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TRANSCANADA CORP. $47.90 (Toronto symbol TRP; Shares outstanding: 705.1 million; Market cap: $33.5 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.transcanada.com) reports that its earnings fell 14.7% in 2012, to $1.3 billion, or $1.89 a share, from $1.6 billion, or $2.22 a share, in 2011.

Earnings benefited from the start-up of sections of the Keystone pipeline and contributions from new power projects. However, the company experienced unplanned outages at other power plants, and pumped less gas through its Canadian Mainline pipeline. Revenue rose 2.1%, to $8.0 billion from $7.8 billion.

The company also raised its dividend for the 13th consecutive year. The new annual rate of $1.84 a share, up 4.5% from $1.76, yields 3.8%. TransCanada is a buy.

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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $30.60 (Toronto symbol BEP.UN; Units outstanding: 262.5 million; Market cap: $8.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.7%; www.brpfund.com) owns over 183 hydroelectric generating stations, seven wind farms and two natural-gas-fired plants. In all, it has 5,300 megawatts of generating capacity.

Roughly 33% of Brookfield Renewable’s generating capacity is in Canada, with another 45% in the U.S. and 22% in Brazil.

In the three months ended December 31, 2012, Brookfield’s revenue rose 7.5%, to $317 million from $295 million a year earlier. Cash flow per unit jumped 40%, to $0.28 from $0.20, although both quarters were well under long-term averages. That’s because below-average rainfall amounts and lighterthan- usual winds held back electricity production.

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BELL ALIANT INC. $26.63 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $6.1 billion; TSINetwork Rating: Average; Dividend yield: 7.1%; www.aliant.ca) sells phone and Internet services to 2.5 million customers in Atlantic Canada and rural Ontario and Quebec. It also sells wireless services through an alliance with BCE, which owns 45% of Bell Aliant.

The company continues to replace copper wires with fibre optic cable. That’s attracting more highspeed Internet and digital TV customers. Strong demand for these services is also helping offset lower revenue from traditional phone services.

Bell Aliant’s high-speed fibre optic systems now reach 650,000 homes. The company plans to increase that to 800,000 by the end of 2012.

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GREAT-WEST LIFECO $27.18 (Toronto symbol GWO; Shares outstanding: 950.6 million; Market cap: $25.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.5%) has agreed to buy Irish Life Group Ltd., Ireland’s largest pension manager and life insurance provider.

Irish Life has over one million clients and $50 billion of assets under management.

The government of Ireland nationalized Irish Life in June 2012, after its former parent company, Irish Life & Permanent, ran into financial difficulty.
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BCE INC. $46.26 (Toronto symbol BCE; Shares outstanding: 775.4 million; Market cap: $35.4 billion; TSINetwork Rating: Above Average; Dividend yield: 5.0%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also sells satellite and Internet TV services across the country.

In the three months ended December 31, 2012, BCE’s earnings per share rose 4.8%, to $0.65 from $0.62 a year earlier. Revenue was unchanged at $5.2 billion. Revenue at the traditional telephone business, which supplies 51% of BCE’s overall revenue, fell 3.7%, partly due to strong competition from cable companies.

However, many of BCE’s land-line clients are switching to mobile phones, which are more profitable for the company. That helped fuel a 6.8% revenue increase at the wireless division (28% of total revenue). Revenue at BCE’s media division (11%) rose 2.2%.
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SYMANTEC CORP. (Nasdaq symbol SYMC; www.symantec.com) sells computer security technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software....

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 investing advice on the widest possible variety of topics. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice....

THE BOEING CO. (New York symbol BA; www.boeing.com grounded all of its new 787 Dreamliner passenger planes in January 2013 after a battery problem forced one to make an emergency landing in Japan....

THOMSON REUTERS CORP. $31 (www.thomsonreuters.com) has increased its quarterly dividend by 1.6%, to $0.325 U.S. a share from $0.32 U.S. The new annual rate of $1.30 U.S. yields 4.3%. Buy.

CANADIAN IMPERIAL BANK OF COMMERCE $83 (www.cibc.com) earned $2.15 a share in the three months ended January 31, 2013. That’s up 9.1% from $1.97 a share a year earlier. The bank continues to expand its retail banking and wealth management operations....

MANITOBA TELECOM SERVICES INC. $33 (www. mtsallstream.com) reported that its revenue fell 3.5% in 2012, to $1.7 billion from $1.8 billion in 2011. That’s because revenue declined 8.3% at its Allstream division, which provides telecommunication services to businesses....

CANADIAN TIRE CORP. $70 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.1 million; Market cap: $5.7 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.canadiantire.ca) operates 490 Canadian Tire stores, which specialize in automotive, household and sporting goods. The company owns these stores, but franchisees operate most of them. Canadian Tire also operates 299 gas stations and 87 Part Source auto parts stores.

In the past few years, the company has diversified its product lines by purchasing retailers with specialized products. These include Mark’s, which sells casual clothing though 386 stores, and Forzani Group, which sells sporting goods through 495 outlets, mainly under the Sport Chek banner. As well, Canadian Tire will soon complete its $85- million purchase of Pro Hockey Life, which sells hockey equipment through 23 stores.



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ROYAL BANK OF CANADA $63 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.5 billion; Market cap: $94.5 billion; Price-to-sales ratio: 2.4; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.rbc.com) earned $2.1 billion, or $1.36 a share, in the three months ended January 31, 2013. That’s up 11.6% from $1.9 billion, or $1.22 a share, a year earlier. Revenue rose 4.4%, to $7.9 billion from $7.6 billion. Royal set aside $349 million to cover potential loan defaults, up 30.7% from $267 million. That’s mainly due to extra provisions on specific loans at its securities-trading division.

Low interest rates continue to spur loan demand at Royal’s retail banking operations in Canada, the U.S. and the Caribbean. Strong results from the bank’s trading and wealth management divisions also contributed to the higher results.

Royal also raised its quarterly dividend by 5.0%, to $0.63 a share from $0.60. The new annual rate of $2.52 yields 4.0%.
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POTASH CORP. OF SASKATCHEWAN $41 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 864.9 million; Market cap: $35.5 billion; Price-to-sales ratio: 4.3; Dividend yield: 2.8%; TSINetwork Rating: Average; www.potashcorp.com) aims to raise its stake in Israel Chemicals Inc. from 13.9% to at least 51%.

Israel Chemicals produces potash from minerals it extracts from the Dead Sea. Based on Israel Chemicals’ current stock price, this purchase would cost Potash Corp. around $6 billion U.S.

The Israeli government considers this a strategic resource, so Potash Corp. needs permission to buy more shares. Still, this investment would give it a greater stake in a high-quality potash deposit.
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BOMBARDIER INC. (Toronto symbols BBD.A $4.06 and BBD.B $4.06; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.9 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.5%; TSINetwork Rating: Average; www.bombardier.com) has received a firm order for 32 of its new CSeries passenger jets from Russian aircraft leasing firm Ilyushin Finance Co.

If Ilyushin exercises its option to buy an additional 10 planes, the entire order would be worth $3.4 billion U.S. That’s equal to 20% of Bombardier’s 2012 revenue of $16.8 billion U.S. The company did not say when it would begin deliveries, as it is still developing the CSeries plane. It plans to begin test flights in June 2013.

The subordinate-voting class B shares are the better choice because of their slightly better liquidity and higher dividend yield.
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ANDREW PELLER LTD. $11 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.3 million; Market cap: $157.3 million; Price-to-sales ratio: 0.6; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.andrewpeller.com) reported that its sales rose 4.2% in the three months ended December 31, 2012, to $79.8 million from $76.6 million a year earlier. Peller has launched a number of new products, including its low-calorie skinnygrape wine.

Peller earned $6.6 million, up 5.1% from $6.3 million. Earnings per share rose 2.2%, to $0.47 from $0.46, on more shares outstanding. The company benefited from hedging contracts that it uses to lock in foreign exchange rates; that was the main reason for the higher earnings. Without these hedges, Peller’s earnings would have risen 0.5%.

Andrew Peller is a buy....

IMPERIAL OIL LTD. $43 (Toronto symbol IMO; Conservative Growth Portfolio; Resources sector; Shares outstanding: 847.6 million; Market cap: $36.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) has completed its purchase of 50% of Celtic Exploration Ltd. from its parent company, ExxonMobil Corp. (New York symbol XOM).

Celtic owns large undeveloped shale gas deposits along the B.C.-Alberta border. These fields hold a total of 128 million barrels of oil equivalent. At the end of 2012, Imperial’s proved reserves totalled 3.6 billion barrels of oil equivalent.

The company paid $1.55 billion for its half of Celtic. That’s equal to 42% of the $3.7 billion, or $4.42 a share, that it earned in 2012.
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PENGROWTH ENERGY CORP. $4.90 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 511.8 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.6; Dividend yield: 9.8%; TSINetwork Rating: Average; www.pengrowth.com) produced 85,748 barrels of oil equivalent a day (60% natural gas and 40% oil) in 2012. That’s up 15.9% from 73,973 barrels in 2011. However, depressed gas prices pushed down its cash flow by 13.1%, to $538.8 million from $620.0 million. Cash flow per share declined 35.8%, to $1.20 from $1.87, on more shares outstanding.

The stock is down 50% in the past year. That’s because investors are concerned that low gas prices and Pengrowth’s high debt ($1.8 billion, or 75% of its market cap) will force it to cut its $0.04-a-share monthly dividend, for a 9.8% annualized yield.

However, Pengrowth’s rising oil production will cut its risk. It recently began work on its Lindbergh oil sands project, which will produce 12,500 barrels a day by early 2015. That will rise to 50,000 barrels a day by 2018. Moreover, Pengrowth has $4.5 billion in tax pools that it can use to cut its tax bill until 2017.
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PRECISION DRILLING CORP. $8.40 (Toronto symbol PD; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 276.3 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.4%; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) sells contract drilling services to oil and gas producers, mainly in North America. It ended 2012 with 321 active rigs.

The company is slowly expanding its international operations: it now has a total of eight rigs in Mexico and the Persian Gulf region.

In 2012, Precision’s earnings fell 72.9%, to $52.4 million, or $0.18 a share. It earned $193.5 million, or $0.67 a share, in 2011. If you exclude writedowns of older rigs, earnings per share would have declined by 12.9%, to $0.81 from $0.93.
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RIOCAN REAL ESTATE INVESTMENT TRUST $27 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 300.1 million; Market cap: $8.1 billion; Price-to-sales ratio: 4.8; Dividend yield: 5.2%; TSINetwork Rating: Average; www.riocan.com) is Canada largest real estate investment trust (REIT), with 294 retail properties, including 11 under development. It also owns 52 malls in the U.S.

RioCan continues to expand beyond suburban big-box-style malls. It recently formed a joint venture with Allied Properties Real Estate Investment Trust (Toronto symbol AP.UN) to redevelop certain properties in Toronto as mixed-use office, retail and residential complexes.

The REIT has also agreed to pay $362 million for an enclosed shopping centre and 50% of another mall, both in southern Ontario. Enclosed malls now supply 16.1% of its Canadian rental revenue.
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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) earned $222.0 million, or $6.38 a share, in 2012. That’s up 16.8% from $190.1 million, or $5.46 a share, in 2011. Low interest rates continue to fuel mortgage demand: revenue rose 12.3%, to $887.7 million from $790.3 million.

The company caters to borrowers who don’t meet the stricter standards of larger banks. Even so, it continues to do a good job of identifying problem loans before borrowers fall behind on their payments. Bad loans rose in 2012, but they still made up just 0.33% of its total loans, up from 0.25% a year earlier.

Home Capital Group is a buy....

CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.8 million; Market cap: $24.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.0%; TSINetwork Rating: Average; www.cenovus.com) had to write down its natural gas properties in Alberta due to low gas prices. That’s why its earnings fell 30.5% in 2012, to $1.14 a share from $1.64 in 2011. However, cash flow per share rose 11.1%, to $4.80 from $4.32, as it expanded its oil sands production by 35%.

The company’s oil refineries and low production costs should keep pushing up its cash flow, even if oil prices fall. As a result, we’ve upgraded Cenovus’s TSINetwork Rating to “Average” from “Extra Risk.”

Cenovus is a buy.

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EMERA INC. $35 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 131.0 million; Market cap: $4.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.0%; TSINetwork Rating: Average; www.emera.com) gets 60% of its revenue and 50% of its earnings from Nova Scotia Power Inc., which is that province’s main electricity 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.

The Newfoundland government recently approved a new hydroelectric project on Labrador’s Churchill River. Emera will participate in this operation by paying $600 million for a 29% stake in a new regulated utility that 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.

Meanwhile, Emera earned $220.8 million in 2012, down 8.4% from $241.1 million in 2011. Due to more shares outstanding, earnings per share fell at a faster pace of 10.7%, to $1.76 from $1.97.
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FORTIS INC. $33 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 191.6 million; Market cap: $6.3 billion; Price-to-sales ratio: 1.7; Dividend yield 3.8%; 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 should complete its takeover of CH Energy Group (New York symbol CHG) in the second quarter of 2013. CH supplies gas and power to 375,000 customers in New York State’s Mid-Hudson River Valley. Fortis will pay $1.5 billion U.S. for CH Energy, including assuming $500 million U.S. of debt.

In 2012, Fortis’s earnings rose 7.5%, to $322.5 million from $300.0 million in 2011. Earnings per share rose just 3.0%, to $1.70 from $1.65, on more shares outstanding. During the year, Fortis spent $400 million to expand its power transmission operations in Alberta. That was the main reason for the higher earnings. However, revenue fell 2.2%, to $3.65 billion from $3.74 billion. That’s mainly because warmer winter weather cut natural gas demand.
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ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $92 and ACO.Y [class II voting] $92; Income Portfolio, Utilities sector; Shares outstanding: 57.5 million; Market cap: $5.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.6%; 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 2012, ATCO’s revenue rose 11.9% to $4.4 billion from $4.0 billion a year earlier. In addition to a higher contribution from Canadian Utilities, revenue at its structures division rose 24.8% due to new mines, such as the Jansen potash project in Saskatchewan. Earnings rose 14.7%, to $375 million, or $6.48 a share, from $327 million, or $5.64.

ATCO continues to trade for less than the value of its assets; investors call this a “holding company discount.” Based on current prices, you can buy a share of ATCO for $92 and get roughly $93 worth of Canadian Utilities. That means you get ATCO’s non-utility businesses, which provide a third of its earnings, for free.
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