encana

RBC CANADIAN EQUITY FUND $18.03 (CWA Rating: Conservative) (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) mainly invests in larger-capitalization stocks, but may also buy small- and mid-cap stocks. The $3.1-billion fund’s largest holdings are Royal Bank, Manulife, EnCana, TD Bank, Potash Corp., Bank of Nova Scotia, Canadian Natural Resources, Suncor Energy, Research in Motion and BCE. The fund is heavily weighted (47.2%) toward the resource sector; 27% of its investments are in finance. Over the last 10 years, RBC Canadian Equity posted a 4.9% annual rate of return. That’s just over the S&P/TSX’s 4.6% gain. The fund lost 38.3% over the last year, compared to a loss of 38.2% for the S&P/TSX. The fund’s MER is 1.96%....

CIBC CANADIAN EQUITY FUND $16.61 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Web site: www.cibc.com. No load — deal directly with the bank) looks at fundamentals like earnings, cash flow and debt level to identify companies that it sees as having above-average growth potential. The $317.2-million fund’s top holdings are: TransCanada Corp., EnCana, Research in Motion, Bank of Nova Scotia, CN Railway, Potash Corp., BCE Inc., Canadian Natural Resources and Royal Bank of Canada. CIBC Canadian Equity holds 39.4% of its portfolio in resource stocks and 27.1% in finance stocks....

SCOTIA CANADIAN GROWTH FUND $41.09 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9269; Web site: www.scotiabank.com. No load — deal directly with the bank) attempts to use an investment’s fundamentals to determine whether it has the potential for above-average growth. The $315.8-million Scotia Canadian Growth Fund’s largest stock holdings include EnCana Corp., Royal Bank, TD Bank, BCE Inc., Potash Corp., Canadian Natural Resources, Suncor Energy, Bank of Nova Scotia and Barrick Gold. Scotia Canadian Growth holds 43.3% of its portfolio in the resource sector. Its next-largest segment is financial services, at 24.9%....

FIDELITY GROWTH AMERICA FUND $11.98 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca., load fund — available from brokers) uses a broad “bottom-up” approach to identify undervalued companies using fundamentals, such as earnings, dividend yield, book value, cash flow and debt level. The $160.2-million Fidelity Growth America Fund’s top holdings, among the 122 stocks it holds, include Exxon Mobil, Wal-Mart, Apple, Nuance Communications, Chevron Corp., Qualcomm, Bristol Myers Squibb, Coca-Cola, 3M and Phillip Morris International. Fidelity Growth America Fund is broken down by economic segment as follows: 13.9% in Information Technologies, 13.3% in Health Care, 11.9% in Energy, 10.3% in Consumer Staples, 9.1% in Financials, 8.7% in Industrials, 7% in Consumer Discretionary, 3.9% in Utilities, 3.5% in Telecommunication Services and 2.5% in Metals & Minerals....

ENCANA CORP. $50.27 (Toronto symbol ECA; Shares outstanding: 750 million; Market cap: $37.7 billion; SI Rating: Average) earned $4.4 billion before unusual items in 2008, up 7.4% from $4.1 billion in 2007. Earnings per share rose 9.3%, to $5.86 from $5.36 on fewer shares outstanding. Cash flow per share rose 12.8%, to $12.48 from $11.06. A 6% rise in production, plus much higher oil and natural-gas prices in the first half of 2008, were behind the gains. Through hedging contracts, EnCana has locked in prices for two-thirds of its natural gas production for the first ten months of 2009. The average price of $9.13 per thousand cubic feet that EnCana gets under these deals is 125.4% more than the current spot price of $4.05. Gas accounts for over 80% of EnCana’s total output. EnCana is a buy.

Horizons AlphaPro Managed S&P/TSX 60 ETF, $8.33, symbol HAX on Toronto (Shares outstanding: 960,000; Market cap: $8.0 million), invests in stocks in the S&P/TSX 60 index using research based on technical, cyclical and sentiment indicators provided by Ron Meisels of Phases & Cycles Inc. Meisels contributes a weekly column, called “What the Charts Say” to The Globe & Mail. His research may include moving averages, trend lines, volumes, price patterns and point-and-figure charts. The ETF began trading on Toronto at $9.80 a unit on January 7, 2009. The ETF’s recent top-10 holdings were EnCana Corp. (6.8%), Research in Motion (6.3%), Barrick Gold (6%), Potash Corp. of Saskatchewan (5.2%), Goldcorp (4.5%), Canadian Natural Resources (4.3%), Suncor Energy (3.8%), Rogers Communications (3.7%), TransCanada Corp. (3.2%) and Royal Bank of Canada (2.9%). These holdings gave the ETF this sector breakdown: energy (24.1%), gold (16.2%), financials (13.3%), materials, excluding gold (10.3%), industrials (6.7%), information technology (6.3%), utilities (6.4%), cash (6%), telecommunications (3.7%), consumer discretionary (3.4%), consumer staples (2.6%) and health care (1%)....

APACHE CORP. $60 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 334.7 million; Market cap: $20.1 billion; Price-to-sales ratio: 1.7; WSSF Rating: Average) explores for and produces oil and natural gas, mostly in North America. Apache prefers to sell its oil at the current spot price, instead of locking in prices through hedging contracts. This strategy let it take full advantage of rising oil and natural-gas prices in the first half of 2008. Thanks to a 27.5% rise in its average oil prices, and a 25.5% jump in gas prices, Apache’s 2008 earnings rose 30.5%, to $3.8 billion from $2.9 billion in the prior year. Earnings per share climbed 29.6%, to $11.22 from $8.66. The 2008 earnings exclude a $3.6-billion writedown of Apache’s properties that was caused by falling energy prices in the second half of 2008. This is a non-cash accounting adjustment, and had no impact on the company’s cash balances. Apache’s revenue rose 23.9%, to $12.4 billion from $10 billion....

ENCANA CORP. $38 (New York symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.4 million; Market cap: $28.5 billion; Price-to-sales ratio: 0.7; WSSF Rating: Average) is a leading North American producer of natural gas and oil. Natural gas accounts for about 80% of EnCana’s production. EnCana focuses on what it calls “key resource plays”. These are unconventional properties, such as early-stage gas fields and oil-sands projects, that have much longer production lives than conventional properties. EnCana’s oil-sands operations consist of two 50- 50 joint ventures with ConocoPhillips — one operates the oil-sands properties, while the other processes the heavy, tar-like oil at refineries in Texas and Illinois. Oil-sands projects cost more to operate and face greater environmental opposition than regular oil fields, so this arrangement cuts EnCana’s risk....

This year, global oil consumption will probably fall for the first time since the early 1980s. We feel now is a good time to buy well-established oil companies that can take advantage of low oil prices. The three listed below are good examples; all have low debt and plenty of cash, which puts them in a good position to buy new properties or smaller producers, possibly at bargain prices. CHEVRON CORP. $64 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2 billion; Market cap: $128 billion; Price-to-sales ratio: 0.7; WSSF Rating: Above Average) is the second-largest integrated oil company in the United States, after ExxonMobil. Oil production supplied 86% of its earnings in 2008; the remaining 14% came from its refineries and retail gas stations. In response to weaker energy prices, Chevron aims to conserve cash by temporarily suspending its share buyback program. (In 2008, it repurchased $8 billion of its stock.) It now holds $9.6 billion, or $4.70 a share, in cash, and its total debt of $8.9 billion is a low 7% of its market cap....

ENCANA CORP., $48.27, Toronto symbol ECA, has agreed to sell the gas from its Deep Panuke offshore development near Nova Scotia to Repsol YPF SA, a Spanish oil-and-gas firm. The Deep Panuke project, worth $550-million (all amounts except share price in U.S. dollars), should begin operating in 2010, and its reserves could last up to 18 years. Locking Repsol in as a buyer helps cut EnCana’s risk. Meanwhile, EnCana earned $4.4 billion before unusual items in 2008, up 7.4% from $4.1 billion the previous year. Earnings per share rose 9.3%, to $5.86 from $5.36 on fewer shares outstanding. Cash flow per share rose 12.8%, to $12.48 from $11.06. A 6% rise in production, plus much higher oil and natural-gas prices in the first half of 2008 were behind the gains. Through hedging contracts, EnCana has locked in prices for two-thirds of its natural gas production for the first ten months of 2009. The average price of $9.13 per thousand cubic feet that EnCana gets under these deals is 125.4% more than the current spot price of $4.05. Natural gas accounts for over 80% of EnCana’s total production....