bombardier

PLEASE NOTE: Our next Hotline will go out on Thursday, April 7, 2011. BOMBARDIER INC., Toronto symbols BBD.A $7.09 and BBD.B $7.11, rose 12% this week after the company reported better-than-expected earnings. In its 2011 fiscal year, which ended January 31, 2011, Bombardier’s earnings rose 8.2%, to $755 million from $698 million in fiscal 2010 (all amounts except share price in U.S. dollars). Earnings per share rose 7.7%, to $0.42 from $0.39, on more shares outstanding. That easily beat the consensus estimate of $0.36 a share....

The stock market put on a huge rise from mid-2010 through February this year, and this left it ripe for a setback. Japan’s earthquake/tsunami/nuclear plant breakdown provided the trigger for that setback. Events in Japan have been horrific for the victims, of course. The Japanese situation could still weigh on the market for weeks or months to come. However, the damage to Japan is far too isolated and local to put the worldwide economic recovery at risk. World economic growth could slow temporarily while multi-national companies re-think their hiring and investment plans, and consumers re-think major purchases. After they complete their re-thinking, businesses and consumers may speed up their spending to make up for lost time. The outcome of Japan’s nuclear problems could have a big impact. If radiation leakage is widespread, it could spur much more environmental opposition to the nuclear industry. That could shift demand from nuclear to natural-gas power plants, particularly since shale gas discoveries and technology have vastly expanded natural gas reserves in North America and around the world. (One key beneficiary would be our long-time favourite, Encana – see below.)...

TORONTO-DOMINION BANK, $83.60, Toronto symbol TD, is the first of Canada’s big five banks to raise its dividend following the 2008-2009 financial crisis. The new quarterly dividend of $0.66 a share, up 8.2% from $0.61, yields 3.2% on an annualized basis. TD also reported better-than-expected quarterly earnings this week. In the three months ended January 31, 2011, the bank’s earnings rose 11.0%, to $1.6 billion from $1.4 billion a year earlier. Earnings per share rose 8.8%, to $1.74 from $1.60, on more shares outstanding. These figures exclude several one-time items, such as gains and losses on securities the bank holds, and costs to integrate recent acquisitions in the U.S. On that basis, the latest earnings easily beat the consensus earnings estimate of $1.54 a share. More of the bank’s customers are repaying their loans on time. As a result, TD’s loan-loss provisions fell 19.9%, to $414 million from $517 million. That was the main reason for the higher earnings....

TRANSCANADA CORP., $38.01, Toronto symbol TRP, recently opened the second phase of its four-phase Keystone pipeline project, which pumps crude oil from the Alberta oil sands to refineries in the U.S. Midwest. The third phase, called Keystone XL, will pump oil from Oklahoma to the U.S. Gulf Coast. The fourth phase will run from Alberta to Nebraska. Regulatory delays and higher-than-expected construction costs have pushed up the entire project’s cost to $13 billion U.S. That’s 8.3% higher than TransCanada’s earlier estimate of $12 billion U.S. So far, the company has spent $7.4 billion U.S. on Keystone. It aims to complete the remaining two phases by mid-2013....

PLEASE NOTE: In next week’s Successful Investor Hotline, we’ll reveal our #1 stock pick for 2011. Don’t miss this unique opportunity to profit. TORSTAR CORP., $12.50, Toronto symbol TS.B, has received $40 million in connection with the takeover of The Globe and Mail newspaper by the Thomson family, which now owns 85% of the paper. BCE Inc. (Toronto symbol BCE) owns the remaining 15%. The proceeds are equal to 4% of Torstar’s $989-million market cap. The sale of The Globe and Mail is part of BCE’s plan to acquire full control of CTVglobemedia, the private company that owns the CTV Television Network, which consists of 27 TV stations. CTVglobemedia also owns 30 specialty channels and 34 radio stations. It also owned The Globe and Mail....

Every Wednesday, we publish our “Investor Toolkit” investing advice series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on successful investing. Each Investor Toolkit update gives you a fundamental piece of investing advice and shows you how you can put it into practice right away. Tip of the week: “Sometimes it pays to pay a little extra and get a vote.” Some Canadian companies, such as Bombardier and Teck Resources, have two classes of common shares: voting and non-voting (or multiple voting and subordinate voting)....

TORONTO-DOMINION BANK, $72.23, Toronto symbol TD, fell 4% this week, even though the bank reported higher revenue and earnings in its 2010 fiscal year, which ended October 31, 2010. Revenue rose 9.6%, to $19.6 billion from $17.9 billion in fiscal 2009. Earnings rose 10.9%, to $5.2 billion from $4.7 billion. Earnings per share rose 7.9%, to $5.77 from $5.35, on more shares outstanding. These figures exclude unusual items, such as costs to integrate the recently purchased South Financial Group, Inc., which operates bank branches in Florida and the Carolinas. On this basis, the latest earnings fell short of the consensus estimate of $5.81 a share. The bank continues to set aside less money to cover bad loans. That’s the main reason why earnings at TD’s retail-banking business rose 53.7% in the U.S. and 25.2% in Canada. Earnings from wealth management rose 7.4%. However, earnings from TD’s trading business fell 23.8%, due to lower trading volumes, a drop in underwriting activity, and fewer gains from its investment portfolio....

BOMBARDIER INC. (Toronto symbols BBD.A $4.97 and BBD.B $4.98; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $8.5 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.bombardier.com) is the world’s third-largest commercial-aircraft maker, behind Boeing and Airbus. Its aerospace division supplies roughly half of its revenue. The other half comes from its transportation division, which is the world’s largest maker of passenger railcars. In its 2011 second quarter, which ended July 31, 2010, the company earned $0.08 a share (all amounts except share prices and market cap in U.S. dollars). That’s down 27.2% from $0.11 a share, a year earlier. Revenue fell 17.5%, to $4.1 billion from $4.9 billion. The uncertain economy continues to hurt demand for Bombardier’s jets. It delivered 46 aircraft in the latest quarter. That’s down from 80 a year earlier. However, Bombardier received orders for 29 new planes (net of cancellations) in the latest quarter. A year ago, it had negative 38 net orders. The railcar division received $4.3 billion of new orders, up 43.3% from $3.0 billion a year earlier....

The recession forced airlines to cut spending on new planes, flight simulators and pilot training. However, airlines will have to start replacing their aging fleets in the next few years. That should spur a surge in orders for Bombardier and CAE. BOMBARDIER INC. (Toronto symbols BBD.A $4.97 and BBD.B $4.98; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $8.5 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.bombardier.com) is the world’s third-largest commercial-aircraft maker, behind Boeing and Airbus. Its aerospace division supplies roughly half of its revenue. The other half comes from its transportation division, which is the world’s largest maker of passenger railcars. In its 2011 second quarter, which ended July 31, 2010, the company earned $0.08 a share (all amounts except share prices and market cap in U.S. dollars). That’s down 27.2% from $0.11 a share, a year earlier. Revenue fell 17.5%, to $4.1 billion from $4.9 billion. The uncertain economy continues to hurt demand for Bombardier’s jets. It delivered 46 aircraft in the latest quarter. That’s down from 80 a year earlier....