encana

Some investors worry that Washington’s $700 billion bailout of the banking industry is going to fall apart, and that this will lead to a rise in gold and a drop in the stock market. We think the bailout will go through. The only obstacle to it is the political bickering and posturing that is bound to go into a highly visible effort like this, all the more so just prior to a presidential election. There is always a possibility that the market will move lower from here. Meanwhile, gold will stay volatile. But we still feel stock prices will hit bottom over the next month or two, then move up for six months or more. ENCANA CORP. $71.22, Toronto symbol ECA, now plans to expand its refinery in Roxana, Illinois. The company and ConocoPhillips each own 50% of this facility. This upgrade will increase the plant’s total capacity by 16%. It will also let the plant handle increasing production from EnCana’s oil sands operations in Alberta....

PEMBINA PIPELINE INCOME FUND $18.11 (Toronto symbol PIF.UN; SI Rating: Extra risk) has interests in 14 feeder pipeline systems with a total length of 8,350 kilometres. This network is the largest feeder operation in Canada. These pipelines bring oil and gas from fields in northeastern B.C. and western and northern Alberta to refineries, or feed into major pipelines such as the Enbridge Pipeline System. The fund’s network includes the Pembina System, which has been in operation since 1954. It also holds a 50% interest in the Fort Saskatchewan Ethylene Storage Limited Partnership. In the three months ended June 30, 2008, Pembina’s revenues rose 43.6%, to $181.5 million, from $126.4 million. Cash flow per unit rose 59.4%, to $0.51 from $0.32....

FIDELITY GROWTH AMERICA FUND $18.32 (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 low debt. The $262.1-million Fidelity Growth America Fund’s top holdings include Exxon Mobil, Apple, Hewlett-Packard, Medco Health Solutions, Agco, National OilWell Varco, Travelers Companies, CF Industries Holdings, Lockheed Martin and ENSCO. Fidelity Growth America Fund is broken down by economic segment as follows: 15.7% in financials, 15.6% in information technologies, 13.4% in health care, 12.9% in energy, 11.9% in industrials, 10.1% in consumer staples, 9.5% in consumer discretionary, 3.9% in materials, 3.4% in utilities and 2.9% in telecommunication services. The fund’s one-year loss in Canadian dollars is 21.4%, compared to a loss of 14.4% for the S&P 500 in Canadian funds over the same period. The fund’s MER is 2.59%....

TRANSALTA CORP. $36 (Toronto symbol TA; SI Rating: Average) rose as high as $38 in July after it received an informal takeover offer worth $39.00 a share from a private equity partnership that includes Luminus Management. Luminus currently owns about 9% of TransAlta’s stock, and has pressured the company to sell non-core assets, buy back shares and raise the dividend. The stock currently trades about 8% below Luminus’ offer. That’s mainly due to concerns that problems in credit markets will make it difficult for the buyers to borrow the cash they need to complete the takeover. TransAlta is a major supplier of Alberta’s electricity. The buyers could have difficulty winning regulatory approval if the takeover significantly increases TransAlta’s debt, and limits its ability to invest in new power plants or environmental upgrades....

HARBOUR FUND $21.52 (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 $5.7 billion Harbour Fund’s top holdings include Bank of Nova Scotia, Canadian National Railway, Goldcorp Inc., Suncor Energy, General Electric, EnCana Corporation, Petro-Canada, Rio Tinto, Talisman Energy and BHP Billiton. The Harbour Fund gained 0.5% over the last year. The fund’s five-year return averages 15.2% annually. Its MER is 2.33%....

RBC CANADIAN DIVIDEND FUND $46.18 (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) has 43.5% of its portfolio in Financial services stocks. It has a further 19.4% in Energy stocks and 6.5% in Consumer discretionary. The $9.6 billion RBC Canadian Dividend Fund’s top stock holdings are Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank, Manulife Financial, Canadian Imperial Bank of Commerce, EnCana Corporation, Bank of Montreal, Sun Life Financial and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 13.1% annual rate of return. That’s less than the S&P/TSX’s gain of 18.2% over the same period....

BMO DIVIDEND FUND $44.99 (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 36.3% of its portfolio in the Financial services industry. Its next-largest holdings are Energy at 24.4% and Consumer discretionary at 9.1%. BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank of Canada, Power Financial Corporation, Toronto-Dominion Bank, TransCanada Corporation, Imperial Oil, Suncor Energy, EnCana Corporation, Enbridge Inc., Husky Energy and Sun Life Financial. Over the last five years, the $5.2 billion BMO Dividend Fund has posted a 12.1% annual rate of return. That’s under the S&P/TSX’s gain of 18.2%. However, the S&P/TSX index held a high 40% or so of its holdings in Resources shares. That’s been one of the best-performing, although riskiest, sectors. The fund lost 5.6% over the last year, compared to a gain of 6.8% for the S&P/TSX index. BMO Dividend’s MER is 1.71%....

BMO Dividend and RBC Canadian Dividend hold mostly high-quality stocks. Even high-quality stocks sometimes run into trouble and go through lengthy struggles, just like lesser investments. Eventually, though, most solve their problems and go on to thrive anew. Both funds hold a high proportion of their assets in financial services stocks. However, if you must focus on something, finance is a relatively stable sector, at least in Canada. If you do invest in these funds, be sure to adjust the rest of your portfolio so these funds won’t overly concentrate your holdings in the financial sector....

ENCANA CORP. $91.17 (Toronto symbol ECA; SI Rating: Average) now has assembled 220,000 net acres in the Horn River area of Northeast B.C., and 325,000 net acres in the Haynesville region of Louisiana and Texas. Early drilling indicates that these two fields contain large amounts of shale gas. Unlike regular natural gas, gas producers must use specialized fracturing techniques to release shale gas. That makes extracting shale gas about twice as expensive as production from traditional gas wells. While actual production is still years away, EnCana feels each of these deposits could eventually produce 1 billion cubic feet of gas per day. It now produces 3.7 billion cubic feet daily....

TRIMARK CANADIAN FUND $18.44 (CWA Rating: Aggressive) (AIM Funds Management Inc., 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631- 7008; Website: www.aimfunds.ca. Buy or sell through brokers.) uses a bottom-up stock-picking style (using fundamentals such as earnings, cash flow and low debt) that looks at valuation measures and then tries to pick stocks selling at a discount to long-term value. The fund’s 10 largest holdings are Thomson Reuters Corp., TD Bank, Bank of Nova Scotia, MacDonald Dettwiler, Time Warner, Willis Group Holdings, Alimentation Couche-Tard, Power Corporation, Toromont Industries and Molex Inc. The fund’s portfolio breaks down by sector as follows: Financials, 26.3%; Consumer discretionary, 20.1%; Information technology, 10.8%; Materials, 9.8%; Energy, 4.2%; and Industrials, 7.8%....