income trust

TRANSCANADA CORP. $56.86 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $40.8 billion; TSINetwork Rating: Above Average; Dividend yield: 3.4%; www.transcanada.com) is facing pressure from U.S.-based activist investors to unlock some of its value by selling or spinning off its electrical
power plants.

These investors also want the company to place more of its U.S. natural gas pipelines into a master limited partnership, which is similar to a Canadian income trust.

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Pat McKeough responds to many requests from members of his Inner Circle for specific investment 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 a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday. Recently an Inner Circle member asked us about a leading Canadian specialty food maker. Premium Brands draws two-thirds of its revenue from retail and the rest from food services. The company continues to expand aggressively and Pat assesses the flurry of acquisitions it has made in recent years. He considers the high debt Premium has assumed to make its acquisitions and whether it can continue to maintain its high dividend. Q: Pat: Can you please give me your opinion of Premium Brands for income and gains in the specialty food sector? Thanks....

TRANSCANADA CORP. $56.86 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $40.8 billion; TSINetwork Rating: Above Average; Dividend yield: 3.4%; www.transcanada.com) is facing pressure from U.S.-based activist investors to unlock some of its value by selling or spinning off its electrical power plants. These investors also want the company to place more of its U.S. natural gas pipelines into a master limited partnership, which is similar to a Canadian income trust....

TIM HORTONS INC., $88.38, Toronto symbol THI, still plans to merge with Miami-based Burger King Worldwide (New York symbol BKW), even though the U.S. government is now clamping down on “tax inversion” deals like this one. The combined firm will be based in Oakville, Ontario, which will let it take advantage of Canada’s 15% corporate tax rate, compared to 35% in the U.S. Under the new rules, it’s now more difficult for the foreign parent firm to shift funds between subsidiaries....

A: Premium Brands Holdings Corp., $24.28, symbol PBH on Toronto (Shares outstanding: 22.2 million; Market cap: $538.0 million; www.premiumbrandsholdings.com), took its current form on July 22, 2009, when it converted to a corporation from an income trust. Before the changeover, it was called Premium Brands Income Fund. The company operates through two divisions:

• Retail supplies 63% of Premium Brands’ revenue and mainly serves food sellers, such as delicatessens, specialty grocery chains, convenience stores, national and regional grocery chains and warehouse clubs. It also sells to cafés that offer premade foods, like sandwiches, wraps and pastries.
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Pat McKeough responds to many requests from members of his Inner Circle for advice on specific stocks, 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 a report on one of the stocks profiled in these Q&A sessions. Beginning this week, we give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of our new approach offering you regular and specific buy, hold and sell advice in our daily posts. Every week you’ll get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday. This week an Inner Circle member asked us about one of the Canadian stocks that serves the U.S. housing market. Hardwoods Distribution purchases high-grade lumber and sheet goods from hardwood mills and sells them, largely for home construction. The company has added several U.S. acquisitions in the past two years. Pat looks at Hardwoods business and its balance sheet and assesses its prospects in light of the U.S. housing recovery. Q: Pat: What are your thoughts on Hardwoods Distribution?...

Hardwoods Distribution, $10.28, symbol HWD on Toronto (Shares outstanding: 16.5 million; Market cap: $170.0 million; www.hardwoods-inc.com), is one of North America’s largest distributors of high-grade hardwood lumber and specialty sheet goods. The company mainly purchases these products from hardwood lumber mills and sells them in the home construction, renovation and institutional markets. It operates through 33 distribution centres across Canada and the U.S. Hardwoods converted from an income trust to a conventional corporation in July 2011....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice on buying stocks 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. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. Recently an Inner Circle member asked us about a Canadian stock that is tapping into the economic growth of Western Canada. WesternOne operates through a series of smaller acquisitions that build up its business in construction heating, aerial equipment and modular buildings. Pat looks at the company’s expanding business and the potential risks and rewards of its growth-by-acquisition strategy in a very competitive market. Q: Pat, could you give me your opinion on WesternOne, please?...

WesternOne, $7.90, symbol WEQ on Toronto (Shares outstanding: 31.7 million; Market cap: $250.4 million; www.weq.ca), aims to keep expanding by acquiring privately owned small- and medium-sized businesses, mainly in Western Canada. The company converted from an income trust to a corporation on January 1, 2013. WesternOne operates in two main areas: construction heat services and aerial equipment; and modular building construction and leasing. The company’s businesses include Britco Building Innovation, a designer and maker of commercial custom-built mobile and modular buildings in North America. In January 2013, Britco expanded into Australia through the acquisition of APB, one of that country’s largest modular building manufacturers....

Canexus Corp., $5.25, symbol CUS on Toronto (Shares outstanding: 180.8 million; Market cap: $936.3 million; www.canexus.ca), produces sodium-chlorate and chlor-alkali products, largely for the pulp and paper and water-treatment industries. The company’s six plants—four in Canada and two at one site in Brazil—aim to use nearby low-cost electricity sources and transportation facilities to cut their production and delivery expenses. Canexus also provides “transloading” services (transfers of oil and gas by-products, such as butane, from railcars or pipelines to trucks) at its terminal in Bruderheim, Alberta....