enbridge

ENBRIDGE INC. $40 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 799.9 million; Market cap: $32.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.enbridge.com) wants to reverse the flow of its oil pipeline in southern Ontario, which would let it pump oil to Montreal. The company also aims to increase the line’s capacity by 25%. Regulators must still approve this plan. Reversing the flow will make it easier to pump oil from western Canada to refineries in Ontario and Quebec. Shipping more oil to eastern refineries will also improve Enbridge’s long-term prospects if regulators reject its proposed Northern Gateway pipeline, which would pump oil from Alberta to Kitimat, B.C. Enbridge is a buy.

SNC-LAVALIN GROUP INC., $39.40, Toronto symbol SNC, fell 5% this week in response to the arrest of Pierre Duhaime, the company’s former chief executive officer. The charges relate to possible illegal payments that SNC may have paid to secure a contract to build the new McGill University Health Centre in Montreal. The company and its partners won this deal in April 2010 under a public-private partnership with the Quebec government. It’s unclear if these payments are related to the $56 million U.S. in unusual payments to agents that SNC discovered in March 2012. To put that in context, SNC earned $378.8 million (Canadian), or $2.49 a share, in 2011. This situation prompted Mr. Duhaime to step down as CEO and a director of the company. SNC also fired other executives....

ENBRIDGE INC. $39.81 (Toronto symbol ENB; Shares outstanding: 796.9 million; Market cap: $31.7 billion; TSINetwork Rating: Above A v e r a g e ; D i v i d e n d y i e l d : 2 . 8 % ; www.enbridge.com) has formed a new joint venture with Pennsylvania-based Canopy Prospecting Inc. This new firm, called Eddystone Rail, will build and operate a $68-million railway and pipeline system. These new joint-venture assets will ship crude from Canopy’s shale oil property in North Dakota’s Bakken region to refineries near Philadelphia. Enbridge will own 75% of this joint venture, and will operate it. The project is forecast to begin operating in the third quarter of 2013....

ISHARES S&P/TSX 60 INDEX FUND $17.71 (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, as the fund must ensure that all sectors are represented, it holds a few stocks we wouldn’t include.

The index’s top holdings are Royal Bank, 7.4%; TD Bank, 6.8%; Bank of Nova Scotia, 5.8%; Suncor Energy, 4.5%; Barrick Gold, 3.7%; CN Railway, 3.5%; Bank of Montreal, 3.4%; Potash Corp., 3.3%; Goldcorp, 3.3%; BCE Inc., 3.1%; Canadian Natural Resources, 3.0%; TransCanada Corp., 2.9%; CIBC, 2.8%; Enbridge, 2.8%; Cenovus Energy, 2.4%; and Telus Corp., 1.8%.

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TELUS CORP., Toronto symbols T $62.71 and T.A $61.52, has paid an undisclosed sum for KinLogix. This Quebec-based private company makes software that lets medical professionals store patient records on remote server computers. KinLogix already serves over 200 clinics and accounts for 36% of Quebec’s electronic medical records market. Telus’s health care-related operations are much smaller than its main wireless and regular telephone divisions. However, demand for reliable electronic record storage is growing steadily. Telus’s strong reputation should help KinLogix attract more clients....

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ENBRIDGE INC. $39.39 (Toronto symbol ENB; Shares outstanding: 796.9 million; Market cap: $31.4 billion; TSINetwork Rating: Above A v e r a g e ; D i v i d e n d y i e l d : 2 . 9 % ; www.enbridge.com) plans to spend $600 million to expand its natural gas distribution system in the Greater Toronto Area, including Brampton, Mississauga, Vaughan, Richmond Hill and Markham. The existing system hasn’t had a major expansion for 20 years, and in that time, the total number of customers that Enbridge serves in the area has almost doubled, from 1.1 million to 1.9 million. These upgrades will help the company sell more gas in the fast-growing communities outside Toronto. Enbridge aims to complete this project in 2015....

ENBRIDGE INC. $38.65 (Toronto symbol ENB; Shares outstanding: 796.9 million; Market cap: $30.8 billion; TSINetwork Rating: Above Average; Dividend yield: 2.9%; www.enbridge.com) recently finished repairing its leaking oil pipeline in Wisconsin.

The company has faced criticism over leaks like this. That could hurt its proposed $5.5- billion Northern Gateway project, which would pump oil from Edmonton to Kitimat, B.C.

However, Enbridge still has a strong safety record, and it has pledged to spend an extra $500 million on safety for Northern Gateway. This investment includes thicker steel at river crossings, 50% more inspections and aroundthe- clock staffing at remote pumping stations.

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VERESEN $12.77 (Toronto symbol VSN; Shares outstanding: 196.3 million; Market cap: $2.5 billion; TSINetwork Rating: Average; Yield: 7.8%) owns pipelines, power plants and natural gas processing facilities across North America. One of its major holdings is 50% of the Alliance gas pipeline, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Enbridge owns the other 50%.

The company also owns the Alberta Ethane Gathering System, and Veresen and Enbridge together hold 85.4% of the Aux Sable natural gas liquids plant.

In December 2011, Veresen paid Encana Corp. $920 million for the Hythe/Steeprock natural gas gathering and processing complex in the Montney region of B.C. and Alberta. Encana has agreed to purchase most of the facility’s gas under a long-term contract.

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ENBRIDGE INC. $38 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 797.1 million; Market cap: $30.3 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.enbridge.com) plans to spend $600 million to expand its natural gas distribution system in the Greater Toronto Area. To put this figure in context, Enbridge earned $653 million, or $0.86 a share, in the first half of 2012.

These upgrades will help the company sell more gas in the fast-growing communities outside Toronto. Enbridge aims to complete this project in 2015.

Enbridge is a buy.

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