge about $1 million a day in lost revenue. To put that in context, the company’s revenue was $8.0 billion, or over $89 million a day, in the first three months of 2013.

Enbridge is a buy.
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CANADIAN PACIFIC RAILWAY $127.99 (Toronto symbol CP; Shares outstanding: 174.7 million; Market cap: $22.6 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; www.cpr.ca) continues to benefit from its aggressive plan to improve its efficiency with new locomotives, upgraded tracks and software that optimizes train loads and speeds.

For example, CP has cut the time it takes to ship intermodal containers between Toronto and Calgary by 20 hours. The trip now takes 64 hours.

Speeding up service will help CP attract more customers. It will also help it reach its goal of lowering its operating ratio from 75.8% in the first quarter of 2013 to around 65% by the middle of 2016. (Operating ratio is calculated by dividing a railway’s regular operating costs by its revenue. The lower the ratio, the better.)
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PENN WEST PETROLEUM $11.38 (Toronto symbol PWT; Shares outstanding: 485.0 million; Market cap: $5.7 billion; TSINetwork Rating: Average; Dividend yield: 5.1%) is moving to shore up its finances and boost its value after it appointed Rick George as chairman and Allan Markin as vice-chairman.

George played a key role in building Suncor Energy, while Markin was important to the growth of Canadian Natural Resources.

Penn West already plans to cut its staff by 10% and reduce its quarterly dividend by 48.1%, to $0.14 from $0.27. The new rate will give it a 4.9% yield, based on today’s share price.
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ENERPLUS CORP. $15.55 (Toronto symbol ERF; Shares outstanding: 199.7 million; Market cap: $3.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.0%) produces an average of 87,183 barrels of oil equivalent per day (52% gas and 48% oil).

The company’s properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia.

In the three months ended March 31, 2013 Enerplus’s cash flow per share rose 1.2%, to $0.87 from $0.86 a year earlier. Oil prices fell 8.6%, but that was offset by a 10.1% overall production increase and 36.5% higher gas prices.
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ARC RESOURCES $27.53 (Toronto symbol ARX; Shares outstanding: 311.1 million; Market cap: $8.8 billion; TSINetwork Rating: Speculative; Dividend yield: 4.4%; www.arcresources.com) produces oil and natural gas in western Canada. The company’s average daily output of 95,472 barrels of oil equivalent (including natural gas) is weighted 61% to gas and 39% to oil.

In the three months ended March 31, 2013, cash flow per share rose 4.8%, to $0.65 from $0.62. Production increased 2.1%, and a 22.2% rise in gas prices more than offset an 8.4% decline in oil prices.

ARC’s long-term debt is $762.0 million, or a low 8.7% of its market cap. It trades at 10.2 times its forecast 2012 cash flow of $2.70 a share.
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LOBLAW COMPANIES $47.66 (Toronto symbol L; Shares outstanding: 283.1 million; Market cap: $13.6 billion; TSINetwork Rating: Above Average; Dividend yield: 2.0%; www.loblaw.ca) is testing a new store format in Calgary that is much smaller than its other supermarkets.

This store, called The Box by No Frills, is just 10,000 square feet, compared to 25,000 square feet for its regular stores.

Smaller stores like this would help Loblaw expand in urban areas. They would also help it compete with non-traditional food sellers, such as drug stores and convenience stores. To boost traffic, the new stores will highlight $1 items in most aisles.
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MARKET VECTORS VIETNAM ETF $18.89 (New York symbol VNM; buy or sell through brokers) holds shares of Vietnamese companies or foreign firms that get a significant amount of their revenue from Vietnam.

The ETF’s top 10 holdings are Pha Lai Thermal Power, 8.2%; Bank for Foreign Trade of Vietnam, 7.2%; Baoviet Holdings (finance and insurance), 7.1%; PetroVietnam Fertilizer and Chemical, 6.9%; Vincom Corp. (real estate), 6.8%; Saigon Thuong Tin Commercial Bank, 5.3%; Gamuda Bhd (a Malaysiabased construction group), 5.2%; Minor International (a Thailand-based firm with hotels and fast-food restaurants in Vietnam), 4.4%; Vietnam Construction and Import-Export, 4.3%; and Oil & Natural Gas Corp. (an India-based oil and gas company), 4.2%.

Market Vectors Vietnam ETF’s industry breakdown is as follows: Financials, 36.2%; Energy, 19.9%; Industrials, 14.5%; Materials, 10.0%; Utilities, 8.2%; Consumer Discretionary, 5.3%; and Consumer Staples, 3.7%. Its expense ratio is 0.76%.
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ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $31.73 (New York symbol FXI; buy or sell through brokers) is an ETF that aims to track the FTSE/Xinhua China 25 Index, which is made up of the 25 largest and most liquid Chinese stocks. All of the stocks in the index trade on the Hong Kong exchange. Some also trade as American Depositary Receipts (ADRs) on the New York exchange.

The fund’s top holdings are China Mobile, 10.5%; China Construction Bank, 8.7%; Industrial & Commercial Bank, 7.4%; Tencent Holdings, 6.8%, Bank of China, 5.9%; PetroChina, 4.0%, CNOOC, 4.0%; China Shenhua Energy, 3.9%; China Life Insurance, 3.9%, and Ping An Insurance, 3.9%.

The fund’s holdings give it the following industry breakdown: Financials, 52.1%; Telecommunications, 16.7%; Oil and Gas, 11.8%; Technology, 6.8%, Basic Materials, 5.0%; and Consumer Goods, 3.2%. Its expense ratio is 0.73%.
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H&R REIT $21.95 (Toronto symbol HR.UN; Units outstanding: 261.7 million; Market cap: $16.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.2%; www.hr-reit.com) has bought the Peter Pond Mall in Fort McMurray, Alberta for $168.5 million.

The Peter Pond Mall is Fort McMurray’s only enclosed shopping centre. It serves the thriving oil sands industry in that area.

The average household income in Fort Mc- Murray is over $190,000 a year, and that prosperity gives the mall average sales of over $870 a square foot. That average ranks Peter Pond among the top 10 shopping centres in Canada.
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ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $31.73 (Toronto symbol AP.UN; Units outstanding: 68.0 million; Market cap: $2.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.3%; www.alliedpropertiesreit.com) owns 126 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.5 million square feet of leasable area.

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

The trust bought $400 million worth of properties in 2012. In the first quarter of 2013, it added a further $146 million of acquisitions. Allied has a 92.8% occupancy rate.
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RIOCAN REAL ESTATE INVESTMENT TRUST $25.37 (Toronto symbol REI.UN; Units outstanding: 300.0 million; Market cap: $7.8 billion; TSINetwork Rating: Average; Dividend yield: 5.6%; www.riocan.com) is Canada’s largest real estate investment trust (REIT). It has interests in 344 shopping malls containing over 84 million square feet of leasable area. That total includes 50 U.S. malls containing over 13.7 million square feet.

RioCan recently ended its joint venture with Retail Properties of America (New York symbol RPAI). As a result, RioCan now holds 100% of eight highquality malls in Texas, including the dominant shopping centres in Austin and San Antonio.

In the quarter ended March 31, 2013, RioCan’s revenue rose 10.6%, to $281 million from $254 million a year earlier. Cash flow per unit rose 10.8%, to $0.41 from $0.37. The units yield 5.6%.
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SUN LIFE FINANCIAL $31.38 (Toronto symbol SLF; Shares outstanding: 603.0 million; Market cap: $18.9 billion; SI Rating: Above Average; Dividend yield: 4.6%; 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 has expanded into Asia, China and India. It has $570.7 billion of assets under management.

In the three months ended March 31, 2013, Sun Life’s earnings per share rose 1.4%, to $0.75 from $0.74. Revenue rose 3.1%, to $3.4 billion from $3.3 billion.
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