acquisition strategy
Parkland Fuel Corp., $26.35, symbol PKI on Toronto (Shares outstanding: 82.6 million; Market cap: $2.2 billion, www.parkland.ca), operates gas stations, convenience stores and a fuel-distribution business, mostly in Western Canada and Ontario. It was called Parkland Income Fund before it converted to a dividend-paying corporation on December 31, 2010. The company owns 143 rural gas stations and convenience stores. Its brands include Fas Gas Plus, Race Trac Gas and Short Stop. Many of Parkland’s stations sell propane in addition to gasoline and diesel fuel. Parkland also operates Esso stations in Western Canada and Ontario under a licensing deal with Imperial Oil (symbol IMO on Toronto). In addition, it has an agreement to use the Chevron brand in B.C....
DirectCash Payments Inc., a leading ATM operator in Canada, Australia and the U.K. this Canadian firm keeps on expanding through a series of small takeovers
Low interest rates have spurred strong investor interest in these two high-yielding master limited partnerships (MLPs). Both have strong businesses that give them lots of cash flow for distributions. However, we feel Cedar Fair (see box) is the better choice, because Buckeye’s aggressive growth-by-acquisition strategy adds risk. Still, there are a few things Canadian investors should keep in mind: for one, you must pay a 35% U.S. withholding tax on income from MLPs, though you can usually claim a non-refundable Canadian tax credit to offset that. As well, MLPs are not suitable for RRSPs or RRIFs....
Pat McKeough responds to many requests from members of his Inner Circle on specific stock picks as well as questions on investment strategy and the economy. 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 members of Pat’s Inner Circle.
This week an Inner Circle Member asked us about a stock that has risen and fallen sharply in the past year. AutoCanada has almost four dozen franchised auto dealerships across Canada and continues to add more through takeovers. While the company has benefited from a rebound in car sales, it also faces several challenges in a cyclical, competitive business. Pat examines the risk of its growth-by-acquisition strategy and the potential impact of lower oil prices on Western Canadian car sales.
Q: Pat: I am a new member and I have a question. What is your current view of AutoCanada? Thanks.
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This week an Inner Circle Member asked us about a stock that has risen and fallen sharply in the past year. AutoCanada has almost four dozen franchised auto dealerships across Canada and continues to add more through takeovers. While the company has benefited from a rebound in car sales, it also faces several challenges in a cyclical, competitive business. Pat examines the risk of its growth-by-acquisition strategy and the potential impact of lower oil prices on Western Canadian car sales.
Q: Pat: I am a new member and I have a question. What is your current view of AutoCanada? Thanks.
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AutoCanada Inc., $38.29, symbol ACQ on Toronto (Shares outstanding: 24.5 million; Market cap: $886.8 million; www.autocan.ca), has 46 franchised car dealerships in eight provinces. The company sells numerous brands, including Chrysler, Dodge, Jeep, Ram, Fiat, Chevrolet, GMC, Buick, Cadillac, Nissan, Hyundai, Subaru, Audi, Volkswagen and BMW. However, Chrysler vehicles (including Dodge, Jeep, Ram and Fiat) supply around 70% of its revenue. In 2013, AutoCanada’s dealerships sold roughly 36,000 vehicles and processed about 364,000 repair and maintenance orders in their 381 service bays....
Every Monday we feature “A Stock to Sell” as our daily post. With every stock or investment we recommend as a sell, we give you a full explanation of why we advise against investing in it at this time.
Exchange Income Corp. (symbol EIF on Toronto; www.exchangeincomecorp.ca) operates in two main areas: aviation and manufacturing.
The aviation business (63% of revenue) includes regional airlines Perimeter Aviation, Keewatin Air, Calm Air International, Bearskin Lake Air Service, Custom Helicopters and Regional One. These airlines serve communities in Manitoba, Ontario and Nunavut.
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Exchange Income Corp. (symbol EIF on Toronto; www.exchangeincomecorp.ca) operates in two main areas: aviation and manufacturing.
The aviation business (63% of revenue) includes regional airlines Perimeter Aviation, Keewatin Air, Calm Air International, Bearskin Lake Air Service, Custom Helicopters and Regional One. These airlines serve communities in Manitoba, Ontario and Nunavut.
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Exchange Income Corp., $22.63, symbol EIF on Toronto (Shares outstanding: 22.4 million; Market cap: $506.6 million; www.exchangeincomecorp.ca), operates in two main areas: aviation and manufacturing. The aviation business (63% of revenue) includes regional airlines Perimeter Aviation, Keewatin Air, Calm Air International, Bearskin Lake Air Service, Custom Helicopters and Regional One. These airlines serve communities in Manitoba, Ontario and Nunavut. The manufacturing business (37% of revenue) includes WesTower Communications Canada (a maker and installer of wireless communication towers), Jasper Tank, Overlanders Manufacturing, Water Blast Manufacturing and Stainless Fabrication....
Pat McKeough responds to many requests from members of his Inner Circle for specific stock investing advice as well as questions on investment strategy and the economy. 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 a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday.
Recently an Inner Circle member asked us about Parkland Fuel, a company that sells gasoline and operates convenience stores through its own brands and under license to bigger companies like Imperial Oil. Parkland recently lost a major supply contract with Suncor Energy and Pat examines the company’s attempts to replace that business with new acquisitions. He also looks at the impact of lower oil prices on Parkland’s profits.
Q: Hi Pat: Could you give us an update on Parkland Fuels? They are continuing to make acquisitions, and the stock continues to rise. Would you consider it a buy now? Regards.
A: Parkland Fuel Corp. (symbol PKI on Toronto; www.parkland.ca) operates gas stations, convenience stores and a fuel distribution business, mostly in Western Canada and Ontario. It was called Parkland Income Fund before it converted to a dividend-paying corporation on December 31, 2010.
The company owns 144 rural gas stations and convenience stores. Brands include Fas Gas Plus, Race Trac Gas and Short Stop. Many of Parkland’s stations sell propane in addition to gasoline and diesel fuel. The company also operates Esso stations in Western Canada and Ontario under a licensing deal with Imperial Oil (symbol IMO on Toronto). It recently signed an agreement to use the Chevron brand in B.C.
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Recently an Inner Circle member asked us about Parkland Fuel, a company that sells gasoline and operates convenience stores through its own brands and under license to bigger companies like Imperial Oil. Parkland recently lost a major supply contract with Suncor Energy and Pat examines the company’s attempts to replace that business with new acquisitions. He also looks at the impact of lower oil prices on Parkland’s profits.
Q: Hi Pat: Could you give us an update on Parkland Fuels? They are continuing to make acquisitions, and the stock continues to rise. Would you consider it a buy now? Regards.
A: Parkland Fuel Corp. (symbol PKI on Toronto; www.parkland.ca) operates gas stations, convenience stores and a fuel distribution business, mostly in Western Canada and Ontario. It was called Parkland Income Fund before it converted to a dividend-paying corporation on December 31, 2010.
The company owns 144 rural gas stations and convenience stores. Brands include Fas Gas Plus, Race Trac Gas and Short Stop. Many of Parkland’s stations sell propane in addition to gasoline and diesel fuel. The company also operates Esso stations in Western Canada and Ontario under a licensing deal with Imperial Oil (symbol IMO on Toronto). It recently signed an agreement to use the Chevron brand in B.C.
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Parkland Fuel Corp., $22.18, symbol PKI on Toronto (Shares outstanding: 75.0 million; Market cap: $1.7 billion, www.parkland.ca), operates gas stations, convenience stores and a fuel distribution business, mostly in Western Canada and Ontario. It was called Parkland Income Fund before it converted to a dividend-paying corporation on December 31, 2010. The company owns 144 rural gas stations and convenience stores. Brands include Fas Gas Plus, Race Trac Gas and Short Stop. Many of Parkland’s stations sell propane in addition to gasoline and diesel fuel. The company also operates Esso stations in Western Canada and Ontario under a licensing deal with Imperial Oil (symbol IMO on Toronto). It recently signed an agreement to use the Chevron brand in B.C. Parkland continues to sell its company-owned stations to franchisees. This lets it collect rent and commissions on fuel sales without having to staff and operate the stations....
ARCHER DANIELS MIDLAND CO., $50.36, New York symbol ADM, processes corn, wheat, soybeans, canola, flax seed, peanuts, cocoa and other crops into a wide variety of food ingredients, such as flour, oils and sweeteners. It is also the largest maker of ethanol from corn in the U.S. This week, the company agreed to sell its global chocolate operations, including three plants in North America and three in Europe, to privately held Cargill Inc. These businesses process cocoa into chocolate for candy makers and other food companies. Archer Daniels will receive $440 million when it completes the sale in the first half of 2015. That’s equal to 83% of the $533 million, or $0.81 a share, that it earned in the three months ended June 30, 2014....