Search

CANADIAN PACIFIC RAILWAY LTD. $74 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.9 million; Market cap: $12.6 billion; Price-to-sales ratio: 2.3; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.cpr.ca) has signed a long-term deal with U.S. Silica Holdings Inc. (New York symbol SLCA), a leading maker of specialized sand.

Oil and gas exploration companies pump this sand, along with water and other chemicals, into shale rock formations. This fractures the rock and releases the oil and gas.

Under the terms of this multi-year deal, Silica will use CP trains to ship sand from its new Sparta, Wisconsin facility to its customers. CP did not say how much this deal is worth, but it should help the company profit from rising production of shale oil in the Bakken area, which covers parts of Montana, North Dakota and Saskatchewan.

...

SUNCOR ENERGY INC. $29 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $46.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.8%; TSINetwork Rating: Average; www.suncor.com) produced an average of 343,000 barrels of oil per day at its oil sands projects in June 2012. That’s down 0.9% from 346,000 barrels in May 2012.

The company expects its oil sands production for all of 2012 to range from 325,000 to 355,000 barrels a day. If you include conventional oil and natural gas, Suncor should produce 530,000 to 580,000 barrels a day in 2012. The midpoint of that range is 1.6% higher than its average 2011 production of 546,000 barrels a day.

Suncor is a buy.

...

DUNDEE CORP. $22 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 55.0 million; Market cap: $1.2 billion; Price-to-sales ratio: 1.7; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) is a holding company with subsidiaries in wealth management, real estate, resources and agriculture.

In the three months ended March 31, 2012, Dundee earned $32.5 million, up 129.2% from $14.2 million a year earlier. Per share earnings jumped 211.8%, to $0.53 from $0.17, on fewer shares outstanding.

The increase resulted from much higher returns on the company’s various investments during the latest quarter: $21.6 million compared to just $2.3 million a year ago. Dundee’s revenue rose 11.4%, to $131.3 million from $117.8 million.

...

POTASH CORP. OF SASKATCHEWAN $45 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 858.9 million; Market cap: $38.7 billion; Price-to-sales ratio: 4.5; Dividend yield: 1.3%; TSINetwork Rating: Average; www.potashcorp.com) has gained roughly 17% since the middle of June 2012. That’s because hot, dry weather in the U.S. could reduce this year’s corn harvest.

In response, farmers are applying more fertilizer to boost their crop yields. As well, corn needs more potash than other crops.

The spike in demand has pushed up potash prices. Moreover, the long-term outlook for potash and other fertilizers remains bright, mainly due to rising demand for better food in fast-growing countries such as China, India and Brazil.

...

THOMSON REUTERS CORP. $29 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 829.2 million; Market cap: $24.0 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.thomsonreuters.com) is buying FX Alliance Inc. (New York symbol FX), which sells foreign exchange data to banks, portfolio managers and corporations. When the deal closes in the next weeks, it will strengthen Thomson’s electronic-data products.

The $625-million U.S. price is equal to 37% of the $1.7 billion U.S., or $1.98 U.S. a share, that Thomson earned in 2011.

Thomson Reuters is a buy.

...

CANADA BREAD CO. LTD. $46 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.7; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.canadabread.ca) is Canada’s second-largest producer of baked goods, after Weston Bakery. It supplies around a third of Maple Leaf’s (see left) sales.

A big part of Maple Leaf’s restructuring is Canada Bread’s new $100-million facility in Hamilton, Ontario. This plant, which opened in September 2011, is Canada’s largest fresh bakery.

The new plant let Canada Bread close two outdated Toronto facilities in the latest quarter. The company plans to close a third Toronto-area bakery in early 2013.

...

MAPLE LEAF FOODS INC. $11 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 139.5 million; Market cap: $1.5 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.mapleleaf.ca) is Canada’s largest foodprocessing company. It mainly makes its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. Through 90.0%-owned Canada Bread (see right), the company also makes fresh and frozen bread, pastries and pasta.

Maple Leaf continues to restructure its operations, including simplifying its product lines and increasing its focus on its most profitable foods. The company is also installing a new computer system that will give its managers more timely information and help them make better decisions.

These measures should raise Maple Leaf’s gross margin (gross profits as a percentage of sales) from 7.7% in the past 12 months, to 12.5% in 2015.

...

PRECISION DRILLING CORP. $6.85 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 276.3 million; Market cap: $1.9 billion; Price-to-sales ratio: 0.9; No dividends paid since February 2009; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract-drilling services to land-based oil and gas producers in Canada, the U.S. and Mexico. It had 344 rigs in service as of March 31, 2012.

The stock is down 45.6% from its recent peak of $12.60 in March 2012. That’s due to fears that falling oil and natural gas prices will hurt demand for Precision’s rigs. However, the company operates under long-term contracts that help shield it from volatile oil and gas prices. It has 122 rigs under contract in 2012 and 79 in 2013.

Precision can also conserve cash by putting off building new rigs if demand weakens. That’s why it recently cut its 2012 capital expenditures to $975 million from its earlier forecast of $1.1 billion.

...

TRANSCANADA CORP. $43 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 704.0 million; Market cap: $30.3 billion; Price-to-sales ratio: 3.5; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.transcanada.com) is now building its Keystone XL pipeline in sections. In January 2012, the U.S. government rejected the full project, which aims to pump crude oil from Alberta to refineries on the U.S. Gulf Coast.

The company will soon start work on the southern section, from Oklahoma to Texas. It has now changed its path for the northern section and reapplied for the necessary permit.

TransCanada is a buy.

...

PENGROWTH ENERGY CORP. $6.13 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 364.5 million; Market cap: $2.2 billion; Price-to sales ratio: 1.5; Dividend yield: 7.8%; TSINetwork Rating: Average; www.pengrowth.com) is cutting its monthly dividend by 42.9%, to $0.04 a share from $0.07, starting with the August 2012 payment. The new annual dividend rate of $0.48 yields 7.8%.

The company’s selling prices for oil and natural gas are falling, and it wants to conserve cash for acquisitions and investments in new projects like its Lindbergh oil sands development in Alberta.

Lindbergh should begin operating in 2015, and will increase Pengrowth’s production by a third by 2018. The project’s reserves should last 25 years.

...

CANADIAN IMPERIAL BANK OF COMMERCE $72 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 404.9 million; Market cap: $29.2 billion; Price-to-sales ratio: 2.3; Dividend yield: 5.0%; TSINetwork Rating: Above Average; www.cibc.com) is Canada’s fifth-largest bank, with total assets of $387.5 billion.

CIBC’s exposure to the five most troubled European countries was just $354 million when its fiscal 2012 second quarter ended on April 30, 2012. That’s down from $363 million on January 31, 2012 (the bank did not provide comparable figures for the end of fiscal 2011).

These amounts are small next to the $766 million, or $1.90 a share, that CIBC earned in its latest quarter. That’s up 6.1% from $722 million, or $1.80 a share, a year earlier. Without unusual items, earnings per share would have risen 9.3%, to $2.00 from $1.83. Revenue rose 2.3%, to $3.1 billion from $3.0 billion. Low interest rates continue to spur demand for loans. The bank also saw higher gains from the portfolio of securities it holds.

...

BANK OF MONTREAL $58 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 643.4 million; Market cap: $37.3 billion; Price-to-sales ratio: 2.4; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with assets of $525.5 billion.

The bank’s exposure to troubled European countries was a moderate $1.3 billion on April 30, 2012. That’s up from $1.0 billion three months earlier (it didn’t report comparable results for the end of fiscal 2011). The rise is mainly due to an increase in short-term loans to clients in Italy.

In the quarter ended April 30, 2012, Bank of Montreal’s earnings rose 27.5%, to $982 million from $770 million a year earlier. That mainly reflects the contribution from U.S. banking firm Marshall & Ilsley, which Bank of Montreal bought for $4.0 billion in stock in July 2011. Because of extra shares outstanding, earnings per share rose at a slower pace of 15.2%, to $1.44 from $1.25.

...

BANK OF NOVA SCOTIA $53 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $58.3 billion; Price-to-sales ratio: 3.4; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.scotiabank.com) is Canada’s third-largest bank, with assets of $659.7 billion.

Scotia’s overseas operations now supply 30% of its earnings. It prefers to focus on fast-growing regions like Asia and Latin America instead of Europe. The bank holds $2.5 billion of securities from troubled European countries, mainly Italy and Spain, down from $2.6 billion six months ago.

To put these figures in context, Bank of Nova Scotia earned $1.5 billion in the three months ended April 30, 2012. That’s up 16.1% from $1.3 billion a year earlier. Earnings per share rose 8.5%, to $1.15 from $1.06, on more shares outstanding. Revenue rose 1.4%, to $4.7 billion from $4.6 billion.

...

TORONTO-DOMINION BANK $80 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 908.2 million; Market cap: $72.7 billion; Price-to-sales ratio: 3.2; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.td.com) is Canada’s second-largest bank, with total assets of $773.2 billion.

TD is also cutting its exposure to troubled European countries. It held $691 million of investments from these nations on April 30, 2012, down from $1.0 billion on October 31, 2011.

The bank earned $1.7 billion in its second quarter, up 13.9% from $1.5 billion a year earlier. Earnings per share rose 11.7%, to $1.82 from $1.63, on more shares outstanding. These gains are largely the result of TD’s recent $6.8-billion purchase of MBNA’s Canadian credit card business. Revenue rose 11.5%, to $5.8 billion from $5.2 billion.

...

BOMBARDIER INC. (Toronto symbols BBD.A $4.06 and BBD.B $4.01; 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 traditionally been a maker of smaller aircraft, such as business jets and regional planes.

The company is now adding larger models, such as its upcoming CSeries jets, which seat between 100 and 150 passengers. Bombardier is still developing and testing the CSeries, but it aims to deliver the first plane in the next 18 months.

Even with the current economic uncertainty, the company recently announced new orders for a total of 35 CSeries planes.

...

METRO INC. $53 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 98.9 million; Market cap: $5.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.6%; TSINetwork Rating: Average; www.metro.ca) is Canada’s third-largest supermarket operator, after Loblaw and Sobeys. The company has about 600 supermarkets in Quebec and Ontario. It also operates 260 drugstores under the Brunet, The Pharmacy and Drug Basics banners.

Metro’s sales rose 7.4%, from $10.6 billion in 2007 to $11.4 billion in 2011 (fiscal years end September 30). Earnings fell 5.0%, from $295.6 million in 2007 to $280.8 million in 2008. Metro is an aggressive buyer of its own shares. Because of fewer shares outstanding, per-share earnings fell 2.4%, from $2.54 to $2.48.

However, earnings turned around in 2009, rising 27.8%, to $359.0 million, or $3.23 share. That’s mainly because the company lowered its advertising costs by converting its various banners in Ontario to the Metro brand. Earnings continued to rise, and reached $400.6 million, or $3.87 a share, in 2011.

...

There is a history of Canadian consumer stocks trying, and failing, to establish a presence in the United States. But there are several outstanding success stories, such as Alimentation Couche-Tard (Toronto symbol ATD.B) our #1 Stock for 2012, which has profited extensively from its convenience stores and gas bars in the U.S. A new partnership initiative in the U.S. by Reitmans is on a more modest scale than Couche-Tard’s operations, but the women’s wear retailer is looking for a welcome boost in sales. REITMANS (CANADA) LTD. (Toronto symbol RET.A; www.reitmans.com) owns 925 women’s clothing stores across Canada. The chain consists of 364 Reitmans, 154 Penningtons, 153 Smart Set, 114 Addition Elle, 74 Thyme Maternity and 66 RW & Co. stores....

Vale SA is one of the world’s largest iron ore producers. The company gets about 59% of its revenue from iron ore. The rest comes from base metals, coal and fertilizer.

When we go through the many comments we receive from TSI Network readers, the subject that seems to come up most often is dividend stocks. That’s not surprising, perhaps, since the first principle in our 3-part investment strategy is to mainly buy well-established, dividend-paying stocks. Another subject that draws many questions and strong opinions from our readers is retirement planning. And the idea of planning your retirement around dividends is one that appeals to many investors. When Pat replied to a specific question on this strategy two and a half months ago, it became the most watched of the weekly videos he has posted on the network over the past four months. It seems like a good time to have another look at this video, particularly because Pat’s answer holds a word of caution for investors: simply buying and holding dividend stocks may not be quite enough to accomplish your goals....

Many young people begin investing with the mistaken notion that a single big idea can make them rich. For some, the big idea is stumbling upon an investment that provides a 1,000-to-1 return. For others, it’s a technique that provides sure-fire investment decisions, or an investing course or guru that promises instant riches. If you ask investors who have a few decades of successful investing behind them, however, few if any will credit their success to any one investment or investing technique. Instead, most will talk about the value of everyday qualities like patience, consistency and a healthy sense of skepticism—in short, the kind of qualities that bring success in all aspects of life, not just investing....

AMERICAN EXPRESS CO. $56 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $61.6 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.4%; TSINetwork Rating: Average; www.americanexpress.com) is best known for its American Express charge and credit cards. It also sells travel-related services, such as hotel bookings, insurance and traveller’s cheques.

Amex gets most of its revenue from the fees it charges merchants who accept its cards. It also earns interest on the outstanding balances of its cardholders. Being a lender adds to its risk, particularly if cardholders fall behind on their payments and Amex has to write off these loans.

However, Amex clients tend to have above-average incomes and good credit histories. The company has also tightened its lending policies in the past few years.

...

GENERAL ELECTRIC CO. $20 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $212.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.ge.com) plans to split its energy-products division into three new businesses: GE Power and Water (turbines, generators); GE Oil and Gas (products for onshore and offshore energy producers); and GE Energy Management (power-transmission equipment).

This reorganization should make it easier for these new divisions to take advantage of new opportunities. It should also save GE $200 million to $300 million by 2014.

To put these savings in context, GE earned $4.0 billion in the three months ended June 30, 2012. That’s up 6.9% from $3.75 billion a year earlier. Earnings per share rose 11.8%, to $0.38 from $0.34, on fewer shares outstanding. Revenue rose 2.5%, to $36.5 billion from $35.6 billion.

...

CEDAR FAIR L.P. $32 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.5 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 5.0%; TSINetwork Rating: Average; www.cedarfair.com) reported revenue of $456 million from the beginning of the year through the July 4th holiday weekend. That’s up 4.6%, from the same period in 2011.

New rides and attractions are helping Cedar Fair draw more visitors to its 11 amusement parks and seven water parks. Overall attendance rose 2%, while average spending per guest gained 4%. Revenue at its five hotels also rose 2%.

Cedar Fair is a buy.

...

MACY’S INC. $35 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 413.2 million; Market cap: $14.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.3%; TSINetwork Rating: Average; www.macysinc.com) reported lower-than-expected sales at its 840 department stores for June 2012.

During the month, same-store sales rose 1.2% from June 2011. That missed the consensus estimate of a 1.9% increase. The weaker U.S. economy has hurt consumer spending. As well, renovations have cut sales at its flagship store in New York City.

However, the company’s websites continue to grow strongly: online sales jumped 31.8% in June 2012. Moreover, Macy’s still expects its same-store sales to rise 3.7% for its full fiscal year, which ends January 31, 2013.

...

CINTAS CORP. $38 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 126.5 million; Market cap: $4.8 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.4%; TSINetwork Rating: Average; www.cintas.com) earned $297.6 million in its 2012 fiscal year, which ended May 31, 2012. That’s up 20.5% from $247.0 million in 2011. Earnings per share jumped 35.1%, to $2.27 from $1.68, on fewer shares outstanding.

Revenue rose 7.7% in 2012, to a record $4.1 billion from $3.8 billion. If you exclude contributions from acquisitions, revenue still rose 6.1%.

The company continues to see rising demand for the uniforms and services, such as document shredding, that it sells to businesses. It is also doing a good job of controlling its costs.

...