income trust

PEYTO EXPLORATION & DEVELOPMENT CORP. $21.98 (Toronto symbol PEY; Shares outstanding: 133.1 million; Market cap: $2.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.3%; www.peyto.com) produces and explores for oil and natural gas in Alberta. The company converted from an income trust to a dividend-paying stock on December 31, 2010. Peyto’s average daily production of 34,443 barrels of oil equivalent (including natural gas) is weighted 89% toward gas and 11% to oil. In the three months ended June 30, 2011, Peyto’s cash flow rose 31.8%, to $0.58 a unit from $0.44 a year earlier. The shares trade at 9.5 times the company’s forecast 2011 cash flow of $2.32 a share. Peyto’s long-term debt of $455 million is a low 15.7% of its $2.9-billion market cap....

Labrador Iron Mines Holdings Ltd., $6.90, symbol LIM on Toronto (Shares outstanding: 50.8 million; Market cap: $350.5 million; www.labradorironmines.ca), has restarted its iron ore projects in northwestern Labrador and northeastern Quebec. The company is now shipping ore to China. Iron Ore Company of Canada markets and ships the ore under an agreement with Labrador Iron Mines. The company’s projects consist of 20 deposits, containing about 166 million tonnes of iron ore. There is little processing required, and all the ore is loaded onto trains and shipped straight to the port town of Sept-Iles, Quebec. The properties are part of the historic Schefferville mining district, where Iron Ore Company of Canada operated from 1954 to 1982. The company holds cash of $87.5 million, or $1.62 a share, and has no debt. That gives it the funds to keep expanding its mining operations and exploring its properties....

Yellow Media Inc., $0.19, symbol YLO on Toronto (Shares outstanding: 516.1 million; Market cap: $98.1 million; www.ypg.com) is the successor to Yellow Pages Income Fund, which first sold units to the public and began trading on the Toronto exchange at $10 in July 2003. The company converted to a corporation from an income trust on November 1, 2010. As part of the conversion, it changed its name to Yellow Media from Yellow Pages Income Fund. Yellow Media is the largest telephone-directory publisher in Canada, and owns the Yellow Pages and Pages Jaunes trademarks. It also operates web sites devoted to classified advertising. The company used to print free, advertising-based publications, including Auto Trader, Buy & Sell and Renters News, through 98%-owned Trader Corp. However, it recently sold Trader Corp. for $745 million in cash. It needed the cash to lower its high $2.5 billion of debt. At that time, that debt was equal to 114% of its market cap....

CML Healthcare Inc., $9.43, symbol CLC on Toronto (Shares outstanding: 89.8 million; Market cap: $846.8 million; www.cmlhealthcare.com), was called CML Healthcare Income Fund before it converted from an income trust to a corporation on January 4, 2011. CML (or Canadian Medical Laboratories) is one of Canada’s largest health-care diagnostic services providers. It has two main business segments: Laboratory Services and Imaging Services. Laboratory Services, which provides 45% of CML’s revenue, performs a wide range of medical tests through its Ontario laboratory network, which consists of 117 specimen collection centres and the company’s central laboratory in Mississauga. CML’s large network of labs lets it take advantage of economies of scale that are not available to smaller labs. About 85% of the company’s lab revenues are fixed by an agreement with the Ontario Ministry of Health (more on that below)....

Medical Facilities Corp., symbol DR owns majority interests in four specialty surgical hospitals located in South Dakota & Oklahoma

ISHARES CDN REIT SECTOR INDEX FUND $14.20 (Toronto symbol XRE; buy or sell through a broker; ca.ishares.com) holds the 13 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT is limited to 25% of iShares CDN REIT Sector Index Fund’s value. iShares CDN REIT’s expenses are just 0.55% of its assets. RioCan REIT is the fund’s largest holding, at 25.0%, followed by H&R REIT (12.0%), Canadian REIT (8.9%), Calloway REIT (8.6%), Boardwalk REIT (6.9%), Dundee REIT (6.9%), Primaris Retail REIT (6.2%), Canadian Apartment Properties REIT (6.1%), Allied Properties REIT (4.4%), Cominar REIT (4.4%), Chartwell Seniors Housing REIT (4.0%), Artis REIT (3.7%) and Extendicare REIT (2.0%)....

Medical Facilities Corp., $10, symbol DR on Toronto (Shares outstanding: 28.4 million; Market cap: $284.0 million, www.medicalfacilitiescorp.ca), owns majority interests in four specialty surgical hospitals located in South Dakota and Oklahoma, as well as an ambulatory surgery centre in California. The specialty hospitals perform scheduled surgical, imaging and diagnostic procedures. Their revenue comes from fees they charge for the use of their facilities. The ambulatory surgery center specializes in outpatient surgical procedures. Patients typically stay in this facility for less than 24 hours. In the three months ended June 30, 2011, Medical Facilities’ revenue rose 6.2%, to $54.3 million from $51.2 million (all figures except share price and market cap in U.S. dollars). Cash flow per share rose 6.3%, to $0.34 from $0.32....

BELL ALIANT INC. $27 (Toronto symbol BA, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 227.8 million; Market cap: $6.2 billion; Price-to-sales ratio: 1.0; Dividend yield: 7.0%; TSINetwork Rating: Above Average; www.bellaliant.ca) sells telephone and Internet services to 2.8 million customers in Atlantic Canada, as well as rural parts of Ontario and Quebec. The company also sells wireless services through an alliance with BCE. Sales of the company’s Internet and TV services are rising. That’s offsetting lower sales from its local and long-distance telephone operations. In the three months ended June 30, 2011, Bell Aliant earned $0.43 a share (the company did not provide comparable year-earlier figures, because it was an income trust)....

PetroBakken Energy, $10.97, symbol PBN on Toronto (Shares outstanding: 216.0 million; Market cap: $2.1 billion; www.petrobakken.com), produces and explores for oil, mainly in the Cardium area of west-central Alberta and the Bakken region of southeastern Saskatchewan. The Bakken formation covers parts of Montana, North Dakota and Saskatchewan, and could contain up to 500 billion barrels of oil or more. Oil was first discovered at Bakken in 1951, but it has always been hard to extract the oil from the rock. However, modern techniques, such as horizontal (or slant) drilling have made it easier to access hard-to reach deposits like those at Bakken....

PENN WEST PETROLEUM $18.34 (Toronto symbol PWT; Shares outstanding: 466.9 million; Market cap: $8.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.9%) is one of North America’s largest oil and gas producers. The company produces an average of 156,107 barrels of oil equivalent per day (weighted 63% to oil and 37% to natural gas). In the three months ended June 30, 2011, cash flow per share rose 7.1%, to $0.85 from $0.62, mostly due to higher oil and gas prices. The company owns 50% of the huge Cordoba Embayment shale-gas project in B.C. Japan’s Mitsubishi Corp. owns 30%, state-owned Korea Gas Corp. owns 5%, and four other Japanese companies own 3.75% each. Penn West’s partners are spending a total of $850 million to earn their stakes....