Search

CIMAREX ENERGY $60.76 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 86.0 million; Market cap: $5.2 billion; Dividend yield: 0.8%) produces and explores for oil and natural gas. Gas makes up 53% of its output.

Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas; the Permian Basin of western Texas and southeastern New Mexico; and the Texas Gulf Coast.

In the three months ended September 30, 2012, Cimarex’s production averaged 635.1 million cubic feet of natural gas equivalent per day (including oil). That’s up 7.3%, from 592.0 million cubic feet a year earlier.

...

DEVON ENERGY CORP. $53.06 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 404.5 million; Market cap: $21.5 billion; Dividend yield: 1.5%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 63% gas and 37% oil.

Last year, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company is now focused on its North American projects, which include conventional production, shale oil in Texas and oil sands in Alberta.

Devon is forming joint ventures to cut the risk of its big development projects. Earlier this year, it sold a one-third stake in shale oil and gas fields in five U.S. states to giant Chinese state-owned petroleum and chemical firm Sinopec for $2.2 billion. More recently, Japan’s Sumitomo Corp. agreed to buy 30% of the Cline and Wolfcamp shales in Texas for $1.4 billion.

...

LEON’S FURNITURE LTD. $11.30 (Toronto symbol LNF; TSINetwork Rating: Average) (416 -243-7880; www.leons.ca; Shares outstanding: 70.0 million; Market cap: $791.0 million; Dividend yield: 3.5%) is nearly doubling its market cap by acquiring rival furniture chain The Brick (Toronto symbol BRK) for $700 million.

The Brick operates 230 stores across Canada, while Leon’s has 76 outlets in every province except B.C. Leon’s and The Brick will continue to operate as separate chains.

Growth by acquisition can be risky, especially with a deal this big. But the Brick looks like a good fit with Leon’s.

...

DOREL INDUSTRIES $37.83 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.5 million; Market cap: $1.2 billion; Dividend yield: 3.2%) makes a wide range of products, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational products, mostly bicycles.

In the three months ended September 30, 2012, Dorel’s sales rose 6.5%, to $613.3 million from $575.8 million a year earlier (all figures except share price and market cap in U.S. dollars). Excluding one-time items, earnings per share jumped 37.0%, to $0.63 from $0.46.

The company’s juvenile products division reported steadily rising sales of infant and children’s merchandise in North America and Europe, as well as strong gains in Chile. Sales of Schwinn and Mongoose bicycles also rose.

...

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 investment advice on stocks and other topics that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “When you look at the way some investments are marketed to investors, you may find that the supposed benefits are actually drawbacks.”...

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of high quality stocks. ISHARES MSCI JAPAN INDEX FUND (American Exchange symbol EWJ; us.ishares.com) is an exchange traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index....

As they come closer to retirement, some investors decide that they are too old to assume any investment risk. That attitude is often abetted by advisors who recommend that they move a larger part of their investments from stocks to bonds and other fixed-return investments. To some extent, this is an understandable strategy, since bonds provide steady income and a guarantee to repay the principal at maturity....

Pat McKeough responds to many personal questions about specific stocks and other investment topics from the members of his Inner Circle. 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 the Inner Circle. This week, an Inner Circle member asked about one of the more versatile resource stocks in Canada. This company provides housing and a variety of other essential services for remote oil and gas rigs and mining sites. Pat looks at the company’s prospects for growth and its plans to begin making acquisitions in foreign markets....

From time to time, we are asked about ethical investing (or “socially responsible investing”). I’d say it works as a marketing angle for a handful of small investment companies, and it may make you feel better about your investments. But it won’t do much to improve your investment results, or cut down on what you see as unethical corporate behaviour. If you refuse to invest in an ethically questionable company, you don’t hurt the company. But you do help others who are willing to invest in the company, because they get to buy it a little cheaper....

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 advice on how to trade stocks and other investment topics that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Practice accounts are advertised as a good way to learn how to invest, but they can encourage investors to develop bad habits.”...

PEYTO EXPLORATION & DEVELOPMENT CORP. $24.65 (Toronto symbol PEY; Shares outstanding: 143.9 million; Market cap: $3.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 2.9%; www.peyto.com) produces and explores for oil and natural gas in Alberta.

Peyto’s average daily production of 41,343 barrels of oil equivalent is 89% gas and 11% oil.

In the three months ended June 30, 2012, the company’s cash flow was $0.47 a share, down 16.1% from $0.56 a share a year earlier. Lower gas prices offset a 20.0% rise in production.

...

BONAVISTA ENERGY $18.01 (Toronto symbol BNP; Shares outstanding: 169.2 million; Market cap: $3.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 8.0%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and B.C.

Bonavista produces an average of 69,506 barrels of oil equivalent per day, weighted 61% to gas and 39% to oil.

In the three months ended June 30, 2012, the company’s cash flow per share fell 44.3%, to $0.49 from $0.88 a year earlier. Lower gas prices more than offset a 5.3% production increase.

...

IBM $210.51 (New York symbol IBM; Shares outstanding: 1.1 billion; Market cap: $231.6 billion; TSINetwork Rating: Above Average; Dividend yield: 1.7%) continues to expand its software business. In the latest quarter, software accounted for 24% of its total revenue and 43% of its pre-tax earnings.

The company recently paid an undisclosed sum for U.K.-based Butterfly Software Ltd. Businesses use this private firm’s software to collect data from older computers and securely transfer it to remote servers.

Butterfly’s products nicely complement IBM’s growing analytics software operations, which help companies quickly gather and analyze a wide range of information.

...

TRANSCANADA CORP. $45.02 (Toronto symbol TRP; Shares outstanding: 704.9 million; Market cap: $31.7 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.transcanada.com) has settled its dispute with the Ontario government.

In 2009, the company agreed to build a natural-gas-fired power plant in Oakville, Ontario. However, the provincial government cancelled the project in 2010.

This week, TransCanada agreed to build a new gas-fired power plant on the grounds of the Lennox generating station near Napanee in eastern Ontario.

...

POWERSHARES QQQ ETF $69.11 (Nasdaq symbol QQQQ; buy or sell through brokers; www.invescopowershares. com), formerly called Nasdaq 100 Trust Shares, holds the stocks that represent the Nasdaq 100 Index. That index is made up 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, Oracle Corp., Comcast Corp. and Kraft Foods Inc.

SPDR DOW JONES INDUSTRIAL AVERAGE ETF $134.68 (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 Corp., 3M, Wal-Mart Stores, McDonald’s Corp., Procter & Gamble, Caterpillar Inc., United Technologies and Boeing. The fund’s expenses are about 0.18% of its assets.

SPDR Dow Jones ETF is a buy.

...

SPDR S&P 500 ETF $145.09 (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 Inc., ExxonMobil, Microsoft, Procter & Gamble, Wells Fargo & Co., Johnson & Johnson, IBM, Chevron, General Electric, Pfizer Inc., Coca-Cola Co., Google and AT&T.

The fund’s expenses are just 0.10% of its assets.

...

ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $20.77 (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 4.6%.

The fund’s top holdings are CIBC, 7.1%; National Bank, 5.8%; TD Bank, 5.6%; Bank of Montreal, 5.3%; Bonterra Energy, 4.8%; Royal Bank, 4.6%; Telus Corp., 4.6%; Bank of Nova Scotia, 4.3%; BCE Inc., 4.1%; and AG Growth International, 4.0%.

The fund holds 54.4% of its assets in financial stocks. Utilities are next, at 21.2%. 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 $17.71 (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, as the fund must ensure that all sectors are represented, it holds a few stocks we wouldn’t include.

The index’s top holdings are Royal Bank, 7.4%; TD Bank, 6.8%; Bank of Nova Scotia, 5.8%; Suncor Energy, 4.5%; Barrick Gold, 3.7%; CN Railway, 3.5%; Bank of Montreal, 3.4%; Potash Corp., 3.3%; Goldcorp, 3.3%; BCE Inc., 3.1%; Canadian Natural Resources, 3.0%; TransCanada Corp., 2.9%; CIBC, 2.8%; Enbridge, 2.8%; Cenovus Energy, 2.4%; and Telus Corp., 1.8%.

...

GREAT-WEST LIFECO $22.23 (Toronto symbol GWO; Shares outstanding: 949.8 million; Market cap: $21.1 billion; TSINetwork Rating: Above Average; Dividend yield: 5.5%) is Canada’s largest insurance company, with $523.6 billion in assets under administration. It operates under several well-known banners, including Great West Life, Canada Life and Freedom 55. It also sells mutual funds and retirement planning and wealth management services. Power Financial Corp. owns 68.2% of Great-West.

In the three months ended June 30, 2012, Great-West’s revenue rose 9.2%, to $7.8 billion from $7.1 billion a year earlier. Earnings fell 6.7%, to $491 million, or $0.52 a share, from $550 million, or $0.55 a share.

Earnings declined from exceptionally strong results a year ago, but they still beat the consensus estimate of $0.48 a share.

...

GEORGE WESTON LTD. $63.26 (Toronto symbol WN; Shares outstanding: 128.2 million; Market cap: $8.1 billion; TSINetwork Rating: Above Average; Dividend yield: 2.3%) makes a number of products through Weston Foods, including fresh and frozen baked goods in Canada and frozen baked goods, biscuits, cookies, cones and wafers in the U.S. The company also owns a 63% interest in Loblaw (see left).

Weston’s revenue rose 1.3% in the three months ended June 30, 2012, to $7.63 billion from $7.53 billion a year earlier. Without one-time items, earnings per share fell 20.9%, to $1.06 from $1.34, largely due to a lower contribution from Loblaw.

The company holds cash of $3.6 billion, which it could use to increase its stake in Loblaw or make other investments to add to its growth.

...

LOBLAW COMPANIES $34.65 (Toronto symbol L; Shares outstanding: 289.9 million; Market cap: $10.0 billion; TSINetwork Rating: Above Average; Dividend yield: 2.4%; www.loblaw.ca) is Canada’s largest food retailer, with about 1,000 stores.

In the three months ended June 16, 2012, Loblaw’s sales rose 1.3%, to $7.4 billion from $7.3 billion a year earlier. Overall sales at its supermarkets rose 1.1%, while same-store sales gained 0.2%. Revenue from its financial-services division, which mainly issues credit cards, rose 14.9%.

Earnings fell 19.3%, to $159 million, or $0.57 a share, from $197 million, or $0.70 a share, a year earlier. But the decline was mainly because Loblaw continues to invest in new computers as part of a far-reaching plan to improve its efficiency and avoid product shortages in its stores. In the latest quarter, the company spent $20 million on these initiatives.

...

BANK OF NOVA SCOTIA $53.87 (Toronto symbol BNS: Shares outstanding: 1.1 billion; Market cap: $63.6 billion; TSINetwork Rating: Above Average; Div. yield: 4.2%, www.scotiabank.com) continues to build on its extensive international operations.

The bank recently announced deals with China’s Bank of Xi’an and India’s Kotak Mahindra Bank that make it easier for immigrants, international students and foreign workers to transfer their accounts to Bank of Nova Scotia’s Canadian branches.

Once they arrive in Canada, these clients can also apply for credit cards and other services.

...

PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST $24.14 (Toronto symbol PMZ.UN; Units outstanding: 92.8 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.1%; www.primarisreit.com) owns large malls in medium-sized Canadian cities and suburban areas. In all, it owns 33 properties that contain 13.7 million square feet of leasable area.

Primaris has 43% of its properties in Ontario, followed by Alberta, 16%; B.C., 15%; Quebec, 13%; Saskatchewan, 9%; Manitoba, 3% and New Brunswick, 1%. Primaris has a 97.4% occupancy rate.

In the quarter ended June 30, 2012, acquisitions increased Primaris’s revenue by 19.5%, to $98.9 million from $82.8 million a year ago. Cash flow rose 53.3%, to $33.4 million from $21.8 million. Cash flow per unit rose 26.7%, to $0.384 from $0.303, on more units outstanding. The trust yields 5.1%.

...

RIOCAN REAL ESTATE INVESTMENT TRUST $27.48 (Toronto symbol REI.UN; Units outstanding: 295.9 million; Market cap: $8.2 billion; TSINetwork Rating: Average; Dividend yield: 5.0%; www.riocan.com) is Canada’s largest real estate investment trust (REIT). It has interests in 278 shopping malls in Canada, including 10 under development. These properties contain over 59 million square feet of leasable area.

RioCan recently ended its joint venture with Cedar Shopping Centers in the U.S., so it now owns 100% of all of its 48 malls in that country. RioCan held 80% of this venture, which owned 22 shopping centres in the U.S. Under the deal, RioCan will buy Cedar’s 20% stake in 21 malls, while Cedar will buy RioCan’s 80% stake in another mall.

In the quarter ended June 30, 2012, RioCan’s revenue rose 13.5%, to $269 million from $237 million a year earlier. Cash flow per unit rose 2.8%, to $0.37 from $0.36. The units yield 5.0%.

...