great-west lifeco

EMERA INC. $21 (Toronto symbol EMA) earned $0.05 a share in the three months ended September 30, 2008, down 86.5% from $0.37 a year earlier. If you disregard a writedown and one-time costs, Emera would have earned $0.22 a share in the most recent quarter. The drop was mainly due to higher fuel costs at its main subsidiary, Nova Scotia Power. Revenue fell 4.7%, to $295.8 million from $310.3 million. However, high power rates should expand revenue in 2009. Buy. TELUS CORP. $37 (Toronto symbol T.A) estimates that it will spend $50 million on restructuring activities in 2008. That’s up from its earlier estimate of $30 million. To put these costs in perspective, Telus earned $0.89 a share (total $285.1 million) in the third quarter of 2008. However, improving its efficiency will help Telus compete with new entrants in the wireless field. Buy. GREAT-WEST LIFECO INC. $27 (Toronto symbol GWO) earned $0.48 a share in the third quarter of 2008, down 5.9% from $0.51 a year earlier. The drop was mainly due to unusual charges at its U.S. mutual fund subsidiary, Putnam Investment Trust. Despite the recent market turmoil, Great-West remains well capitalized. Best Buy.

GREAT-WEST LIFECO INC. $28 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 894.4 million; Market cap: $25.0 billion; SI Rating: Above average) holds $101 million of fixed-income securities issued by Lehman Brothers, which declared bankruptcy in September, 2008. The company also holds $347 million of securities linked to troubled U.S.-based AIG (American International Group), plus $2.1 million of fixed-income securities of Washington Mutual Inc. Great-West will record an undisclosed charge against its third quarter earnings to reflect the decline in value of these investments. However, the company’s total exposure of $450.1 million is minimal next to its total assets of $131.3 billion, or equity of $12.4 billion. Great-West may also take advantage of the current crisis to buy promising operations at bargain prices. As one of our recommended Canadian dividend stocks, Great-West Lifeco is a buy....

POWER CORPORATION $31.55 (Toronto symbol POW; SI Rating: Above average) is a diversified holding company. Power Corp. controls one of Canada’s largest mutual-fund companies, IGM Financial, and Great-West Lifeco, one of the largest life insurers. Power Financial, 66.4% held, is a holding company for Power Corp.'s financial assets, including 72.9% of Great-West Lifeco and 58.4% of IGM Financial. As well, Power Financial holds 50% of Parjointco, which in turn owns a 54.3% interest in Swiss-listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European companies: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), Suez (energy, water and waste services) and Lafarge SA (cement and building materials). In the three months ended June 30, 2008, Power Corp.'s earnings excluding one-time items rose 3.5%, to $382 million or $0.82 a share, from $369 million or $0.79. Great-West Lifeco contributed $254 million to earnings and IGM Financial contributed $88 million....

Power Corp. has held up well lately despite exceptional volatility in stock markets and in financial services stocks. That’s because both of its major holdings are leaders in their fields, are cheap in relation to their steady earnings and have long histories of rising dividends. POWER CORPORATION $31.55 (Toronto symbol POW; SI Rating: Above average) is a diversified holding company. Power Corp. controls one of Canada’s largest mutual-fund companies, IGM Financial, and Great-West Lifeco, one of the largest life insurers. Power Financial, 66.4% held, is a holding company for Power Corp.'s financial assets, including 72.9% of Great-West Lifeco and 58.4% of IGM Financial. As well, Power Financial holds 50% of Parjointco, which in turn owns a 54.3% interest in Swiss-listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European companies: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), Suez (energy, water and waste services) and Lafarge SA (cement and building materials)....

GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 894.4 million; Market cap: $28.6 billion; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $392.8 billion. The company also provides retirement planning and wealth management services. Power Corp. controls 70.6% of Great-West’s shares. The company recently sold its U.S. health care business for $1.3 billion. This business faces strong competition from larger insurers, whose size lets them negotiate better terms with medical service suppliers, so selling it made sense. The cash will help Great- West fund last year’s purchase of struggling U.S.-based mutual fund manager Putnam Investment Trust. Putnam increases Great-West’s exposure to volatile stock markets. However, the acquisition gives it an opportunity to market its products to Putnam’s large client base....

We advise most investors to place the bulk of their holdings in the Finance sector of their portfolio in two or more of the big five Canadian banks. The banks have been among the market’s top performers for several decades now, and continue to offer an attractive combination of growth and income. We also recommend that investors diversify their Finance investments with non-bank Finance sector stocks, such as these four. Like the big banks, they trade at reasonable levels in relation to their earnings. Great-West Lifeco and IGM Financial also pay above-average dividends. However, we see only three as buys right now. GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 894.4 million; Market cap: $28.6 billion; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $392.8 billion. The company also provides retirement planning and wealth management services. Power Corp. controls 70.6% of Great-West’s shares....

Today’s rebound in the market is reassuring, but I expect stocks to remain highly volatile for a month or more. After that, we could see a six-month rebound in prices. The U.S. bailout of major financial institutions raises inflation risk over the next few years, but it heads off panic. Nobody can predict market bottoms, but I suspect we are much closer to the bottom than the top. NORTEL NETWORKS CORP. $3.25, Toronto symbol NT, fell 50% this week after the company cut its revenue and earnings outlook for 2008. Due to slowing demand for telecommunications equipment, unfavourable foreign exchange rates and delays delivering certain products, Nortel now expects revenue for 2008 will be 2% to 4% lower than in 2007. It had earlier predicted that revenue would rise this year. Due to the lower revenues, Nortel will probably lose $0.39 U.S. a share in 2008. That estimate excludes the costs of a new restructuring plan. Nortel earned $0.37 U.S. a share before unusual items in 2007....

GREAT-WEST LIFECO $29.71 (Toronto symbol GWO; SI Rating: Above-average) is a leading Canadian insurance company. As well, it provides wealth management and other financial services. Great-West also operates in the U.S. and Europe. Great-West reports sharply higher earnings in the three months ended June 30, 2008, to $1.2 billion or $1.36 a share, from $544 million or $0.61 a share. The latest quarter included a gain of $649 million on the sale of the company’s U.S. health care business. Without the gain, earnings per share rose 3.3%, to $0.63 from $0.61. Without the effects of the rising Canadian dollar, earnings would have risen 8%....

NOVA CHEMICALS CORP. $28 (Toronto symbol NCX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 83.1 million; Market cap: $2.3 billion; SI Rating: Extra risk) has formed a joint venture with Reliance Industries Ltd. This new company will design and build energy efficient buildings in India, using construction components supplied by Nova. This alliance gives Nova an easy way to profit from India’s booming construction market. Nova Chemicals is a buy. GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 894.1 million; Market cap: $28.6 billion; SI Rating: Above average) earned $0.73 a share in the three months ended March 31, 2008, up 25.9% from $0.58 a year earlier. If you exclude two unusual gains, Great-West’s earnings would have grown 3.4% to $0.60 a share in the latest quarter. Unfavourable foreign exchange rates also lowered Great-West’s most recent quarterly profits by $0.05 a share. Revenue jumped to $18.0 billion from $6.9 billion due to last year’s purchase of U.S.-based mutual fund manager Putnam Investments Trust....

GREAT-WEST LIFECO $31.29 (Toronto symbol GWO; SI Rating: Above-average) is a leading Canadian insurance company. As well, it provides wealth management and other financial services. Great-West also operates in the U.S. and Europe. The 2007 purchase of Putnam Investments Trust for $3.9 billion doubled its assets under administration, to $394 billion....