investment

At a time of lower commodity prices, the mining stocks with the greatest speculative appeal are those with new projects that enhance their value even before prices rebound. Today we look at Hecla Mining and Amerigo Resources, two mining firms that are moving ahead with large developments. In both cases these projects promise to expand production considerably. Hecla is beginning production at a Mexican silver mine that last operated a decade ago, and has also purchased one of North America’s largest undeveloped silver deposits. Amerigo has launched a new copper tailings project in Chile that could double its production by next year.

HECLA MINING COMPANY (New York symbol HL; www.hecla-mining.com) explores for, mines and processes silver and gold in the U.S. and Mexico. Most of the company’s silver output comes from its Greens Creek mine in Alaska and its Lucky Friday project in Idaho. Hecla’s Casa Berardi mine in Quebec supplies the majority of its gold production.

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RUSSEL METALS INC., $19.26, symbol RUS on Toronto, is one of North America’s largest metal distributors, serving 39,000 clients at 53 locations in Canada and 12 in the U.S. In the three months ended September 30, 2015, Russel’s revenue fell 25.5%, to $773.4 million from $1.04 billion a year earlier. The company’s sales mainly declined because revenue fell 40% at its energy products division, which supplies pipes for oil and gas drillers. Earnings dropped sharply, to $12.8 million, or $0.21 a share, from $33.0 million, or $0.54. The latest figure included a $2-million charge related to a more than 7% cut to the company’s workforce. Russel’s earnings fell faster than its revenue because steel prices moved down in the latest quarter. That hurts the company’s profit margins and causes it to suffer losses on its inventory....

TRANSCANADA CORP., $43.32, Toronto symbol TRP, fell 4% on Friday after the U.S. rejected its proposed Keystone XL pipeline, which would have pumped crude from Alberta’s oil sands to refineries on the U.S. Gulf Coast. So far, TransCanada has spent $2.4 billion U.S. on this $8.0-billion U.S. project. However, it can use some of the line’s equipment on other projects, which would minimize a writedown. Meanwhile, the company’s earnings fell 2.2% in the three months ended September 30, 2015, to $440 million (Canadian), or $0.62 a share, though that was still ahead of the consensus estimate of $0.60. A year earlier, it earned $450 million, or $0.63....

Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers almost $3 trillion U.S. in 170 mutual funds. Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds aren’t available in all provinces. Canadians can, however, buy Vanguard exchange traded funds that trade on stock exchanges. We don’t recommend all of Vanguard’s ETFs, but here are two we do see as low-fee buys....

RIOCAN REAL ESTATE INVESTMENT TRUST $25.36 (Toronto symbol REI.UN; Units outstanding: 319.4 million; Market cap: $8.1 billion; TSINetwork Rating: Average; Dividend yield: 5.6%; www.riocan.com) is Canada’s largest real estate investment trust. In the three months ended September 30, 2015, RioCan’s cash flow rose 2.3%, to $0.44 a unit from $0.43 a year earlier. Revenue gained 4.5%, to $320.6 million from $306.9 million. The trust continues to do a good job of hanging onto tenants and renewing leases at higher rates: rents on renewals rose 8.6% in Canada and 9.8% in the U.S....

ISHARES CDN REIT SECTOR INDEX FUND $15.10 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index. iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 5.5%. The ETF’s largest holding is RioCan REIT at 20.1%, followed by H&R REIT (14.4%), Smart REIT (8.5%), Canadian Apartment Properties REIT (7.9%), Canadian REIT (7.7%), Allied Properties REIT (6.7%), Cominar REIT (6.1%), Dream Office REIT (5.6%), Boardwalk REIT (5.1%), Artis REIT (4.6%), Granite REIT (4.4%), Crombie REIT (2.5%), Dream Global REIT (2.4%), Pure Industrial REIT (2.1%) and Northern Property REIT (1.5%)....

Investing guidelines and rules of thumb can help you make better investment decisions. But to profit most from any one guideline, you need to understand why it works. That way, you can determine if the rule makes sense in a particular situation. For example, our rule on new stock issues or IPOs (Initial Public Offerings) is simple. We generally stay out of them. That’s because new stock issues come to market when it’s a good time for the company or its insiders to sell. That may not be a good time for you to buy. In fact, it’s often a bad time for you to buy, judging by academic studies of new-issue performance. In addition, brokers reserve their best new issues for their biggest and most co-operative clients—those who do a lot of trading, or who buy every new issue the broker offers them. If you rarely buy new issues, you will rarely if ever be able to buy a significant portion of the best new issues....

Weight Watchers International, $16.14, symbol WTW on New York (Shares outstanding: 57.2 million; Market cap: $880.1 million; www.weightwatchers.com), offers weight-loss services in 23 countries. The company promotes a program of lifestyle changes through over 36,000 weekly member meetings and online. It gets 80% of its revenue by collecting meeting fees and 20% from product sales. Weight Watchers has been in business for over 54 years. Jean Nidetch, a homemaker living in Queens, New York, founded the company in 1961. Nidetch struggled to lose weight, so she started a support group with friends and neighbours....

Mainstreet Equity, $32.50, symbol MEQ on Toronto (Shares outstanding: 10.3 million; Market cap: $333.9 million; www.mainst.biz), owns 216 properties with 9,319 apartment units, mainly in Western Canada. In the three months ended June 30, 2015, Mainstreet’s revenue rose 9.3%, to $25.1 million from $23.0 million a year earlier. Cash flow per share gained 15.9%, to $0.73 from $0.63. Mainstreet’s total debt, including mortgages, is $672.0 million, or a high 201% of its market cap. That’s compared to, say, RioCan Real Estate Investment Trust, a recommendation of our Successful Investor newsletter, whose total debt of $6.7 billion is 82.0% of its market cap....

Low interest rates are cutting the income these lenders earn on new loans. At the same time, they’ve had to increase the rates they pay out to attract depositors, which has squeezed their margins. In response, they’re making acquisitions and cutting costs. These moves should fuel their earnings, particularly as interest rates will likely rise in 2016. WELLS FARGO & CO. $55 (New York symbol WFC; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 5.1 billion; Market cap: $280.5 billion; Price-to-sales ratio: 3.3; Dividend yield: 2.7%; TSINetwork Rating: Average; www.wellsfargo.com) operates through three divisions: Community Banking provides mortgages, loans, credit cards and other financial services (57% of 2014 revenue, 59% of earnings); Wholesale Banking supplies business loans (27%, 32%); and Wealth, Brokerage and Retirement offers wealth management, brokerage and trust services to individuals and institutions, such as pension plans (16%, 9%)....