Search

BLACKBERRY LTD. $11 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.2 million; Market cap: $5.8 billion; Price-to-sales ratio: 0.5; No dividends paid; TSINetwork Rating: Average; www.blackberry.com) is looking at alternatives for increasing shareholder value. Options the company is examining include the sale of some or all of its operations and joint ventures with other firms.

That’s because its new smartphones, powered by its BlackBerry 10 software, continue to face intense competition from Apple’s iPhone and devices running Google’s Android operating system.

The company will probably complete this review quickly. If not, the uncertainty may prompt its corporate and government clients to switch to competing wireless email systems.
...

CANADA BREAD CO. LTD. $59 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.5 billion; Price-to-sales ratio: 1.0; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.canadabread.ca) is Canada’s secondlargest producer of fresh and frozen baked goods, after Weston Bakery. The company also makes pastas and sauces. The company’s main brands include Dempster, Tenderflake and Olivieri. Canada Bread supplies around a third of Maple Leaf’s total sales.

The company is also investing in new facilities as part of Maple Leaf’s restructuring. In 2011, Canada Bread opened a new $100-million bakery in Hamilton, Ontario. That let it close two outdated facilities in Toronto and shift their production to the new plant. Earlier this year, it closed a third Toronto bakery.

In the second quarter of 2013, Canada Bread earned $24.5 million, or $0.97 a share. That’s down 6.0% from $26.1 million, or $1.03 a share, a year earlier. Excluding unusual items, earnings per share rose 0.9%, to $1.07 from $1.06.
...

MAPLE LEAF FOODS INC. $14 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 140.0 million; Market cap: $2.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.1%; TSINetwork Rating: Average; www.mapleleaf.ca) is Canada’s largest food processing company. It mainly sells its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. Though 90.0%-owned Canada Bread (see right), the company also makes fresh and frozen bread, pastries and pasta.

Maple Leaf continues to make progress on a major restructuring plan that includes building new plants and eliminating unprofitable products. As part of this strategy, Maple Leaf recently sold its Ontario turkey farms for a combined $48.2 million under two separate deals. The company is also installing a new computer system that will give its managers more timely information.

In the three months ended June 30, 2013, Maple Leaf earned $9,000, or a loss of $0.02 a share. A year earlier, it earned $26.0 million, or $0.16 a share. If you exclude unusual items, such as severance costs and writedowns, earnings per share fell 91.3%, to $0.02 from $0.23.
...

RIOCAN REAL ESTATE INVESTMENT TRUST $24 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 302.6 million; Market cap: $7.3 billion; Price-to-sales ratio: 4.5; Dividend yield: 5.9%; TSINetwork Rating: Average; www.riocan.com) owns 348 retail properties in Canada, including 15 under development. It also owns 50 malls in the U.S.

The trust continues to expand through acquisitions. In the second quarter of 2013, RioCan acquired seven properties for $460 million. As part of its plan to focus on larger cities, RioCan also sold four properties in smaller markets for $364 million. As a result, big cities now account for 72.1% of its rental revenue, up from 67.5% at the end of 2012.

These new properties are also diversifying RioCan’s portfolio beyond its suburban big-box-style malls. For example, its recent purchases include two enclosed malls in Ontario. The trust is also redeveloping certain properties in Toronto as mixed-use office, retail and residential complexes.
...

CANADIAN TIRE CORP. $91 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.5 million; Market cap: $7.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.canadiantire.ca) operates 490 Canadian Tire stores, which specialize in automotive, household and sporting goods. The company owns these outlets, but franchisees operate most of them. Canadian Tire also operates 300 gas stations and 87 PartSource auto parts stores.

In the 1990s, big U.S. retailers like Wal-Mart and Home Depot expanded to Canada. In response, Canadian Tire upgraded its stores with better signage, wider aisles and brighter lighting. These improvements also made it easier for managers to move faster-selling seasonal merchandise to high-traffic areas of the store.

The company is also trying out new formats. For example, it recently opened a smaller store in Toronto. This outlet, called Canadian Tire Express, is one-third the size of a regular Canadian Tire store and mainly features items like light bulbs and plumbing parts instead of tires and lawnmowers.
...

WELLS FARGO & CO. (New York symbol WFC; www.wellsfargo.com) set aside $652 million to cover bad loans in the three months ended June 30, 2013, down 63.8% from $1.8 billion a year earlier....

GUGGENHEIM CHINA SMALL CAP ETF $23.14 (New York Exchange symbol HAO; buy or sell through brokers; www.guggenheimfunds.com) aims to track the AlphaShares China Small Cap Index, which is made up of all Chinese stocks that are legal for foreign investors and have market caps between $200 million and $1.5 billion.

The $184.3-millon fund’s top holdings are Youku Tudou, 2.0%; Tsingtao Brewery, 1.4%; Xinyi Glass Holdings, 1.3%; Sino Biopharmaceutical, 1.3%; China Everbright International, 1.2%; BYD Co., 1.2%; GCL Poly Energy International, 1.2%; Sohu- .com. 1.2%; Semiconductor Manufacturing International, 1.1%; and China Resources Gas Group, 1.1%.

As China’s economy matures and wages rise, domestic spending should continue to increase. As well, China’s leaders will likely need to spend more on programs to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.
...

PENGROWTH ENERGY $5.84 (Toronto symbol PGF; Shares outstanding: 516.1 million; Market cap: $3.0 billion; TSINetwork Rating: Average; Dividend yield: 8.2%; www.pengrowth.com) has sold several of its less important oil and gas properties in Western Canada for $700 million.

Including the company’s earlier $316-million sale of its 10.02% interest in the Weyburn oil project in Saskatchewan, Pengrowth has now reached its goal of raising $1 billion through asset sales in 2013.

The cash will help Pengrowth develop its $590-milllion Lindbergh oil sands project in Alberta. It will also help the company pay down its long-term debt, which stood at $1.6 billion on June 30, 2013. That’s equal to 52% of Pengrowth’s $3.1-billion market cap. The monthly dividend of $0.04 a share still seems safe and gives the stock an 8.2% yield.
...

CRESCENT POINT ENERGY CORP. $37.79 (Toronto symbol CPG; Shares outstanding: 386.1 million; Market cap: $14.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.3%; www.crescentpointenergy.com) produces oil and natural gas in western Canada. Its output is weighted 90% toward oil and 10% to gas.

The company continues to focus on its Bakken light oil development in southeastern Saskatchewan.

In the three months ended June 30, 2013, Crescent Point’s cash flow rose 30.6%, to $504.4 million from $386.3 million a year earlier.
...

BONAVISTA ENERGY $12.98 (Toronto symbol BNP; Shares outstanding: 181.5 million; Market cap: $2.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.5%; www.bonavistaenergy.com) explores for oil and gas in Alberta, Saskatchewan and B.C. Its production is 62% gas and 38% oil.

In the three months ended June 30, 2013, Bonavista’s cash flow per share rose 28.6%, to $0.63 from $0.49 a year earlier. Gas prices increased 67.0%, to $3.64 per thousand cubic feet from $2.18. Production rose 4.4%, to 72,554 barrels of oil equivalent a day (including gas) from 69,506.

Bonavista cut its monthly dividend by 41.7% in January 2013, to $0.07 from $0.12. That’s helping it save cash for exploration and development. The new annual rate of $0.84 a share still yields a high 6.5%. As well, Bonavista now pays out just 37% of its cash flow as dividends, so more cuts are unlikely.
...

IBM $188.56 (New York symbol IBM; Shares outstanding: 1.1 billion; Market cap: $209.2 billion; TSINetwork Rating: Above Average; Dividend yield: 2.0%; www.ibm.com) reports that its earnings per share before one time items rose 8.0% in the three months ended June 30, 2013, to $3.91 from $3.62. That easily beat the consensus forecast of $3.77.

Revenue fell 3.3%, to $24.9 billion from $25.8 billion. That fell short of the consensus estimate of $25.4 billion. IBM gets two-thirds of its revenue from overseas. If you adjust for foreign exchange rates, its sales would have declined by 1%.

Demand for the company’s software remains strong, because it helps businesses analyze large amounts of data and improve their efficiency. However, the uncertain economy continues to slow sales of mainframe computers and services. Still, IBM’s computer services business ended the quarter with a backlog of $141 billion, up 3% from a year earlier.
...

BCE INC. $42.55 (Toronto symbol BCE; Shares outstanding: 775.9 million; Market cap: $33.0 billion; TSINetwork Rating: Above Average; Dividend yield: 5.5%; www.bce.ca) has completed its $3.2-billion purchase of Astral Media.

Astral 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.
...

POWERSHARES QQQ ETF $76.42 (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 Amgen.
...

SPDR DOW JONES INDUSTRIAL AVERAGE ETF $154.54 (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 fund’s top holdings are IBM, ExxonMobil, Chevron, 3M, Travelers Companies, McDonald’s, Johnson & Johnson, 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 $169.18 (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 U.S. stocks 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, Google, AT&T and Wells Fargo. 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 DOW JONES CANADA SELECT DIVIDEND INDEX FUND $22.31 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.50%. It yields 4.5%.

The fund’s top holdings are Bonterra Energy, 6.5%; CIBC, 6.3%; National Bank, 5.9%; TD Bank, 5.7%; Bank of Montreal, 5.3%; Royal Bank, 4.5%; IGM Financial, 4.4%; Telus Corp., 4.2%; Bank of Nova Scotia, 4.1%; and BCE Inc., 4.0%.

The fund holds 53.4% of its assets in financial stocks. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.
...

ISHARES S&P/TSX 60 INDEX FUND $17.88 (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, 8.2%; TD Bank, 7.1%; Bank of Nova Scotia, 6.2%; Suncor Energy, 4.5%; CN Railway, 3.9%; Bank of Montreal, 3.7%; Enbridge, 3.4%; Canadian Natural Resources, 3.2%; TransCanada Corporation, 3.0%; Manulife Financial, 3.0%; BCE, 2.9%; CIBC, 2.8%; Valeant Pharmaceuticals, 2.8%; Potash Corp., 2.3%; Cenovus Energy, 2.0%; and Goldcorp, 2.0%.
...

ISHARES CDN REIT SECTOR INDEX FUND $15.05 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of each REIT is limited to 25% of the ETF’s value.

iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 5.2%.

The ETF’s largest holding is RioCan REIT at 19.4%, followed by H&R REIT (14.5%), Dundee REIT (8.3%), Canadian REIT (7.4%), Calloway REIT (6.7%), Cominar REIT (6.1%), Boardwalk REIT (5.9%), Canadian Apartment REIT (5.7%), Allied Properties REIT (5.5%), Artis REIT (4.8%), Chartwell REIT (4.4%), Granite REIT (4.3%), Dundee International REIT (2.3%), Northern Property REIT (2.3%) and Crombie REIT (1.9%).
...

INNERGEX RENEWABLE ENERGY $8.40 (Toronto symbol INE; Shares outstanding: 94.5 million; Market cap: $802.8 million; TSINetwork Rating: Extra Risk; Dividend yield 6.9%; www.innergex.com) operates 23 hydroelectric facilities, five wind farms and one solar-power plant in Quebec, Ontario, B.C. and Idaho. Innergex gets 55% of its power from hydroelectric facilities. Wind farms supply 39% and solar generates 6%.

In contrast to Algonquin, Innergex is growing slowly, mostly by building its own hydroelectric and wind plants, rather than by making acquisitions. Right now, it is developing or building eight projects.

But like Algonquin, Innergex makes sure it has firm long-term power-purchase contracts in place before it starts building new facilities.
...

ALGONQUIN POWER & UTILITIES CORP. $6.96 (Toronto symbol AQN; Shares outstanding: 205.0 million; Market cap: $1.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.9%) has nearly tripled in size over the last year through a series of acquisitions.

The company’s regulated utility businesses now provide water, electricity and natural gas utility services to over 470,000 customers, up from 120,000 a year ago. Its hydroelectric, thermal energy and wind plants currently generate 1,100 megawatts of power, up from 460 megawatts.

Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 24.5% of Algonquin.
...

GEORGE WESTON $85.19 (Toronto symbol WN; Shares outstanding: 127.9 million; Market cap: $11.1 billion; TSINetwork Rating: Above Average; Yield: 2.0%; weston.ca) owns 63.1% of Loblaw. It will help it pay for Shoppers by buying $500 million of new shares. After Loblaw completes the purchase, Weston will own 46% of Loblaw.

Loblaw will operate Shoppers as a separate chain and does not plan to close any stores. That makes sense, because most Shoppers stores are small outlets in urban areas where there is little overlap with Loblaw’s mainly suburban supermarkets.

Shoppers will also keep its own brands and loyalty program. However, combining marketing and distribution should save the company $300 million annually by the end of the third year.
...

LOBLAW COS. $47.97 (Toronto symbol L; Shares outstanding: 283.0 million; Market cap: $13.6 billion; TSINetwork Rating: Above Average; Dividend yield: 2.0%; www.loblaw.ca) is buying Shoppers Drug Mart (Toronto symbol SC), which operates 1,240 drugstores across Canada.

Assuming regulators and Shoppers shareholders approve, Loblaw aims to complete the $12.5-billion purchase in six to seven months.

GREAT-WEST LIFECO $30.31 (Toronto symbol GWO; Shares outstanding: 951.5 million; Market cap: $29.0 billion; TSINetwork Rating: Above Average; Yield: 4.1%; www.greatwestlifeco.com) is Canada’s largest insurance company. It also offers mutual funds, retirement planning and wealth management. Power Financial owns 68.2% of Great-West.

In the quarter ended June 30, 2013, earnings rose 6.8%, to $521 million, or $0.55 a share, from $488 million, or $0.51, a year ago. On June 30, Great-West had $596.0 billion of assets under administration.

Earnings from the Canadian division, which supplies 54% of the total, rose 11.1%. Stronger sales of group policies offset lower demand for individual insurance. As well, the value of the assets this division manages rose, which pushed up its fee income.
...

HECLA MINING COMPANY (New York symbol HL; www.hecla-mining.com) explores for, mines and processes silver and gold in the U.S. and Mexico. Most of its silver output comes from its Greens Creek mine in Alaska and its Lucky Friday mine in Idaho. In the three months ended June 30, 2013, Hecla’s revenue rose 27.3%, to $85.3 million from $67.0 million a year earlier. The company lost $0.03 a share, compared to a profit of $0.01. The loss mostly came from lower silver prices and costs related to its recent acquisition of Aurizon Mines....

SNC-LAVALIN GROUP INC. (Toronto symbol SNC; www.snclavalin.com) is a leading Canadian engineering and construction company. It specializes in large-scale public works projects, such as roads, bridges, transit systems and water-treatment plants. SNC-Lavalin replaced most of its senior management following the discovery of $56 million U.S. in unusual payments it made in 2011 to help win Libyan construction contracts. SNC has also strengthened its oversight and compliance procedures in response to allegations that it used bribes to win certain contracts in Quebec....