BCE Inc.

DEVON ENERGY CORP., $67.50, symbol DVN on New York, has announced plans to sell its properties in the Gulf of Mexico, as well as its international assets. After taxes, the company expects the sales to generate between $4.5 billion and $7.5 billion. The properties that Devon is selling make up about 7% of the company’s proven reserves of 2.8 billion barrels of oil equivalent. But they are high-risk and costly prospects to develop, and consume over 30% of Devon’s spending. Their potential is huge, but they would take many years and billions of dollars more to develop. The sales will let Devon focus on its onshore North American properties. Apart from conventional production, these include shale oil in northern Texas and oil sands in Canada. The company also plans to cut its debt from $5.8 billion to as low as $2.5 billion. That’s just 8.3% of its $30.0-billion market cap....

BCE INC. $25.79 (Toronto symbol BCE; Shares outstanding: 767.2 million; Market cap: $19.8 billion; SI Rating: Above Average) and TELUS CORP. $31.35 (Toronto symbol T.A; Shares outstanding: 335.6 million; Market cap: $10.5 billion; SI Rating: Above Average) have begun selling Apple’s hugely popular iPhone smartphone. Until now, Rogers Communications was the sole Canadian carrier. Adding the iPhone should help BCE and Telus hang on to more of their cellphone customers. It will also help them compete with new wireless carriers, including DAVE Wireless and Public Mobile, which will probably start operating next year. Both BCE and Telus are buys.

TRANSALTA CORP., $21.86, Toronto symbol TA, will pay roughly $755 million, or $5.25 a share, for Canadian Hydro Developers Inc. (Toronto symbol KHD). The purchase price is 15.4% higher than TransAlta’s earlier offer of $4.55 a share. Canadian Hydro is currently trading at $5.22, which indicates that investors do not expect a better offer. TransAlta aims to complete the purchase in the next month or two, once Canadian Hydro shareholders approve the takeover. TransAlta will also assume Canadian Hydro’s $876-million debt. To put these figures in context, TransAlta’s 2008 cash flow was $828 million, or $4.16 a share....

AMAZON.COM INC., $95.96, symbol AMZN on Nasdaq, is now selling its Kindle e-book reader in over 100 countries. The reader will ship on October 19, and will cost $279 U.S. Canada has not yet been included in the expansion. That’s because Amazon has not reached a deal with a wireless carrier, such as BCE, Rogers or Telus. Kindle users can download files from Amazon’s Kindle store, which contains over 350,000 books. Most bestsellers and new releases are just $9.99 U.S. each. International users will pay an extra $1.99 U.S. Users can also download leading U.S. and international magazines and newspapers, as well as over 1,200 blogs....

TELUS CORP. (Toronto symbols T $34 and T.A $32; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 318 million; Market cap: $10.5 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) is Canada’s second-largest telephone company after BCE Inc. (Toronto symbol BCE). Telus has been expanding its wireless operations over the past few years. As a result, the company now gets 55% of its earnings from its 6.3 million wireless subscribers across Canada. Telus has 37% of the wireless market. Market leader Rogers Communications Inc. (Toronto symbol RCI.B) has 48%. The remaining 45% of Telus’s earnings comes from its traditional phone business, which has 4.1 million...

Three new wireless providers (Globalive, DAVE Wireless and Public Mobile) will probably enter the Canadian market next year. This will undoubtedly put pressure on Canada’s three existing wireless carriers, including Telus. However, Telus has dealt with strong competition from wireless and cable companies for years. For example, last year it launched Koodo, a new discount cellphone service, to attract younger users. The company has also upgraded its networks to handle a wider variety of cellphones, including Apple’s hugely popular iPhone. New TV services should also help Telus hang on to many of its traditional phone and wireless customers. Moreover, Telus’s high dividend yield should attract more investors as income trusts convert to corporations, or cut their distributions once Ottawa starts taxing them in 2011....

CGI GROUP INC. $13 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 306 million; Market cap: $4 billion; Price-to-sales ratio: 1.0; SI Rating: Extra Risk) is Canada’s largest provider of computer-outsourcing services. CGI helps corporations and government agencies automate certain routine functions, such as accounting and buying supplies. This lets its clients focus on their main businesses, and improve their efficiency. The company has over 100 offices in 16 countries. Canada accounts for roughly 60% of its revenue, followed by the U.S. (35%) and Europe (5%). BCE Inc. (Toronto symbol BCE) is CGI’s largest client, supplying roughly 12% of its annual revenue.

Long-term contracts cut CGI’s risk

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BCE INC. $26.39 (Toronto symbol BCE; Shares outstanding: 767.2 million; Market cap: $20.2 billion; SI Rating: Above Average) has deeply disappointed many investors at times in the past, and they’ve resolved never to buy it again. The most recent disappointment came when the company sold itself to the Ontario Teachers’ Pension Plan for $42.75 a share, but the deal fell through because of problems with financing. That news prompted the stock to plunge from $38 to $22. These disappointments help explain why BCE is now as cheap as it is. However, the stock could redeem itself in investors’ eyes and come back into fashion....

FIDELITY CANADIAN LARGE CAP FUND $24.05 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) mainly invests in large firms, like those on the S&P/TSX 60 index, although it may also invest in mid-cap stocks. The $304.8-million Fidelity Canadian Large Cap Fund’s top holdings include Royal Bank of Canada, Suncor Energy, Manulife Financial, Canadian Natural Resources, Research in Motion, Goldcorp, Bank of Nova Scotia, BCE Inc., Canadian Imperial Bank of Commerce and TD Bank. The fund’s breakdown by industry includes: Financials (27.3%), Energy (18.0%), Materials (11.7%), Information Technology (9.0%), Consumer Discretionary (7.8%) and Industrials (7.5%)....

TELUS CORP. $33.31 (Toronto symbol T.A; Shares outstanding: 335.6 million; Market cap: $11.1 billion; SI Rating: Above Average) has purchased privately owned Black’s Photo Corp. Black’s owns and operates 113 stores that sell film, cameras and other photographic equipment. Telus plans to sell its wireless phones through these stores. As well, most cellphones now come with built-in cameras, so Black’s could help Telus tap into rising demand for digital-photo printing and other photo-related products and services. Telus paid $28 million for Black’s, which is just 11% of its second-quarter earnings of $244 million, or $0.77 a share....