commodity

TRANSCANADA CORP., $46.80, Toronto symbol TRP, hopes the U.S. State Department will approve its proposed Keystone XL pipeline in the next few months. Nebraska’s governor recently approved the company’s plan to reroute the line around environmentally sensitive areas of the state. When completed, Keystone XL would pump oil from Alberta to the U.S. Gulf Coast. The entire project would cost $5.3 billion U.S. It could begin operating in late 2014 or early 2015. So far, TransCanada has invested $1.8 billion U.S. in Keystone XL. Meanwhile, TransCanada’s earnings fell 14.7% in 2012, to $1.3 billion, or $1.89 a share. These figures exclude unusual items, such as gains and losses on contracts the company uses to lock in prices for natural gas and electricity. On that basis, the latest earnings missed the consensus estimate of $1.98 a share. In 2011, it earned $1.6 billion, or $2.22 a share....

TECK RESOURCES LTD. $37 (Toronto symbol TCK.B;Conservative Growth Portfolio, Resources sector; Shares outstanding: 586.0 million; Market cap: $21.7 billion; Price-to sales ratio: 2.0; Dividend yield: 2.4%; TSI Network Rating: Average; www.teck.com) is a leading producer of metallurgical coal, a key ingredient in steel making. Its six coal mines (five inB.C. and one in Alberta) should last from six to 75 years.

Asian customers buy 60% of the company’s coal. In 2011,coal accounted for 49% of Teck’s revenue and 57% of its earnings.

Teck also produces copper (27%, 28%), which its clients in Asia and Europe use to make electrical wire, auto parts and components for electronic devices. As well, Teck is a major supplier of zinc (24%, 15%), which prevents rusting when added to steel.

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Dear Inner Circle member, As you probably know, last week we singled out Teck Resources. $36.70, symbol TCK.B on Toronto (Shares outstanding: 586.0 million; Market cap: $21.5 billion; www.teck.com), as our #1 Stock for 2013 for The Successful Investor. Our Stock of the Year has turned out to be one of our readers’ favourite features, even though you might say it goes against one of our key investing principles: you always need to diversify. Nobody gets it right on every one of their stock recommendations or purchases. Consequently, to succeed as an investor, you need to build a balanced portfolio of mainly well-established companies, with holdings spread out across most if not all of the five main economic sectors....

We’ve chosen Teck Resources as our “Stock of the Year” for2013.

Resource companies are highly cyclical. Teck fell to just $3.35in March 2009 as the credit crisis hurt its ability to refinance the$9.8 billion U.S. in short-term loans it took on the year before as part of its $13.6-billion (Canadian) purchase of Fording Coal....

TECK RESOURCES LTD., $36.93, Toronto symbol TCK.B, is our “Stock of the Year” for 2013. Resource companies are highly cyclical. Teck fell to just $3.35 in March 2009 as the credit crisis hurt its ability to refinance the $9.8 billion U.S. in short-term loans it took on the year before as part of its $13.6-billion (Canadian) purchase of Fording Coal. At that time, Teck’s market cap (the value of all outstanding shares) was just $1.6 billion. However, rising commodity prices helped it find new lenders, and Teck rose as high as $65 in January 2011. The stock has moved down since then due to the slowing global economy. However, we feel the company’s high-quality, long-lasting reserves and potentially higher commodity prices in 2013 make it a particularly attractive buy right now....

Pat McKeough responds to many personal questions about specific stock market advice and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week, one question from an Inner Circle member concerned a leading Canadian waste company. This firm has made several acquisitions, and Pat takes a detailed look at the company’s strategy and the risks it takes in order to pursue the potential rewards of growth by acquisition. ...

Progressive Waste Solutions, $21.15, symbol BIN on Toronto (Shares outstanding: 115.2 million; Market cap: $2.4 billion; www.progressivewaste.com), changed its name from IESI-BFC in May 2011. IESI-BFC was called BFI Canada until June 1, 2009, when it merged with its wholly owned subsidiary, IESI-BFC Ltd. In Canada, the company mainly operates as Progressive Waste Solutions, BFI Canada and Waste Services Inc. (WSI). It uses the Progressive Waste Solutions, IESI and WSI banners in the U.S. Progressive is one of North America’s largest solid-waste-management companies. However, it does not manage, collect or dispose of hazardous or liquid waste....

MAPLE LEAF FOODS INC. $11 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 140.0 million; Market cap: $1.5 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.mapleleaf.ca) is acquiring Puratone Corporation, a private company that raises over 500,000 hogs a year at 50 barns in Manitoba.

The takeover will give Maple Leaf control of 30% of the hogs used by its processing facility in Brandon,
Manitoba.The company will pay $42 million for Puratone when the deal closes in the next few weeks. To put that in context, Maple Leaf earned $30.2 million, or $0.21 a share, in the three months ended September 30, 2012. That’s down 24.5% from $39.9 million, or $0.28 a share, a year earlier.

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CHEMTRADE LOGISTICS INCOME FUND (Toronto symbol CHE.UN; www.chemtradelogistics.com) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors. These companies create sulphur, acid and other by-products as part of their activities. Chemtrade converts these substances into useful chemicals, like sulphuric acid....

CHEMTRADE LOGISTICS INCOME FUND $15.49 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics. com; Units outstanding: 41.7 million; Market cap: $645.9 million; Dividend yield: 7.8%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors. These companies create sulphur, acid and other by-products as part of their activities. Chemtrade converts these substances into useful chemicals, like sulphuric acid. In June 2011, Chemtrade bought Marsulex Inc. for $419.5 million. Marsulex provides a range of environmental services, including improving air quality and treating and handling industrial waste. In the three months ended September 30, 2012, Chemtrade’s revenue fell 10.3%, to $240.9 million from $268.5 million a year earlier. Cash flow per unit fell 25.0%, to $0.72 from $0.96. However, the decline was mostly due to a one-time accounting charge. The 2011 quarter was also particularly strong....