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Talisman Energy Inc., $17.23, symbol TLM on Toronto (Shares outstanding: 1 billion; Market cap: $17.6 billion), is a large Calgary-based oil and natural-gas producer. Crude oil accounted for 52% of its production in 2008; the remaining 48% was natural gas. Talisman operates in three main areas: North America provided 42% of its 2008 output, followed by the North Sea (32%) and Southeast Asia (21%). Other regions accounted for the remaining 5%. Since Talisman’s formation as an independent company in 1992 (it was originally part of BP Canada), it has relied on acquisitions for growth. In 2008, Talisman changed this strategy and began focusing on developing properties with reliable production and better earnings potential. It then sold $2.5 billion worth of properties over the past year....

MDS INC., $6.10, Toronto symbol MDS, continues to lose $4 million a month because of the shutdown of the 52-year-old Chalk River reactor near Ottawa (all amounts except share price in U.S. dollars). To put this in context, MDS lost $17 million, or $0.15 a share, in the three months ended April 30, 2009. The loss included a $16-million writedown of buildings and equipment at MDS’s drug-testing division. Last May, a water leak prompted Atomic Energy of Canada Ltd., which operates the reactor, to shut it down. MDS gets all of its medical isotopes from Chalk River. Medical labs use these isotopes to detect and treat cancer and other diseases. Chalk River will probably remain out of service for the rest of this year. In response, the company is working to find new supplies of isotopes from reactors in Europe and South Africa, which have increased production to fill the gap left by the closure of Chalk River. MDS is also negotiating with a Russian isotope supplier. However, this deal could take several months to finalize....

ENCANA CORP. $52 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.6 million; Market cap: $39 billion; Price-to-sales ratio: 1.1; SI Rating: Average) is a leading North American producer of natural gas and oil. Natural gas accounts for 80% of its production. In July 2008, gas prices shot up to around $12 per thousand cubic feet (all amounts except share price and market cap in U.S. dollars), but have fallen to around $3.38 today. The drop was partly caused by cooler spring weather. This has cut air-conditioner use, so electric utilities are burning less gas. Gas companies have also increased supplies by importing liquefied natural gas and bringing new projects into production. Like many resource companies, EnCana uses hedging contracts to lock in its selling price for natural gas. These help shield it from changing prices. The company has hedged two-thirds of its natural-gas production at an average price of $9.13 through October....

TRIMARK CANADIAN RESOURCES FUND $13.58 (CWA Rating: Aggressive) (Invesco Trimark, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. Tel: 1-800-631-7008; Web site: www.invescotrimark.com. Buy or sell through brokers.) includes firms with Successful Investor Ratings of “Speculative” in its top picks. However, we like Trimark Canadian Resources Fund’s value-seeking, conservative approach to picking stocks in the volatile resource sector. The $428.9-million fund’s top holdings are EnCana Corporation, Canadian Natural Resources, Inmet Mining Corp., Husky Energy, Nexen, Cameco Corp., Mayr-Meinhof Karton AG, Goldcorp Inc., Talisman Energy and Addax Petroleum Corp. Trimark Canadian Resources Fund holds 50.3% of its portfolio in the Energy sector, 26.4% in Metals & Minerals and 6.3% in Industrials....

TD RESOURCE FUND $22.44 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario, M5W 1P9. Tel: 1-800-386-3757; Web site:www.tdcanadatrust.ca. No load: deal directly with the bank.) invests in companies which it sees as having strong asset bases, proven management and the ability to internally finance growth. The $173.1-million TD Resource Fund’s top stock holdings mostly have Successful Investor Ratings of “Average” or higher. They include EnCana, Suncor Energy, Talisman Energy, Goldcorp, Yamana Gold, Petro-Canada, Red Back Mining, BHP Billiton, Husky Energy, Chevron, Marathon Oil and Nexen. TD Resource Fund holds 59.1% of its portfolio in Energy and 38.1% in Metals & Minerals. It has an MER of 2.15%....

Although they are still well below their 2007-2008 highs, resource prices have begun to rise lately. Most resource companies still need an economic recovery to show significant growth. Nonetheless, we think the long-term outlook for global resource demand is still bright. Meanwhile, we think you should cut your risk in this volatile sector by sticking with profitable, well-established companies that have an asset base they acquired when asset prices were low, or in mutual funds that hold those stocks. Here are two resource funds that we rate as Aggressive. They expose investors to two different levels of risk, measured by the stocks they hold. Both are down in value lately, but we think they have long-term gains ahead. TD RESOURCE FUND $22.44 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario, M5W 1P9. Tel: 1-800-386-3757; Web site:www.tdcanadatrust.ca. No load: deal directly with the bank.) invests in companies which it sees as having strong asset bases, proven management and the ability to internally finance growth....

HARBOUR FUND $17.42 (CWA Rating: Conservative) (C.I. Mutual Funds, 151 Yonge St., 7th Floor, Toronto, ON, M5C 2W7. 1-800-268-9374; Web site: www.cifunds.com. Load fund: available from brokers.) invests in only 25 to 40 high-quality mostly Canadian stocks, and it may hold stocks for four or five years to realize their value. The $5.3-billion Harbour Fund’s top holdings include Canadian National Railway, Goldcorp Inc., Suncor Energy, Talisman Energy, EnCana Corporation, Petro-Canada, Manulife Financial and BHP Billiton. The Harbour Fund lost 19.3% over the last year. That’s less than the S&P/TSX’s loss of 27%. The fund’s five-year return has averaged 8% annually....

BMO DIVIDEND FUND $37.58 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) currently holds about 43.3% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 23.1%. The $3.7 billion BMO Dividend Fund’s largest holdings are Bank of Nova Scotia, CIBC, Royal Bank, Canadian National Railway, Manulife Financial, TD Bank, TransCanada Corporation, EnCana Corporation, Enbridge and Goldcorp. The fund’s MER is 1.71%. Over the five years to May 31, 2009, the fund posted a 3.7% annual rate of return. The S&P/TSX index returned 6.9% annually. The index gained from the big run up in resources prices that lasted until early in 2008. The S&P/TSX index holds a high 46% or so of its holdings in Resources stocks....

EnCana, $55, symbol ECA on Toronto (Shares outstanding: 750.1 million; Market cap: $41.3 billion), continues to suffer from weak natural gas prices, but the company should continue to benefit from its hedging contracts. EnCana has locked in the sale of about two-thirds of its expected natural-gas production through October at an average price of $9.13 U.S. per thousand cubic feet. That’s 137% more than today’s spot price of $3.86 U.S. This should keep EnCana’s cash flow strong, even if it takes a while for gas prices to recover. The company has great long-term asset value and growth potential. We see EnCana as a buy. Canadian Natural Resources, $54.97, symbol CNQ on Toronto (Shares outstanding: 542 million; Market cap: $29.8 billion), is Canada’s second-largest independent oil-and-gas producer; only EnCana is larger. Canadian Natural’s product mix is about 57% oil and 43% natural gas. The stock trades at 4.8 times its forecast 2009 cash flow of $11.53 a share. Canadian Natural Resources is not one of our favourites, but it’s okay to hold....

TRANSCANADA CORP., $31.49, Toronto symbol TRP, will buy the 20.01% of the Keystone pipeline that it doesn’t already own from its partner, ConocoPhillips (New York symbol COP), for $550 million U.S. Keystone will pump crude oil from Alberta to refineries in Illinois. The first phase should start operating early next year. TransCanada plans to extend Keystone to the U.S. Gulf Coast by 2012. Aside from the purchase price, TransCanada will assume $200 million U.S. in related short-term debt. In all, Keystone will cost $12 billion U.S. to build. TransCanada and ConocoPhillips have spent $2.7 billion U.S. to date. To put these figures in context, TransCanada’s market cap is $19.4 billion (Canadian)....