commodity

iShares Silver Bullion ETF, $12.27, symbol SVR on Toronto (Units outstanding: 5.0 million; Market cap: $61.4 million; ca.ishares.com), is an example of an ETF with the kinds of “bells & whistles” mentioned above. iShares Silver Bullion ETF aims to replicate the performance of the price of silver bullion, less the fund’s fees and expenses. Unlike stocks, commodity investments like silver bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance and so on....

In the latest issue of The Successful Investor, we analyzed each of Canada’s big five banks. All of the banks have now reported earnings, except for Bank of Nova Scotia, which reports its first-quarter earnings tomorrow, March 4....

SHERRITT INTERNATIONAL $3.64 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 297.3 million; Market cap: $1.1 billion; Yield: 1.1%) has cut its dividend to $0.01 a share from $0.043. It now yields 1.1%.

In the quarter ended December 31, 2013, Sherritt’s revenue fell 16.7%, to $108.6 million from $130.3 million a year earlier. It lost $0.13 a share, compared to a loss of $0.01.

Sherritt’s long-term debt is $2.1 billion, or a high 2.3 times its market cap. But after the upcoming sale of its coal business, it will hold cash of $1.5 billion, or $5.05 a share.
...

TIM HORTONS INC., $58.25, Toronto symbol THI, rose this week after it reported higher-than-expected quarterly earnings. It also raised its dividend and announced a new share buyback plan. The company operates 3,588 coffee-and-donut stores in Canada and 859 in the U.S. It also has 38 outlets in the Persian Gulf. In the three months ended December 29, 2013, Tim Hortons’ revenue rose 10.7%, to $898.5 million from $811.6 million a year earlier. That’s mainly because it renovated more outlets, which let it charge franchisees higher fees. Same-store sales rose 1.6% at its Canadian locations and 3.1% in the U.S....

MCCOY CORP., $5.64, symbol MCB on Toronto, dropped 21% after announcing that it expects to report significantly lower earnings in the three months ended December 31, 2013. The company will release its final results on March 14, 2014. McCoy operates through two divisions: Mobile Solutions and Energy Products and Services. Energy Products and Services sells hydraulic equipment for drilling rigs. This gear includes power tongs, which are large, wrench-like tools that tighten and loosen the pipe in the drill hole. Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries....

BANK OF NOVA SCOTIA $63 (Toronto symbol BNS; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.2 billion; Market cap: $75.6 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www.scotiabank.com) is Canada’s thirdlargest bank, with assets of $743.8 billion. The bank continues to profit from its November 2012 purchase of ING Direct, which offers a variety of no-fee banking services. ING has 1.9 million customers and $30 billion in deposits. Bank of Nova Scotia will soon change ING’s name to Tangerine (it has to stop using the ING brand by May 2014). The change will let this business keep using the orange colour associated with ING Direct. In its 2013 fiscal year, which ended October 31, 2013, the bank’s earnings rose 3.6%, to $6.7 billion from $6.5 billion in fiscal 2012. Due to more shares outstanding, earnings per share fell 1.3%, to $5.15 from $5.22. Without unusual items, such as a gain on a real estate sale, per-share earnings rose 10.2%, to $5.08 from $4.61....

CANADA BREAD CO. LTD., $72.30, Toronto symbol CBY, has accepted a $72.00-a-share takeover offer from Mexican bakery giant Grupo Bimbo SAB. Canada Bread’s shares are trading slightly higher than the bid. That’s because the deal lets the company keep paying quarterly dividends of up to $0.75 a share until Grupo Bimbo completes the takeover, probably by June 30, 2014. Before the deal, Canada Bread paid quarterly dividends of $0.50 a share. Investors should tender their shares to Grupo Bimbo to receive the full $72.00 without paying brokerage fees....

In addition to TD (see page 21), we also like the outlook for Canada’s other four big banks. Each has its particular risks, but all are good choices for long-term growth and income.

ROYAL BANK OF CANADA $71 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $99.4 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s second-largest bank, with $860.8 billion of assets.

Royal recently agreed to sell its 13 branches and related operations in Jamaica....

Rio Tinto plc (ADR), $57.26, symbol RIO on New York (ADRs outstanding: 1.4 billion; Market cap: $78.4 billion; www.riotinto.com), is a major international mining group. The U.K.-based company locates, develops, mines and processes a range of minerals, including aluminum, copper and diamonds. It also produces commodities for power generation, like coal and uranium, and industrial minerals, such as borax, titanium dioxide and salt. Rio Tinto operates across the globe, with a significant concentration in Australia and North America. It has 71,220 employees....

Royal Canadian Mint Gold Reserves Exchange Traded Receipts (ETRs), $13.61, symbol MNT on Toronto (Receipts outstanding: 35.8 million; Market cap: $540.4 million; www.reserves.mint.ca), are receipts issued by the Royal Canadian Mint (the Crown corporation responsible for minting and distributing Canada’s circulation coins) that let investors own gold bullion stored in the Mint’s vaults. The value of these ETRs varies with the price of gold. Investors can trade their ETRs on the stock exchange, or once a month they can redeem them for gold coins or bullion with a minimum purity of 99.99%. This requires at least 10,000 ETRs plus redemption and fabrication fees for the gold coins or bars. Instead of physical gold, investors can choose to redeem their units for cash equal to 95% of the lesser of: a) the ETR price on the redemption date; or b) the volume-weighted average price of the ETRs for five trading days prior to and including the redemption date....