income trust

Our view on a Canadian solar stock that has new power plants and long-term contracts but remains dependent on government subsidies.

Canadian Solar Inc., $33.18, symbol CSIQ on Nasdaq (Shares outstanding: 55.7 million; Market cap: $1.8 billion; www.canadiansolar.com), is an Ontario-based designer, maker and seller of solar modules, which convert sunlight into electricity. Its products are used in a range of residential, commercial and industrial power-generation systems. The company makes solar modules at plants in China, as well as two facilities in Ontario. To cut its reliance on solar modules, Canadian Solar has moved into designing and building solar power plants. It then resells these facilities to utilities, such as TransCanada Corp., or operates them itself under long-term power-purchase contracts. In 2014, this business supplied 45% of Canadian Solar’s revenue....

Capstone Infrastructure Corp., $3.10, symbol CSE on Toronto (Shares outstanding: 93.7 million; Market cap: $302.2 million; www.capstoneinfrastructure.com), is an electricity producer with 449 megawatts of capacity. It operates gas, wind, hydro, biomass and solar facilities and is developing a total of 79 megawatts of wind projects. Capstone also invests in utilities, including a 33.3% stake in a municipal-heating business in Sweden and 50% of a regulated water utility in the U.K. The company plans to keep looking for acquisitions to boost its cash flow. But that adds risk, especially since it has previously added a wide range of operations, including solar and biomass, and made acquisitions in foreign markets like Sweden....

Freehold Royalties Ltd., $17.42, symbol FRU on Toronto (Shares outstanding: 98.0 million; Market cap: $1.7 billion; www.freeholdroyalties.com), holds oil and natural gas rights on 3.5 million acres of land in Alberta, Saskatchewan, B.C., Manitoba and Ontario. These reserves are 47% natural gas, 24% light crude oil, 22% heavy crude oil and 7% natural gas liquids. Freehold collects royalties from oil and gas producers that operate over 38,000 wells on its land, in addition to holding royalty interests in seven potash mines in Saskatchewan. Long-life royalty properties account for about 75% of Freehold’s cash flow, and wells it has a working interest in, and shares the cost of operating, supply the remaining 25%....

Pat McKeough responds to many requests from members of his Inner Circle for specific stock advice as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions.

Q: Pat: Could you give an update on Northland Power?

A: Northland Power Inc. (symbol NPI on; www.northlandpower.ca) develops, builds, owns and operates natural-gas-fired power plants, wind farms, solar projects and hydroelectric facilities. The company converted to a corporation from an income trust on January 1, 2011.

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Northland Power Inc., $17.15, symbol NPI on Toronto (Shares outstanding: 149.7 million; Market cap: $2.9 billion; www.northlandpower.ca), develops, builds, owns and operates natural-gas-fired power plants, wind farms, solar projects and hydroelectric facilities. The company converted to a corporation from an income trust on January 1, 2011. Northland owns or has stakes in 1,345 megawatts of operating generating capacity, with an additional 640 megawatts (400 megawatts net to Northland) under construction and another 456 megawatts (348 megawatts net to Northland) with awarded power contracts....

One of Canada’s last income trusts, Chemtrade Logistics turns industrial waste services and a big acquisition into a high dividend yield.

Every Monday we feature “A Stock to Sell” as our daily post. We give you a full explanation of why we advise against investing in it at this time.

Liquor Stores N.A. Ltd. (symbol LIQ on Toronto; www.liquorstoresna.ca) is North America’s largest private liquor store operator, with 244 outlets. Of that total, 173 are in Alberta, 35 are in B.C., 23 are in Alaska and 13 are in Kentucky.

Liquor Stores’ banners include Liquor Depot, Liquor Barn and Brown Jug.

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A: Liquor Stores N.A. Ltd., $15.04, symbol LIQ on Toronto (Shares outstanding: 27.3 million; Market cap: $408.4 million; www.liquorstoresna.ca), is North America’s largest private liquor store operator, with 244 outlets. Of that total, 173 are in Alberta, 35 are in B.C., 23 are in Alaska and 13 are in Kentucky.

Liquor Stores’ banners include Liquor Depot, Liquor Barn and Brown Jug.

Alberta privatized retail liquor sales in 1993, prompting Irv Kipnes to found Liquor Depot and Henry Bereznicki to start Liquor World that year. Kipnes and Bereznicki, both Edmonton-based real estate developers, merged their companies and founded Liquor Stores Income Fund in 2004. The fund first sold units to the public at $10 each and began trading on Toronto in September 2004.

Liquor Stores Income Fund converted to a corporation on December 31, 2010, in response to Ottawa’s income trust tax.

The company’s strategy is to offer more choice, typically two to three times more products than its competitors. Liquor Stores lets each location juggle its product mix to meet local tastes.

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Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you specific investment tips and stock market advice. Each Investor Toolkit update gives you a fundamental piece of investment advice, and shows you how you can put it into practice right away.

Today’s tip: “There are three ways you can ensure that you get the maximum profit, and tax benefit, from your tax free savings account.”

The federal government first made the tax free savings account (TFSA) available to investors in January 2009. These accounts let you earn investment income — including interest, dividends and capital gains — tax free. You could contribute $5,000 in 2009 to start your tax free savings account.

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