Cenovus Energy Inc.

ISHARES S&P/TSX 60 INDEX FUND $18.50 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets.

The index mostly consists of high-quality companies. However, as the fund must ensure that all sectors are represented, it holds a few stocks we wouldn’t include.

The index’s top holdings are Royal Bank, 7.8%; TD Bank, 6.7%; Bank of Nova Scotia, 6.0%; Suncor Energy, 4.6%; Bank of Montreal, 3.6%; CN Railway, 3.6%; Potash Corp., 3.3%; Enbridge, 3.1%; Trans- Canada Corp., 3.0%; BCE Inc., 3.0%; CIBC, 2.9%; Canadian Natural Resources, 2.9%; Barrick Gold, 2.9%; Goldcorp, 2.6%; Manulife Financial, 2.3%; Cenovus Energy, 2.2%; and Telus Corp., 1.9%.

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iShares S&P/TSX Capped Energy Index Fund, $15.61, symbol XEG on Toronto (Shares outstanding: 56.0 million; Market cap: $874.2 million; ca.ishares.com), aims to mirror the performance of the S&P/TSX Capped Energy Index, which is made up of the largest-capitalization energy stocks on the Toronto exchange. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.60%. It yields 1.5%. iShares S&P/TSX Capped Energy Index Fund’s top 10 holdings are Suncor Energy, 17.6%; Canadian Natural Resources, 12.0%; Cenovus Energy, 8.9%; Nexen, 5.3%; Crescent Point Energy, 5.2%; Encana Corp., 4.9%; Talisman Energy, 4.7%; Imperial Oil, 3.9%; Canadian Oil Sands Trust, 3.4%; and Husky Energy Trust, 3.3%. We continue to think most investors are better off investing in individual companies as part of a well-balanced and diversified portfolio rather than in funds that focus on narrow market sectors. As well, indexes that cap their holdings at a certain level can cut your return by reducing the contribution from top performers if they rise to make up more than the capped limit....

Most stock markets have risen lately. But as always, they remain subject to unexpected downturns. Even so, we feel the long-term outlook is for higher stock prices. One way to profit from rising markets is to add exchange traded funds (ETFs) that track major stock indexes to your portfolio. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You must pay brokerage commissions to buy and sell ETFs, but their low management fees still give them a cost advantage over most mutual funds....

Most stock markets have risen lately. But as always, they remain subject to unexpected downturns. Even so, the long-term outlook is for higher stock prices.

One way to profit from rising markets is to add exchange traded funds (ETFs) that track major stock indexes to your portfolio.

ETFs trade on stock exchanges, just like stocks....

CENOVUS ENERGY $33.67 (Toronto symbolCVE; Shares outstanding: 754.9 million; Market cap:$25.4 billion; TSINetwork Rating: Average;Dividend yield: 2.6%; www.cenovus.com) operatesthree heavy oil projects in Alberta and one inSaskatchewan. It gets about half of its output fromthe oil sands. Conventional oil and natural gas wellssupply the other half.

U.S.-based ConocoPhillips (New York symbolCOP) owns 50% of Cenovus’s main Foster Creekand Christina Lake oil sands projects in Alberta.Cenovus ships the heavy bitumen from these assets torefineries in Illinois and Texas that are also 50%owned by ConocoPhillips.

In the quarter ended September 30, 2012, Cenovus’scash flow per share rose 40.0%, to $1.47 from$1.05 a year earlier. The company continues toexpand its projects, and that pushed up its oil outputby 28.4%, to 171,350 barrels per day. It aims toboost production to 500,000 barrels a day by 2021.
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Encana took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy (Toronto symbol CVE), which specializes in oil sands.

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Encana took its present form on December 1,2009, after the old EnCana Corp. split itself into twonew companies: the new Encana, which focuses onnatural gas, and Cenovus Energy, which specializesin oil sands. Falling gas prices have pushedEncana’s shares down by about 34% since the split.Oil prices have weakened lately, but Cenovus’s stockis still up about 22%.

ENCANA CORP....

CENOVUS ENERGY INC. $33 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.8 million; Market cap: $24.9 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.7%; TSINetwork Rating: Extra Risk; www.cenovus.com) planned to drill up to 1,275 new natural gas wells on land belonging to Canadian Forces Base Suffield in southern Alberta. However, regulators have blocked this plan, as the area is now a national wildlife reserve.

This is a minor setback for Cenovus. The company still has 1,145 gas wells on this property, which it drilled before the area became a reserve.

Cenovus is a buy.

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HEWLETT-PACKARD CO. $14 (www.hp.com) recently wrote down its August 2008 purchase of Electronic Data Systems, provides computer services to large government agencies and corporations. It also wrote down its August 2011 purchase of U.K.-based Autonomy Corp., whose products help businesses organize a variety of information....

CENOVUS ENERGY INC. $34 (www.cenovus.com) has gained 33% since it became a separate company in December 2009. As a result, its long-term debt of $4.6 billion is now a more moderate 18% of its $25.5-billion market cap. That’s why we’ve upgraded Cenovus’s TSINetwork Rating from “Extra Risk” to “Average.” Buy.