encana

CIBC CANADIAN EQUITY FUND $25.59 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.cibc.com. No load — deal directly with the company.) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify companies that trade at reasonable valuations and yet have growth potential. The $644.5 million fund’s top holdings are Petro- Canada, EnCana, Manulife Financial, Teck Cominco, Bank of Nova Scotia, TD Bank, Canadian National Railway, Bank of Montreal, National Bank and Suncor Energy. CIBC Canadian Equity holds 39.4% of its portfolio in Financial services stocks and 24.1% in Energy stocks....

BMO EQUITY FUND $31.63 (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) generally invests in the shares of 20 to 40 “blue-chip” Canadian companies. These stocks are selected based on the manager’s outlook for the industry they operate in, the earnings record of each company, the strength of management, and the potential for growth. BMO Equity Fund’s 10 largest holdings are Manulife Financial, Suncor Energy, Royal Bank, TD Bank, Sun Life Financial, EnCana Corporation, Barrick Gold, CIBC, Bank of Nova Scotia and Telus. The $2.2 billion fund currently holds 35.9% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 20.0%....

RBC CANADIAN EQUITY FUND $27.30 (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) invests mostly in larger-capitalization stocks, but also looks for opportunities in small and mid-cap stocks. The fund’s 10 largest holdings are TD Bank, Manulife Financial, Bank of Nova Scotia, Royal Bank, EnCana, Barrick Gold, CN Railway, CIBC, Suncor Energy and Bank of Montreal. The $4.7 billion fund holds 31.6% of its holdings in Financial stocks. It also holds 21.5% in Energy stocks....

Here are five large funds run by each of Canada’s big-five banks. Each holds the kind of conservative, well-balanced portfolios of high quality stocks we like. All five have a high weighting in Financial services and Energy stocks. However, they stick with high-quality issues with sound fundamentals, so these concentrations don’t add a lot of risk. Each has its quirks, but overall they are well positioned for low-risk returns. TD CANADIAN EQUITY FUND $30.40 (CWA Rating: Conservative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies with strong growth potential. TD Canadian Equity Fund’s 10 largest holdings are Bank of Nova Scotia, Suncor Energy, Royal Bank, TD Bank, Rogers Communications, Canadian Oil Sands Trust, CN Railway, Tim Hortons, Canadian Natural Resources and Teck Cominco....

HARBOUR FUND $20.74 (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 $4.6 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 17.4% over the last year. Its MER is 2.34%....

MOODY’S CORP. $70 (New York symbol MCO) has increased its dividend 14.3%, from $0.07 a share to $0.08. The new annual rate of $0.32 yields 0.5%. The stock fell below $50 in July 2006 on fears that rising interest rates would cut investor interest in new corporate debt securities, and hurt demand for Moody’s ratings. It has recovered as rates stabilized, but it’s expensive at 32 times earnings. Hold. GENERAL MILLS INC. $58 (New York symbol GIS) has raised its dividend for the fourth time in just over two years. The new rate of $1.48 yields 2.6%. The company also plans to buy back more of its stock in 2007. Buy. PHILIPS ELECTRONICS N.V. $37 (New York symbol PHG) hopes to capture a larger share of Asia’s mobile phone market, which could grow by 50% in 2007. It has licensed its brand to a Chinese company that will make low-cost phones under a five-year deal. Buy....

ENCANA CORP. $57 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; SI Rating: Average) produces oil and natural gas, mostly in the western part of North America. Natural gas accounts for three-quarters of its production. In the past few years, the company has focused on unconventional gas reserves in the Rocky Mountains. These discoveries initially cost more to develop than conventional reserves. But they could last decades longer, particularly as new technology helps EnCana extract more gas. In fact, EnCana estimates that its unbooked reserves are 1.3 times the size of its proved reserves. The company also wants to expand its oil sands production 10-fold over the next decade, and a new partnership with U.S.-based ConocoPhillips should help it reach this goal with much less risk....

Oil prices rose to close to $80 U.S. a barrel last summer, mainly due to tensions in the Mideast. But the price has dropped to below $60, as the slowdown in the United States economy cut demand and raised inventories. We’ve probably hit a new high plateau for oil prices, between $40 and $80. We feel conservative investors should have only modest commitments in oil and gas stocks. They should focus on well-established companies, such as these three. Their large reserves and diversified operations will let them profit from higher prices, and help shield them from the inevitable downturns. IMPERIAL OIL LTD. $42 (Toronto symbol IMO; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is Canada’s largest oil company, with major operations in Alberta and the Northwest Territories. Oil accounts for over 70% of its production, while natural gas supplies the other 30%. Imperial also refines crude oil into gasoline and other petrochemicals, and operates over 2,000 gas stations under the “Esso” banner. ExxonMobil Corp. owns 69.6% of the stock....

LA-Z-BOY INC. $13 (New York symbol LZB; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) warned that it will earn between $0.01 a share and $0.04 a share in its second fiscal quarter ending October 28, 2006, down from an earlier estimate of $0.13. Most of the drop is due to weaker-than-expected sales at its retail outlets, as the slowdown in the housing market cut demand for new furniture. Profits at the company’s wholesale business are improving, but high fixed costs combined with slower sales have hurt profit margins at the retail division. We think the company will keep paying its $0.44 dividend, which yields 3.4%. La-Z-Boy is a buy for long-term gains....

ENCANA CORP. $50 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; SI Rating: Average) gets over 75% of its production from natural gas. The recent gas price drop has cut EnCana’s stock price from a peak of $65 in October 2005. Gas prices may move up again during the winter. EnCana’s deal to merge some of its oil sands assets with ConocoPhillips also cuts its risk. The stock is reasonably priced at 11 times earnings and 5 times cash flow....