acquisition
We haven’t found any industrial REITs we recommend as buys, but some are okay to hold as part of a well-balanced portfolio. Here’s a look at the three you asked about:
- WPT Industrial REIT, $10.80, symbol WIR.U on Toronto (Units outstanding: 29.4 million; Market cap: $317.5 million; www.wptreit.com), is a Canadian REIT that owns and manages industrial properties in the U.S. Right now, WPT has 42 properties in 12 states. In all, they include 12.8 million square feet of leasable area....
ENERFLEX LTD. $15.48 (Toronto symbol EFX; TSINetwork Rating: Extra Risk)(403-387-6377; www.enerflex.com; Shares outstanding: 78.6 million; Market cap: $1.2 billion; Dividend yield: 2.2%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration gear and power generators.
On June 30, 2014, Enerflex completed its $431- million U.S. acquisition of two businesses owned by privately held Axip Energy Services LP: an international contract compression and processing subsidiary and a division that provides aftermarket services.
In the quarter ended September 30, 2014, Enerflex’s revenue rose 22.6%, to $479.0 million from $390.7 million a year earlier. Earnings per share jumped 37.5%, to $0.33 from $0.24.
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On June 30, 2014, Enerflex completed its $431- million U.S. acquisition of two businesses owned by privately held Axip Energy Services LP: an international contract compression and processing subsidiary and a division that provides aftermarket services.
In the quarter ended September 30, 2014, Enerflex’s revenue rose 22.6%, to $479.0 million from $390.7 million a year earlier. Earnings per share jumped 37.5%, to $0.33 from $0.24.
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FIRSTSERVICE CORP. $63.43 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.5 million; Market cap: $2.3 billion; Dividend yield: 0.7%) serves the following areas of the real estate market: commercial real estate, residential property management and property improvement. The company has more than 24,000 employees worldwide.
In the quarter ended September 30, 2014, FirstService’s revenue rose 13.5%, to $684.6 million from $603.0 million a year earlier (all figures except share prices in U.S. dollars). Excluding one-time items, earnings per share were $0.75, up 8.7% from $0.69.
Revenue rose at all three of FirstService’s divisions: Colliers International (commercial real estate), up 16%; FirstService Residential (residential property management), up 10%; and FirstService Brands (property services), up 12%. (FirstService Brands operates Paul Davis Restoration, California Closets and CertaPro Painters.)
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In the quarter ended September 30, 2014, FirstService’s revenue rose 13.5%, to $684.6 million from $603.0 million a year earlier (all figures except share prices in U.S. dollars). Excluding one-time items, earnings per share were $0.75, up 8.7% from $0.69.
Revenue rose at all three of FirstService’s divisions: Colliers International (commercial real estate), up 16%; FirstService Residential (residential property management), up 10%; and FirstService Brands (property services), up 12%. (FirstService Brands operates Paul Davis Restoration, California Closets and CertaPro Painters.)
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Pat McKeough responds to many requests from Members of his Inner Circle for specific stock 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 “U.S. Stock Picks” on Thursday.
Recently we had a question from an Inner Circle member about one of America’s best-known venture capital firms, KKR &Co. Previously known as Kohlberg Kravis Roberts & Co., the company earned notoriety when its leveraged buyout of Nabisco in the 1980s became the subject of a best-selling book and TV movie, Barbarians at the Gate. Pat looks at the company’s varied activities in the public, private and capital markets. He also assesses the strategies it is pursuing as it makes a flurry of deals aided by low borrowing rates.
Q: Pat: I was wondering if you could give me any information about KKR & Co. Your thoughts on it would be appreciated.
A: KKR & Co. LP (formerly Kohlberg Kravis Roberts & Co. LP; symbol KKR on New York; www.kkr.com) is an asset manager with 14 offices across North America, Europe, the Middle East, Asia and Australia.
The company serves three main markets: private (investment funds); public (leveraged loans, high-yield bonds, special situation assets, distressed assets and rescue, debtor-in-possession and exit financings); and capital (debt/equity financing).
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Recently we had a question from an Inner Circle member about one of America’s best-known venture capital firms, KKR &Co. Previously known as Kohlberg Kravis Roberts & Co., the company earned notoriety when its leveraged buyout of Nabisco in the 1980s became the subject of a best-selling book and TV movie, Barbarians at the Gate. Pat looks at the company’s varied activities in the public, private and capital markets. He also assesses the strategies it is pursuing as it makes a flurry of deals aided by low borrowing rates.
Q: Pat: I was wondering if you could give me any information about KKR & Co. Your thoughts on it would be appreciated.
A: KKR & Co. LP (formerly Kohlberg Kravis Roberts & Co. LP; symbol KKR on New York; www.kkr.com) is an asset manager with 14 offices across North America, Europe, the Middle East, Asia and Australia.
The company serves three main markets: private (investment funds); public (leveraged loans, high-yield bonds, special situation assets, distressed assets and rescue, debtor-in-possession and exit financings); and capital (debt/equity financing).
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ATLANTIC TELE-NETWORK $65.04 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.9 million; Market cap: $1.0 billion; Dividend yield: 1.8%) is entering the solar energy market by acquiring 28 solar projects in Massachusetts, California and New Jersey for $103 million.
Atlantic will now operate the assets, which have 45.7 megawatts of capacity, through its newly created Ahana Renewable subsidiary. The projects’ power-purchase agreements range from 10 to 25 years.
Before the purchase, Atlantic held cash of $395.6 million, or $24.87 a share, so it can easily afford this acquisition.
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Atlantic will now operate the assets, which have 45.7 megawatts of capacity, through its newly created Ahana Renewable subsidiary. The projects’ power-purchase agreements range from 10 to 25 years.
Before the purchase, Atlantic held cash of $395.6 million, or $24.87 a share, so it can easily afford this acquisition.
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ALIMENTATION COUCHETARD $44.55 (Toronto symbol ATD.B; TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard. com; Shares outstanding: 565.8 million; Market cap: $25.4 billion; Dividend yield: 0.4%) is buying The Pantry (symbol PTRY on Nasdaq), which operates more than 1,500 convenience stores in 13 southern U.S. states.
Couche-Tard will pay $1.7 billion—$ 860 million in cash and the assumption of $840 million of debt. This is its biggest purchase since it paid $2.7 billion U.S. for Norway’s Statoil Fuel & Retail gas station chain in June 2012.
Founded in 1967, The Pantry mainly grew through acquisitions beginning in the late 1980s. Like Couche-Tard, it focuses on selling higher-margin fresh food. It sells its own private-label bottled water and is the fifth-largest location for Subway restaurants.
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Couche-Tard will pay $1.7 billion—$ 860 million in cash and the assumption of $840 million of debt. This is its biggest purchase since it paid $2.7 billion U.S. for Norway’s Statoil Fuel & Retail gas station chain in June 2012.
Founded in 1967, The Pantry mainly grew through acquisitions beginning in the late 1980s. Like Couche-Tard, it focuses on selling higher-margin fresh food. It sells its own private-label bottled water and is the fifth-largest location for Subway restaurants.
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KKR & Co. LP (formerly Kohlberg Kravis Roberts & Co. LP), $22.65, symbol KKR on New York (Shares outstanding: 428.6 million; Market cap: $18.3 billion; www.kkr.com), is an asset manager with 14 offices across North America, Europe, the Middle East, Asia and Australia. The company serves three main markets: private (investment funds); public (leveraged loans, high-yield bonds, special situation assets, distressed assets and rescue, debtor-in-possession and exit financings); and capital (debt/equity financing). As of September 30, 2014, KKR had $96.0 billion of assets under administration. It continues to take advantage of strong financial markets to sell some of its investments at a profit. In the latest quarter alone, it made 10 sales, the largest being Visma, Modern Dairy and Ipreo. It still has a number of pending deals, including US Foods, Biomet and Alliance Boots....
LOBLAW COMPANIES $60.00 (Toronto symbol L; Shares outstanding: 412.7 million; Market cap: $25.2 billion; TSINetwork Rating: Above Average; Dividend yield: 1.6%; www.loblaw.ca) is Canada’s largest food retailer, with about 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills. George Weston Ltd. owns 46% of the company.
Loblaw completed its acquisition of the Shoppers Drug Mart chain in March 2014. It paid $12.3 billion: $6.6 billion in cash and $5.7 billion in Loblaw common shares.
In the quarter ended October 4, 2014, Loblaw’s sales rose 35.9%, to $13.6 billion from $10.0 billion a year earlier. Without Shoppers’ contribution, sales rose 2.0%. Before one-time items, Loblaw’s earnings gained 23.3%, to $0.90 a share from $0.73.
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Loblaw completed its acquisition of the Shoppers Drug Mart chain in March 2014. It paid $12.3 billion: $6.6 billion in cash and $5.7 billion in Loblaw common shares.
In the quarter ended October 4, 2014, Loblaw’s sales rose 35.9%, to $13.6 billion from $10.0 billion a year earlier. Without Shoppers’ contribution, sales rose 2.0%. Before one-time items, Loblaw’s earnings gained 23.3%, to $0.90 a share from $0.73.
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PLEASE NOTE: This is our last Hotline for 2014. Our next Hotline will go out on Friday, January 9, 2015. SHERRITT INTERNATIONAL, $3.23, symbol S on Toronto, has jumped over 42% this week after Cuba and the U.S. announced that they will re-establish diplomatic ties. The company has operated in Cuba for over 20 years and gets about 74% of its revenue from the country. Its Cuban operations include 50% of the Moa nickel and cobalt joint venture, as well as power plants and oil and gas projects. Sherritt is Cuba’s largest foreign investor....
C.R. BARD INC. $166 (New York symbol BCR; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 74.9 million; Market cap: $12.4 billion; Price-to-sales ratio: 3.9; Dividend yield: 0.5%; TSINetwork Rating: Above Average; www. crbard.com) makes over 15,000 medical devices in four main areas: oncology products that detect and treat various types of cancer (28% of 2013 sales); vascular products, like stents and catheters (27%); urology goods, such as drainage and incontinence devices (26%); and surgical tools (16%). Other medical products supply the remaining 3%. The company’s products are typically only used once, so customers must continually buy new ones. Acquisition targets fit well...