encana

ENCANA CORP. $62 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 761.3 million; Market cap: $47.2 billion; SI Rating: Average) is one of North America’s largest producers of natural gas (80% of total production) and oil (20%). In the past few years, EnCana has sold most of its conventional properties to focus on what it calls “key resource plays”, including oil sands and early-stage gas developments. These assets cost more to develop, at least initially, but should last much longer than its older properties. Another project EnCana has high hopes for is the Deep Panuke offshore gas field near Nova Scotia. The company has received tentative regulatory approval for its plan, and aims to begin operations in 2010....

Oil and gas producers must spend large amounts every year to replace diminishing reserves, which cuts their short-term profits. But if done right, these projects should last decades. In Canada, most big energy companies are expanding their operations in Alberta’s oil sands region. Although new environmental regulations could add to the already high costs of developing the oil sands, higher oil prices will probably offset these extra costs. Higher prices will also help offset the costs of other expensive projects, such as new pipelines and offshore platforms. These three top energy companies are all doing a good job holding down their operating and capital costs in a volatile sector. All three are also attractive in relation to earnings and cash flow....

HARBOUR FUND $21.92 (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 Canadian stocks, and it may hold stocks for four or five years to realize their value. The $4.7 billion Harbour Fund’s top holdings include Royal Bank, Bank of Nova Scotia, Suncor Energy, Royal Bank of Scotland, CIBC, Alcan, EnCana Corp., Rio Tinto, TD Bank and BHP Billiton. The Harbour Fund gained 8.2% over the last year. Its MER is 2.34%....

TD RESOURCE FUND $32.96 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Website:www.tdcanadatrust.ca. No load — deal directly with the bank) invests in companies with superior asset bases, proven management and the ability to internally finance growth. The $232.7 million TD Resource Fund’s top holdings are mostly of ‘Average’ quality or higher. The fund’s holdings include Suncor Energy, Alcan, EnCana, Talisman Energy, Goldcorp, Denison Mines, Petro-Canada, Nexen, Yamana Gold, BHP Billiton and Tenke Mining. The fund’s industry breakdown is: Materials, 48.6%; and Energy, 41.2%. Its MER is 2.23%. Over the past year the fund has made 17.5%. The fund’s five-year average is 22.7% annually. TD Resource Fund is a buy....

ISHARES CDN LARGECAP 60 INDEX FUND $76.72 (Toronto symbol XIU; buy or sell through a broker) (formerly called iUnits S&P/TSX 60 Index Participation Fund) is a good low-fee way to buy the top stocks on the TSE. The units hold a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and most heavily traded stocks on the TSE. Most of the 60 stocks in the index are good quality companies. However, to meet the requirement that all sectors are represented, the index holds a few firms we wouldn’t include, such as Cott Corporation and Celestica. The index’s top holdings are: Royal Bank, 7.1%; Manulife, 6.0%; Bank of Nova Scotia, 5.1%; TD Bank, 4.9%; EnCana Corporation, 4.4%; Suncor Energy, 3.9%; Bank of Montreal, 3.9%; Canadian Natural Resources, 3.3%; CIBC, 3.3%; Sun Life Financial, 2.9%; Barrick Gold, 2.8%; BCE Inc., 2.6%; and Canadian National Railway, 2.5%....

The best exchange-traded funds (ETFs) offer well-diversified, tax-efficient portfolios with very low management fees. Due to buyback and share issue arrangements, ETFs always trade close to their net asset value. Here are some of the best deals available in ETFs. We’ve also analysed one we don’t like. ISHARES CDN LARGECAP 60 INDEX FUND $76.72 (Toronto symbol XIU; buy or sell through a broker) (formerly called iUnits S&P/TSX 60 Index Participation Fund) is a good low-fee way to buy the top stocks on the TSE. The units hold a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and most heavily traded stocks on the TSE....

IMPERIAL OIL LTD. $41 (Toronto symbol IMO; Conservative Growth Portfolio, Resources sector; Shares outstanding: 953.0 million; Market cap: $39.1 billion; SI Rating: Average) had to cut production by 50% at its Nanticoke refinery in Ontario due to a fire. This plant accounts for about 25% of Imperial’s refining capacity, and the slowdown led to shortages at many of its Ontario gas stations. It will probably take a few more weeks for the plant to return to full capacity, but it’s unlikely the fire will have a material impact on Imperial’s 2007 profits. Imperial Oil is a buy. DUNDEE CORP. $52 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 25.1 million; Market cap: $1.3 billion; SI Rating: Average) has increased its stake in Breakwater Resources Ltd., from 18.4% to 21.55%. (Breakwater operates zinc mines in British Columbia, Honduras and Chile.) The extra shares cost Dundee $3.1 million, which is slightly less than the $0.13 a share (total $3.5 million) it earned in the third quarter of 2006....

ENCANA CORP. $48 (New York symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 772.0 million; Market cap: $37.1 billion; WSSF Rating: Average) is a leading Canadian energy company. Natural gas accounts for 80% of its production, while oil supplies the remaining 20%. In the three months ended December 31, 2006, lower gas prices cut EnCana’s profit 42.5%, to $0.84 a share from $1.46 a year earlier. These figures exclude unusual items such as gains on the sale of assets and hedging gains. Cash flow per share fell 24.3%, to $2.18 from $2.88, while revenue fell 37.3%, to $3.7 billion from $5.9 billion. In the past few years, EnCana has sold its overseas assets to focus on unconventional properties in North America, such as early-stage gas fields and the oil sands in Alberta....

The Resources and Commodities sector of the economy has gone through a once-in-a-generation price boom in the past few years. Investors generally expect booming demand from India and China to keep prices high. However, this sector has always been highly volatile and subject to sudden downdrafts. We feel the best way to cut your resource risk is to stick with high-quality companies such as these three. They all have a broad range of income streams, which helps them stay profitable, even if prices fall. Hidden or little appreciated assets should fuel their growth for decades. They also have the flexibility to adjust production in the face of lower prices, which conserves cash for dividends and stock repurchases. CHEVRON CORP. $70 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.2 billion; Market cap: $154.0 billion; WSSF Rating: Above average) is the second-largest integrated oil company in the United States, after ExxonMobil Corp....

SCOTIA CANADIAN GROWTH FUND $69.01 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9 269; Website: www.scotiabank.com. No load — deal directly with the company.) uses fundamental analysis to identify what the managers see as investments that have the potential for above-average growth. The $609.0 million Scotia Canadian Growth Fund’s 10 largest holdings are Manulife, Suncor Energy, Royal Bank, TD Bank, Goldcorp, Petro-Canada, CN Railway, CIBC, Sun Life Financial and EnCana. Scotia Canadian Growth currently holds 31.5% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 19.7%....