CP

Every Monday we feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time. Virtus Oil and Gas Corp. (symbol VOIL on the OTCQB market; www.virtusoilandgas.com), began trading in June 2014. The OTCQB market, formerly called the U.S. over-the-counter bulletin board, has no minimum financial standards and includes shell companies and penny stocks with minimal operations....

CANADIAN PACIFIC RAILWAY LTD. $231(Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.5 million; Market cap: $39.6 billion; Price-to-sales ratio: 6.4; Dividend yield: 0.6%; TSINetwork Rating: Above Average; www.cpr.ca) prefers to use its excess cash to buy back shares instead of raising its dividend. That’s because many of its investors live in the U.S. and are subject to withholding taxes on dividends from Canadian firms. The company could repurchase up to 5.3 million shares under its latest authorization. It has now reached this limit, so it has increased its target to 12.65 million shares, or 7% of the total outstanding. It expects to complete these purchases by March 16, 2015. CP Rail is a buy....

Every Monday we feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time. Leisureworld Senior Care Corp., $13.28, symbol LW on Toronto (Shares outstanding: 36.3 million; Market cap: $481.6 million; www.leisureworld.ca), is one of Canada’s largest operators of seniors’ housing and the biggest licensed long-term care provider in Ontario....

ENCANA CORP., $23.86, Toronto symbol ECA, has agreed to buy Athlon Energy Inc. (New York symbol ATHL). Athlon produces 30,000 barrels of oil equivalent (80% oil and 20% natural gas) a day from 1,138 wells in Texas’s Midland Basin. To put that in context, Encana’s daily output was 491,700 barrels (86% gas, 14% oil) in the second quarter of 2014. Right now, Athlon uses traditional vertical drilling techniques. However, Encana feels it can use its expertise with horizontal drilling to make Athlon’s wells more productive. That will help Encana reach its goal of producing 250,000 barrels of oil a day by 2017....

Exchange traded funds (ETFs) are set up to mirror the performance of a stock market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. That’s different from mutual funds, which you can only buy at the end of the day, at a price that reflects the fund’s value at the close of trading. Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds....

CANADIAN PACIFIC $202.20 (Toronto symbol CP; Shares outstanding: 175.1 million; Market cap: $35.7 billion; TSINetwork Rating: Average; Dividend yield: 0.7%; www.cpr.ca) reports that its earnings jumped 47.2% in the three months ended June 30, 2014, to $371 million, or $2.11 a share. A year earlier, the company earned $252 million, or $1.43 a share.

The higher earnings mainly resulted from CP’s plan to improve its efficiency with new locomotives, better tracks and software that optimizes train loads and speeds. Revenue rose 12.3%, to $1.7 billion from $1.5 billion.

The company’s operating ratio improved to 65.1% from 71.9% a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) CP now feels it can cut its full-year operating ratio to 63% or lower in 2014.

...

ROYAL BANK OF CANADA, $80.80, Toronto symbol RY, earned $2.4 billion in the three months ended July 31, 2014, up 10.2% from $2.2 billion a year earlier. Per-share earnings rose 11.0%, to $1.62 from $1.46, on fewer shares outstanding. These figures exclude unusual items, such as a $40-million loss on the recent sale of Royal’s Jamaican banking operations. On this basis, the latest earnings beat the consensus estimate of $1.54 a share. Revenue jumped 25.2%, to $9.0 billion from $7.2 billion. The bank set aside $283 million to cover bad loans in the latest quarter, up 6.0%, from $267 million. That’s mainly due to higher provisions at its Caribbean and Canadian corporate lending operations....

CANADIAN PACIFIC $202.20 (Toronto symbol CP; Shares outstanding: 175.1 million; Market cap: $35.7 billion; TSINetwork Rating: Average; Dividend yield: 0.7%; www.cpr.ca) reports that its earnings jumped 47.2% in the three months ended June 30, 2014, to $371 million, or $2.11 a share. A year earlier, the company earned $252 million, or $1.43 a share. The higher earnings mainly resulted from CP’s plan to improve its efficiency with new locomotives, better tracks and software that optimizes train loads and speeds. Revenue rose 12.3%, to $1.7 billion from $1.5 billion. The company’s operating ratio improved to 65.1% from 71.9% a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) CP now feels it can cut its full-year operating ratio to 63% or lower in 2014....

ISHARES S&P/TSX 60 INDEX FUND $21.94 (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, it must ensure that all sectors are represented, so it holds a few we wouldn’t include.

The index’s top holdings are Royal Bank, 8.1%; TD Bank, 7.4%; Bank of Nova Scotia, 6.4%; Suncor Energy, 4.8%; CN Railway, 4.2%; Canadian Natural Resources, 3.9%; Bank of Montreal, 3.7%; Enbridge, 3.1%; Valeant Pharmaceuticals, 3.0%; Manulife Financial, 2.9%; CIBC, 2.8%; BCE, 2.7%; TransCanada Corp., 2.6%; Potash Corp., 2.5%; CP Rail, 2.2%; and Cenovus, 1.9%.

...

CANADIAN PACIFIC RAILWAY LTD., $209.09, Toronto symbol CP, gained 6% this week after reporting better than expected quarterly results. In the three months ended June 30, 2014, CP’s earnings jumped 47.2%, to $371 million, or $2.11 a share, beating the consensus estimate of $2.09. A year earlier, the company earned $252 million, or $1.43 a share. The higher earnings mainly resulted from CP’s plan to improve its efficiency with new locomotives, better tracks and software that optimizes train loads and speeds....