diversification

FORT CHICAGO ENERGY TRUST $10.89 (Toronto symbol FCE.UN; SI Rating: Extra Risk) owns 50% of the Alliance Pipeline, a 36-inch diameter natural gas pipeline. It extends 3,000 kilometres from Fort St. John in B.C. to Chicago, Illinois. Enbridge Inc. owns the other 50% interest. The other assets held by the two partners are 85.4% of the Aux Sable natural gas liquids plant. Fort Chicago also owns the 1,324-kilometre Alberta Ethane Gathering System. Through recently acquired Countryside Power, Fort Chicago now also owns and operates energy systems in Charlottetown, PEI, and London, Ontario, plus two gas-fired cogeneration plants in California. In the three months ended December 31, 2007, Fort Chicago’s revenues rose 25.7%, to $173.3 million from $137.8 million a year earlier. Cash flow per unit rose 34.4% in the quarter, to $0.43 from $0.32....

MANULIFE FINANCIAL $39.37 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife has assets under administration of $396.3 billion....

Portfolio diversification is an important strategy for cutting risk. We like all five big Canadian banks. But we still think adding non-bank stocks like these three insurance companies to your finance-sector holdings is a good idea for portfolio diversification: MANULIFE FINANCIAL $39.37 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife has assets under administration of $396.3 billion. Its geographic diversification in the U.S. and Asia, including China, offers growth prospects. The shares yield 2.2%. Manulife is a buy....

TRANSCANADA CORP. $36 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 539.7 million; Market cap: $19.4 billion; SI Rating: Above average) has agreed to buy the Ravenswood power plant located in Queens, New York for $2.9 billion U.S. The plant has the capacity to service 21% of New York City’s peak electricity load. The price is 10% more than TransCanada’s 2007 cash flow of $2.6 billion or $4.95 a share. TransCanada will probably issue $1.2 billion worth of new common shares to help pay for this purchase. The acquisition provides diversification in power generation and into the U.S. market. TransCanada should also profit from rising power demand in New York....

MANITOBA TELECOM SERVICES $39.63 (Toronto symbol MBT; SI Rating: Average) has announced it will participate in the upcoming auction of wireless frequencies (called ‘spectrum’ in the industry). If successful, that would let it offer wireless services outside of Manitoba. The company has formed a consortium with the Canada Pension Plan Investment Board and The Blackstone Group L.P. Each will own a third of this partnership. The wireless industry is highly competitive, but growing fast. This partnership will cut Manitoba Tel’s share of the start-up costs, and help it keep paying its $2.60 dividend, which yields 6.6%. Manitoba Tel is a buy....

TEMPLETON EMERGING MARKETS FUND $20.55 (New York symbol EMF; CWA Fund Rating: Speculative) is a closed-end fund that invests in equities from emerging economies. The fund’s manager is Franklin Templeton. Templeton Emerging Market Fund provides broad geographic diversification. Although volatile, it provides access to fast-growing economies such as Brazil, China, India and others. The $418.1 million fund’s regional allocation is Asia (58.9%), Europe (17.2%) and Latin America (23.9%)....

Investing in regions or countries outside of Canada and the United States can entail above-average volatility and risk. But these areas can also offer vast potential growth. We still think that for most investors, the best way to invest in those regions or countries is through mutual funds, rather than individual stocks. And you can cut your costs by buying closed-end funds. Here are four closed-end funds trading on the New York Exchange at discounts to their net asset value. All four are buys....

TRANSCANADA CORP. $36.34, Toronto symbol TRP, fell about 9% this week after it agreed to buy the Ravenswood power plant located in Queens, New York for $2.9 billion U.S. The plant has the capacity to service 21% of New York City’s peak electricity load. The price is 10% more than TransCanada’s 2007 cash flow of $2.6 billion or $4.95 a share. TransCanada will probably issue $1.2 billion worth of new common shares to help pay for this purchase. TransCanada foresees as much as $2 billion in investment opportunities for capacity expansion and efficiency improvements at the facility. As well, Ravenswood provides diversification in power generation and into the U.S....

CEDAR FAIR L.P. $24 (New York symbol FUN) lost $0.08 a unit in 2007. However, that figure included a $1.00 a unit charge related to the restructuring of its Geauga Lake amusement park in Ohio. The company earned $1.59 a unit in 2006. Revenue grew 18.7%, to $987.0 million from $831.4 million. Cedar Fair has also increased its quarterly distribution 1.1%. The new annual rate of $1.92 yields 8.0%. Best Buy. BUCKEYE PARTNERS L.P. $49 (New York symbol BPL) is evaluating a plan to build a pipeline to transport ethanol from production facilities in the Midwest to major markets such as Pittsburgh, Philadelphia and New York. Demand for renewable fuels such as ethanol is growing fast, and this line could become a major cash flow generator. If it proceeds, Buckeye would build the new pipeline with rival Magellan Midstream Partners, L.P., which would cut the project’s risk. Best Buy. THE STANLEY WORKS $51 (New York symbol SWK) continues to enjoy the benefits of its diversification plan, including acquisitions of industrial tool and building security systems businesses. In 2007, sales to home improvement retailers accounted for 17% of total sales, down from 40% five years earlier. Stanley’s improved business mix should expand its 2008 earnings to $4.30 a share. Buy.

MANULIFE FINANCIAL $39.51 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife has assets under administration of $399 billion. In the three months ended September 30, 2007, Manulife’s earnings rose 9.9%, to $1.1 billion or $0.70 a share, from $967 million or $0.62 a share a year earlier. Revenue rose 11.3%, to $9.4 billion from $8.4 billion. Manulife has raised its dividend 9.1%, to $0.24 from $0.22. The shares now yield 2.2%. Manulife’s operations are diversified among life and health insurance, segregated mutual funds, and reinsurance. Its geographic diversification in the U.S. and Asia, including China, offers growth prospects....