commodity
These two utilities are using different strategies to boost their earnings: Enbridge is investing heavily in new pipelines, while Manitoba Telecom is cutting costs at its struggling Allstream unit. We feel both firms will ultimately succeed, and their future growth will give them more cash for dividends. Right now, however, we think their high multiples to earnings make them vulnerable to a setback if their profit growth stalls. ENBRIDGE INC. $56 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 860.1 million; Market cap: $48.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.enbridge.com) gets 85% of its revenue from pipelines that pump oil and natural gas from Western Canada to Eastern Canada and the U.S. The remaining 15% mainly comes from distributing gas to 2.1 million consumers in Ontario, Quebec, New Brunswick and New York State....
Focused on the Bakken oil development, Crescent Point Energy is a stock we believe has strong growth potential when oil prices recover
SUNCOR ENERGY INC., $36.67, Toronto symbol SU, has launched a hostile all-stock takeover offer for Canadian Oil Sands (Toronto symbol COS). Canadian Oil Sands’ main asset is its 36.74% stake in the massive Syncrude oil sands development near Fort McMurray, Alberta. It also operates the project. Suncor already owns 12.0% of Syncrude, so buying Canadian Oil Sands would give it effective control, with a 48.74% stake. Equipment failures and other problems have hurt Syncrude’s production in the past few years, and Suncor feels its expertise running similar projects will help Syncrude improve its efficiency and profits....
Our view of one of the world’s largest mining stocks, Freeport-McMoRan, as activist investor Carl Icahn buys in and presses for change.
In changing agricultural markets, an increasing focus on retail outlets gives fertilizer producer Agrium extra traction as a growth stock.
Freeport-McMoRan Inc., $11.18, symbol FCX on New York (Shares outstanding: 1.1 billion; Market cap: $12.7 billion; www.fcx.com), is a leading producer of copper, gold and other metals from mines in the U.S., Indonesia, Africa and South America.
In 2013, the company diversified into oil and natural gas by acquiring McMoRan Exploration and Plains Exploration & Production, which have properties in Louisiana, Wyoming and California, as well as wells in the Gulf of Mexico. Freeport paid a total of $9 billion for both companies.
In 2014, copper supplied 60% of Freeport’s revenue, followed by oil and gas, 20%; gold, 7%; molybdenum (which strengthens and prevents rust in alloys and high-temperature steels), 6%; and other minerals, 7%.
The U.S. accounted for 48% of total revenue, followed by Indonesia (8%), Japan (7%), Spain (6%), China (5%), Switzerland (4%), Chile (3%), Turkey (2%) and South Korea (2%). Other countries supplied the remaining 15%.
In the three months ended June 30, 2015, Freeport lost $1.85 billion, or $1.78 a share, after the plunge in oil and gas prices forced it to write down its oil and gas holdings by $2.7 billion. Without unusual items, the company earned $143 million, or $0.14 a share, down 70.3% from $482 million, or $0.46, a year earlier.
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In 2013, the company diversified into oil and natural gas by acquiring McMoRan Exploration and Plains Exploration & Production, which have properties in Louisiana, Wyoming and California, as well as wells in the Gulf of Mexico. Freeport paid a total of $9 billion for both companies.
In 2014, copper supplied 60% of Freeport’s revenue, followed by oil and gas, 20%; gold, 7%; molybdenum (which strengthens and prevents rust in alloys and high-temperature steels), 6%; and other minerals, 7%.
The U.S. accounted for 48% of total revenue, followed by Indonesia (8%), Japan (7%), Spain (6%), China (5%), Switzerland (4%), Chile (3%), Turkey (2%) and South Korea (2%). Other countries supplied the remaining 15%.
In the three months ended June 30, 2015, Freeport lost $1.85 billion, or $1.78 a share, after the plunge in oil and gas prices forced it to write down its oil and gas holdings by $2.7 billion. Without unusual items, the company earned $143 million, or $0.14 a share, down 70.3% from $482 million, or $0.46, a year earlier.
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ENBRIDGE INC. $56 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 860.1 million; Market cap: $48.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.enbridge.com) gets 85% of its revenue from pipelines that pump oil and natural gas from Western Canada to Eastern Canada and the U.S. The remaining 15% mainly comes from distributing gas to 2.1 million consumers in Ontario, Quebec, New Brunswick and New York State.The company recently completed the major reorganization it announced in December 2014.
< p>Under the plan, Enbridge transferred some of its assets to 19.9%-owned affiliate Enbridge Income Fund Holdings Inc. (Toronto symbol ENF). This company owns 42% of Enbridge Income Fund (Enbridge Inc. owns the remaining 58%), which holds oil and gas pipelines and solar and wind farms. The transfer included pipelines that pump oil sands crude to the U.S., along with wind farms in Alberta and Quebec. < p>Transactions like this, called drop-downs, free up cash the parent company can use for new projects. The affiliate also benefits, because the new assets’ cash flow helps it maintain or raise its distributions to investors. The reorganization freed up more cash for dividends: Enbridge raised its quarterly payout by 32.9% with the March 2015 payment, to $0.465 a share from $0.35; the new annual rate of $1.86 yields 3.3%. The company now aims to pay out 75% to 85% of its adjusted annual earnings as dividends, up from its old target of 60% to 70%....
< p>Under the plan, Enbridge transferred some of its assets to 19.9%-owned affiliate Enbridge Income Fund Holdings Inc. (Toronto symbol ENF). This company owns 42% of Enbridge Income Fund (Enbridge Inc. owns the remaining 58%), which holds oil and gas pipelines and solar and wind farms. The transfer included pipelines that pump oil sands crude to the U.S., along with wind farms in Alberta and Quebec. < p>Transactions like this, called drop-downs, free up cash the parent company can use for new projects. The affiliate also benefits, because the new assets’ cash flow helps it maintain or raise its distributions to investors. The reorganization freed up more cash for dividends: Enbridge raised its quarterly payout by 32.9% with the March 2015 payment, to $0.465 a share from $0.35; the new annual rate of $1.86 yields 3.3%. The company now aims to pay out 75% to 85% of its adjusted annual earnings as dividends, up from its old target of 60% to 70%....
Here’s the text of the quarterly letter I recently sent to our Portfolio Management clients:
“The subject of interest rates comes up regularly these days, in the news and in investor conversations. U.S. Federal Reserve Board members see a need for rates to move up. Prior to the recent market downturn, they were still undecided on ‘how soon’ and ‘how much’.
If stocks remain weak into the fall months, the Fed is likely to leave interest rates unchanged. However, now is still a good time to review the role of bonds as an alternative to stocks.
Bonds have been rising for 35 years
Interest rates have generally been going down, and bond prices have been going up, since 1980. That year, the yield on 10-year U.S. government bonds peaked at around 16%. Currently they yield around 2%.
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“The subject of interest rates comes up regularly these days, in the news and in investor conversations. U.S. Federal Reserve Board members see a need for rates to move up. Prior to the recent market downturn, they were still undecided on ‘how soon’ and ‘how much’.
If stocks remain weak into the fall months, the Fed is likely to leave interest rates unchanged. However, now is still a good time to review the role of bonds as an alternative to stocks.
Bonds have been rising for 35 years
Interest rates have generally been going down, and bond prices have been going up, since 1980. That year, the yield on 10-year U.S. government bonds peaked at around 16%. Currently they yield around 2%.
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Finning International is a value stock that we see rising when commodities rebound, as it rewards investors with a high dividend yield.
FINNING INTERNATIONAL INC. $22 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding:171.4 million; Market cap: $3.8 billion; Price-to-sales ratio: 0.6; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.finning.com) started up in1933 and is now the world’s largest dealer of tractors, bulldozers and trucks made by Caterpillar Inc. (New York symbol CAT). It also sells heavy equipment made by other firms. Finning’s clients are mainly in the mining, forest products and construction industries.
Western Canada (B.C., Alberta, Yukon, Northwest Territories and parts of Nunavut) supplied 53%of Finning’s revenue in 2014, followed by South America (Argentina, Chile, Uruguay and Bolivia),which contributed 32%, and the U.K. and Ireland(15%).
Big growth in services
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Western Canada (B.C., Alberta, Yukon, Northwest Territories and parts of Nunavut) supplied 53%of Finning’s revenue in 2014, followed by South America (Argentina, Chile, Uruguay and Bolivia),which contributed 32%, and the U.K. and Ireland(15%).
Big growth in services
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