acquisition
LOBLAW COMPANIES LTD. $69 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 412.7 million; Market cap: $28.5 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.4%; TSINetwork Rating: Above Average; www.loblaw.ca) plans to close 52 less profitable stores in the next year, including supermarkets, gas bars and stand-alone Joe Fresh clothing outlets. Following these closures, it will operate 2,400 stores, including the 1,250 Shoppers Drug Mart pharmacies it bought for $12.3 billion in cash and shares in March 2014.
The move will cut $300 million from Loblaw’s yearly sales, but it should add $35 million to $40 million to its annual gross profits. Loblaw also expects to save $200 million this year by merging its warehouses and other operations with Shoppers.
Excluding store-closure costs, Loblaw earned $350 million in the three months ended June 20, 2015, up 17.8% from $297 million a year earlier. Earnings per share gained 14.9%, to $0.85 from $0.74, on more shares outstanding.
Sales rose 2.2%, to $10.5 billion from $10.3 billion. Excluding gasoline, same-store sales rose 4.2% at Loblaw’s supermarkets, while Shoppers’ same-store sales gained 3.8%. Savings from the Shoppers acquisition are helping Loblaw repay the money it borrowed to complete the purchase. The company ended the latest quarter with total debt of $11.1 billion (or 39% of its market cap), down from $11.4 billion at the end of 2014. It also held cash of $1.3 billion.
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The move will cut $300 million from Loblaw’s yearly sales, but it should add $35 million to $40 million to its annual gross profits. Loblaw also expects to save $200 million this year by merging its warehouses and other operations with Shoppers.
Excluding store-closure costs, Loblaw earned $350 million in the three months ended June 20, 2015, up 17.8% from $297 million a year earlier. Earnings per share gained 14.9%, to $0.85 from $0.74, on more shares outstanding.
Sales rose 2.2%, to $10.5 billion from $10.3 billion. Excluding gasoline, same-store sales rose 4.2% at Loblaw’s supermarkets, while Shoppers’ same-store sales gained 3.8%. Savings from the Shoppers acquisition are helping Loblaw repay the money it borrowed to complete the purchase. The company ended the latest quarter with total debt of $11.1 billion (or 39% of its market cap), down from $11.4 billion at the end of 2014. It also held cash of $1.3 billion.
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Milestone Apartment REIT, $14.99, symbol MST.UN on Toronto (Units outstanding: 60.4 million; Market cap: $906.1 million; www.milestonereit.com), holds 61 “garden-style” apartment properties containing 20,232 units in 14 cities throughout the U.S. Southeast and Southwest.
Milestone continues to grow by acquisition. In the first half of 2015, it purchased buildings in Orlando, Atlanta and Kansas City for a total of $101.3 million (all amounts except unit price and market cap in U.S. dollars). In all, these properties contain 819 units. At the same time, the trust is selling older properties to improve the overall quality of its portfolio.
The REIT’s new properties increased its revenue by 22.8% in the three months ended June 30, 2015, to $54.8 million from $44.6 million a year earlier. Cash flow jumped 34.3%, to $14.9 million from $11.1 million. The trust sold units to fund these purchases. As a result, cash flow per unit rose at a slower pace of 20.0%, to $0.24 from $0.20.
As of June 30, 2015, Milestone’s occupancy rate was a high 95.2%, up from 95.0% a year earlier.
In August 2015, the trust agreed to pay $45.1 million for a 372-unit apartment building in Dallas. It expects to close this deal by September 30, 2015.
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Milestone continues to grow by acquisition. In the first half of 2015, it purchased buildings in Orlando, Atlanta and Kansas City for a total of $101.3 million (all amounts except unit price and market cap in U.S. dollars). In all, these properties contain 819 units. At the same time, the trust is selling older properties to improve the overall quality of its portfolio.
The REIT’s new properties increased its revenue by 22.8% in the three months ended June 30, 2015, to $54.8 million from $44.6 million a year earlier. Cash flow jumped 34.3%, to $14.9 million from $11.1 million. The trust sold units to fund these purchases. As a result, cash flow per unit rose at a slower pace of 20.0%, to $0.24 from $0.20.
As of June 30, 2015, Milestone’s occupancy rate was a high 95.2%, up from 95.0% a year earlier.
In August 2015, the trust agreed to pay $45.1 million for a 372-unit apartment building in Dallas. It expects to close this deal by September 30, 2015.
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ALGONQUIN POWER & UTILITIES CORP. $9.38 (Toronto symbol AQN; Shares outstanding: 239.5 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.3%; www.algonquinpower.com) has used acquisitions to nearly triple in size over the past three years and is planning more purchases.
The company’s regulated utility businesses now provide water, electricity and natural gas to over 489,000 customers, up sharply from 120,000 three years ago. Its hydroelectric, thermal energy, solar and wind facilities now generate 1,050 megawatts, up from 460.
Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 20.9% of Algonquin.
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The company’s regulated utility businesses now provide water, electricity and natural gas to over 489,000 customers, up sharply from 120,000 three years ago. Its hydroelectric, thermal energy, solar and wind facilities now generate 1,050 megawatts, up from 460.
Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 20.9% of Algonquin.
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Its niche in medical equipment testing has made Agilent Technologies one of our top U.S. growth stocks before and after its big spinoff.
FEDEX CORP., $145.29, New York symbol FDX, reported lower-than-expected earnings this week, as weaker demand for its shipping services and higher insurance costs offset cost savings. In the first quarter of its 2016 fiscal year, which ended August 31, 2015, the company earned $692 million, up 13.1% from $612 million a year earlier. Per-share earnings gained 14.2%, to $2.42 from $2.12, on fewer shares outstanding, but that still missed the consensus estimate of $2.46. Overall revenue rose 5.1%, to $12.3 billion from $11.7 billion, matching the consensus forecast....
ALIMENTATION COUCHETARD $60.49 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard. com; Shares outstanding: 567.4 million; Market cap: $34.1 billion; Dividend yield: 0.4%) is at new all-time highs after reporting improved profits in the latest quarter. In the three months ended July 19, 2015, Couche-Tard’s sales fell 2.2%, to $8.98 billion from $9.19 billion a year earlier (all figures except share price and market cap in U.S. dollars). The fall came from lower gasoline prices, while the higher U.S. dollar cut the contribution from its European operations. That was partly offset by a full quarter of sales from The Pantry, which Couche-Tard bought for $1.7 billion on March 16, 2015....
LEON’S FURNITURE LTD. $14.00 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 71.2 million; Market cap: $996.6 million; Dividend yield: 2.9%) has steadily opened new stores, growing from 27 in 2003 to 80 today. However, the company more than quadrupled in size overnight with its March 2013 purchase of its main rival, The Brick, for $700 million. The Brick has 223 locations across Canada; the chains continue to operate separately. In the three months ended June 30, 2015, the company’s sales rose 2.1%, to $484.3 million from $474.5 million a year earlier. On a same-store basis, sales gained 1.7%....
Exchange Income Corp., $24.18, symbol EIF on Toronto (Shares outstanding: 23.2 million; Market cap: $560.9 million; www.exchangeincomecorp.ca), operates in two main areas: aviation and manufacturing. The aviation business (77% 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 (23% of revenue) includes WesTower Communications Canada (a maker and installer of wireless communication towers), Jasper Tank, Overlanders Manufacturing, Water Blast Manufacturing and Stainless Fabrication....
Almost a century of uninterrupted dividends and a forceful growth strategy make 3M Company one of our Best Buys in U.S. stocks.
As part of our three-prong approach to investing, we recommend investors spread their money out across the five main economic sectors: Manufacturing, Resources, Consumer Goods, Finance and Utilities. We also advise investing mainly in well-established companies, and downplaying stocks in the broker/media limelight. Due to recent stock market turmoil, investor interest in one of the less-volatile sectors—Consumer Goods—is rising. That includes the three Canadian retailers we analyze below. All are profiting from recent acquisitions, while their upgraded stores are attracting more shoppers. They’re also rolling out effective loyalty programs that spur repeat visits....