energy stocks

iShares S&P/TSX Capped Energy Index Fund, $21.11, symbol XEG on Toronto (Shares outstanding: 50.5 million; Market cap: $1.1 billion; ca.ishares.com) aims to mirror the performance of the S&P/TSX Capped Energy Index, which is made up of the largest-capitalization energy stocks on the Toronto exchange. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.55%. It yields 1.4%. iShares S&P/TSX Capped Energy Index Fund’s top 10 holdings are Suncor Energy, 18.5%; Canadian Natural Resources, 13.5%; Cenovus Energy, 7.5%; Encana Corp., 6.8%; Talisman Energy, 6.4%; Canadian Oil Sands Trust, 4.4%; Nexen, 3.7%; Imperial Oil, 3.5%; Crescent Point Energy, 3.4%; and Penn West Energy Trust, 3.3%. We continue to think most investors are better off investing in individual companies as part of a well-balanced and diversified portfolio, rather than in funds that focus on narrow market sectors. As well, indexes that cap their holdings at a certain level – 25% in the case of the iShares S&P/TSX Capped Energy Index Fund – can cut your return by reducing the contribution from top performers if they soar to make up more that the capped limit....

There’s no limit to the types of investment questions Inner Circle members can ask me and my team of investment experts. Members often ask us about the best ways to profit from specific trends in society. For example, we’ve gotten more questions from members about green energy stocks as concern for the environment has risen. An Inner Circle member recently asked for our recommendation on Electrovaya Inc. This green energy stock’s lightweight batteries can be used in renewable-energy projects and hybrid cars. To give you a sense of how the Inner Circle works, I’d like to share this question, and our answer, with you. I hope you enjoy and profit from it. Q: Hello Mr. McKeough: Recently there has been interest in Electrovaya Inc., which has signed an agreement to provide batteries to Chrysler. What is your opinion on this stock? Regards....

The seeming attraction of wind power stocks is obvious — these companies operate (or make parts for) wind turbines, which offer a source of clean, renewable energy that can replace fossil fuels like oil and coal. However, like many alternative-energy stocks, wind power’s potential has risk to match. For example, the government of Ontario’s recent decision to put a moratorium on offshore wind farms illustrates the mounting political opposition to new wind developments. (Our Special Report, “3 Little-Known Alternative Energy Companies that Could Double or Triple During the Obama Administration,” covers all you need to know to find the profit-making opportunities in wind power stocks. You get this Special Report at no cost when you take a one-month free trial to our Wall Street Stock Forecaster newsletter. Read on for further details. If you’re already a Wall Street Stock Forecaster subscriber or Inner Circle member, click here to access this report right away.)...

Theme investing can pay off from time to time. Today’s popular investment themes include alternative energy, such as solar wind and geothermal, and emerging markets, such as China and India. However, theme investing can turn out badly for investors, especially those who get in late or forget about investment quality. The reason why is straightforward. When you indulge in theme investing, you allow a theme or concept to take a central place in your investing decisions. Usually the theme or concept includes some prediction about the future that has some truth in it, and will make noticeable changes in society. You may assume that if you can just get aboard that theme or find an investment whose future is tied up with it, you are bound to make money....

Energy ETFs (exchange-traded funds) can be a good, low-cost way to hold energy stocks. In our newsletters, we recommend a number of energy stocks that would be good additions to a stock portfolio. If you want to hold an energy ETF, here’s one that invests in the biggest Canadian energy firms: iShares S&P/TSX Capped Energy Index Fund, $17.99, symbol XEG on Toronto (Shares outstanding: 45.2 million; Market cap: $813.1 million) aims to mirror the performance of the S&P/TSX Capped Energy Index, which is made up of the largest-capitalization energy stocks on the Toronto exchange. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.55%. It yields 2.5%. iShares S&P/TSX Capped Energy Index Fund’s top-10 holdings are Suncor Energy, 18.0%; Canadian Natural Resources, 13.8%; Encana Corp., 8.1%; Cenovus Energy, 7.9%; Talisman Energy, 6.2%; Canadian Oil Sands Trust, 4.8%; Nexen, 3.9%; Imperial Oil, 3.6%; Penn West Energy Trust, 3.2% and Crescent Point Energy, 3.2%....

Recently, President Barack Obama visited a Florida solar-power plant operated by FPL Group (symbol FPL on New York), one of the green stocks we cover in our Wall Street Stock Forecaster newsletter. The president was there to announce a $200 million U.S. grant to FPL that will help with the green stock’s installation of “smart meters.” Customers can use these meters to cut their power use and save on their electricity bills. The grant is part of the government’s continuing investment in strengthening and upgrading the country’s power grid. FPL is in a good position to scoop up even more green-power subsidies over the next few years. See below for more on this company’s leading-edge operations....

Front Street Special Opportunities Canadian Fund holds a lot of higher-risk stocks, mainly in the resource sector. It holds 44.4% of its portfolio in energy stocks, and 44% in metals and minerals, including gold. The fund’s top holdings are SouthGobi Energy Resources, Ventana Gold, Petrobank Energy and Resources, Petro Andina Resources, Pacific Rubiales Energy, Mirabela Nickel, Ivanhoe Mines, Gran Tierra Energy, Crew Energy and Alange Energy. The fund is up 71.1% in the six months ended September 30, 2009, because of rising prices for resources and resource stocks. Over the year ended September 30, the fund is up 37.9%. Its MER is 2.09%....

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....

BMO DIVIDEND FUND $34.97 (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 35.1% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 21.1%. The $3.7 billion BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank, Shoppers Drug Mart, TD Bank, TransCanada Corp., EnCana, Enbridge and Shaw Communications. The fund’s MER is 1.71%. Over the five years to November 30, 2008, the fund posted a 4.6% annual rate of return. The S&P/TSX gained 5.7% annually, but that was largely due to the big run up in resources prices that lasted until early in 2008. The S&P/TSX index holds a high 40% or so of its holdings in Resources stocks....

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....