commodity

BREAKWATER RESOURCES, $7.41, symbol BWR on Toronto, is now the subject of a $663-million friendly takeover bid from Belgium-based Nyrstar, a major global producer of zinc and lead, as well as silver, gold and copper. The offer is for $7.00 a share in cash for all of Breakwater’s shares. In addition, Breakwater shareholders will get a special dividend of $0.50 a share in cash. At $7.50, that’s up 155% from the $2.94 we recommended the stock at a year ago in our July 2010 issue of Stock Pickers Digest....

Silver has fallen sharply from its all-time high of $48.70 U.S. an ounce, where it closed on April 28, 2011. Silver now trades at $36.80 U.S. an ounce. That’s up 106.2% from $17.87 U.S. an ounce a year ago. Silver could well regain its high and move up even further over the longer term, although it will likely remain volatile. Higher prices would arise from investor fears that inflation or global political and economic uncertainty will weaken key currencies, such as the U.S. dollar.

Use caution when investing in silver

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ABB LTD. ADRs, New York symbol ABB, manufactures transformers, transmission switches and other equipment for distributing electricity. It also makes automation systems and robotics that increase the productivity of manufacturing plants. Switzerland-based ABB has clients in a variety of industries. The company is one of the world stock market investments we analyze in our Wall Street Stock Forecaster newsletter The company earned $655 million in the three months ended March 31, 2011, up 41.2% from $464 million a year earlier. Earnings per ADR gained 45.0%, to $0.29 from $0.20, on fewer ADRs outstanding. (Each American Depositary Receipt represents one ABB common share.) Revenue rose 21.2% to $8.4 billion from $6.9 billion. Rising industrial development and higher commodity prices are prompting the company’s clients to increase their capacity and make their plants more efficient. These factors are pushing up demand for ABB’s products. Orders for new equipment rose 25% during the quarter. The company’s order backlog is now a record $29.3 billion....

CHIPOTLE MEXICAN GRILL, $266.79, symbol CMG on New York, is a Denver-based Mexican-restaurant chain. In the three months ended March 31, 2011, Chipotle’s revenue rose 24.3% to $509.4 million from $409.7 million a year earlier. The company’s restaurants attracted more customers during the quarter. That pushed up its same-restaurant sales by 12.4%. Chipotle also opened 12 new restaurants. It now has a total of 1,095 locations. Earnings rose 22.5%, to $46.4 million from $37.8 million. Earnings per share rose 24.2%, to $1.49 from $1.20, on fewer shares outstanding. The company holds cash of $282.9 million, or $9.10 a share, and has no debt....

CHEMTRADE LOGISTICS INCOME FUND $14.03 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics.com; Units outstanding: 30.7 million; Market cap: $430.3 million; Dividend yield: 8.8%) 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 processing activities. Chemtrade converts these by-products into useful chemicals, like sulphuric acid. It also makes chemicals, such as sodium chlorate. In the three months ended December 31, 2010, Chemtrade’s cash flow per unit fell 31.7%, to $0.28 from $0.41 a year earlier. However, the decline was mostly because a fire forced Chemtrade to shut down its plant in Beaumont, Texas. High distribution appears safe ...

Delphi Energy, symbol DEE on Toronto, explores for oil and gas in Alberta and B.C. Natural gas makes up 76% of its daily output; the remaining 24% is oil. In the three months ended December 31, 2010, the commodity investment reported combined daily output of natural gas, liquid natural gas and crude oil rose 24.0%, to 8,539 barrels of oil equivalent from 6,888 barrels a year earlier. Delphi’s cash flow rose 26.5%, to $18.0 million from $14.2 million. Its cash flow per share rose 14.3%, to $0.16 a share from $0.14 a share....

Just Energy Group, $15.54, symbol JE on Toronto (Shares outstanding: 137.0 million; Market cap: $2.1 billion, www.justenergy.com), sells natural gas and electricity to homeowners, small to mid-sized businesses, and small industrial customers. The company sells gas in Ontario, Quebec, B.C., Alberta and Manitoba, as well as New York, Michigan, Ohio, California, Illinois and Indiana. Just Energy also markets electricity in Ontario, Alberta, New York, Massachusetts and Texas. The company’s clients buy its gas and electricity under five-year, fixed-price contracts. That way, customers eliminate their exposure to changes in natural-gas and electricity prices. Just Energy profits from the difference between the fixed price at which it sells natural gas and electricity and the fixed price at which it buys them on the futures market....

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WESTJET AIRLINES, $15.48, symbol WJA on Toronto, has just signed a code-sharing agreement with American Airlines. Under these agreements, two airlines co-operate on flights and baggage handling. Last year, WestJet entered into its first code-sharing deal with Cathay Pacific. Initially, WestJet will only connect with American Airlines flights to Chicago and Boston. However, it expects to eventually connect with American Airlines flights that go all across the U.S. Code-sharing agreements are especially valuable for attracting business passengers. That’s because these agreements let customers seamlessly connect between flights and gain frequent-flyer points for the entire distance travelled....