investment

Pat McKeough responds to many requests from members of his Inner Circle for specific stock market 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. 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 “U.S. Stock Picks” on Thursday.

Recently we had a question from an Inner Circle member about one of Canada’s bigger Real Estate Investment Trusts. Canadian Apartment Properties REIT—also known as CAP REIT—focuses primarily on rental properties like apartment buildings and townhouses but also on land-lease properties, largely in trailer parks. Almost 80% of the company’s revenue comes from Ontario and Quebec. Pat examines the company’s latest financial results and looks at its prospects at a time when low interest rates favour home and condominium buying over renting.

Q: Pat: What is your recommendation on Canadian Apartment Properties REIT? Thanks.

A: Canadian Apartment Properties REIT (symbol CAR.UN on Toronto; www.capreit.net) is a real estate investment trust that owns multi-unit residential properties, including apartment buildings and townhouses.

In all, the trust owns 41,958 units, including 35,674 residential suites and 30 manufactured-home communities, or trailer parks, with a total of 6,284 land-lease sites. Its occupancy rate is 97.9%.

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GREAT-WEST LIFECO $34.92 (Toronto symbol GWO; Shares outstanding: 996.7 million; Market cap: $35.2 billion; TSINetwork Rating: Above Average; Yield: 3.7%; www.greatwestlifeco.com) has reported strong results in its latest quarter and raised its dividend. Great-West is Canada’s largest insurance company. It also offers mutual funds and wealth management. Power Financial owns 67.0% of Great-West. The company’s earnings per share jumped 34.7% in the three months ended December 31, 2014, to $0.66 from $0.49 a year earlier. Revenue rose 33.1%, to $10.7 billion from $8.1 billion....

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of highquality stocks. Here’s a look at six international ETFs:...

ISHARES INDIA 50 ETF $33.02 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that invests in the 50 largest, most liquid Indian securities. Indian stocks have moved up 34%, to record highs, since the May 2014 election of Narendra Modi as prime minister. The government has just introduced its first full-year budget, and the $290-billion spending plan includes an additional $12 billion to address one of the country’s most pressing needs—modernizing its transportation, communications and electrical infrastructure....

Every Thursday we bring you one of our best U.S. stock picks. You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, most often from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster.

AT&T INC. (New York symbol T; www.att.com) is the largest wireless provider in the U.S., with 120.6 million subscribers. Wireless accounts for 55% of AT&T’s revenue and 75% of its earnings.

The remaining 45% of revenue and 25% of earnings comes from its wireline division, which sells phone services, television packages and high-speed Internet access to 34.4 million customers.

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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: “Investor shorthand can provide a useful guide to investment information, but it can also oversimplify analysis and events and steer investors into bad decisions.”

Investor shorthand can help you think about and talk about large blocks of investment information. But it may also lead you to make associations and come to conclusions that can cost you money.

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Here are some spinoff stocks that we still think have gains ahead. Symantec Corp., $25.26, symbol SYMC on Nasdaq (Shares outstanding: 690.1 million; Market cap: $17.2 billion; www.symantec.com), sells computer-security technology, including antivirus and email-filtering software, to businesses and consumers. Symantec plans to split itself up into two publicly traded firms. One will keep the Symantec name and focus on antivirus and security software and services. The other, called Veritas Technologies, will consist of Symantec’s information-management operations. This business makes products for data backup and recovery....

DREAM OFFICE REIT $25.82 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dream.ca/office; Units outstanding: 107.9 million; Market cap: $2.8 billion; Dividend yield: 8.7%) (formerly Dundee REIT) owns and manages 24.3 million square feet of office and retail space in major cities across Canada.

In Western Canada, the real estate investment trust has 16% of its total square footage in Calgary and 20% elsewhere. In Eastern Canada, it holds 23% of its square footage in downtown Toronto, 17% in suburban Toronto and 24% elsewhere. Its occupancy rate is 93.0%.

In the three months ended December 31, 2014, Dream Office’s revenue fell 1.6%, to $205.2 million from $208.4 million a year earlier. The trust sold four properties to Dream Industrial REIT (symbol DIR.UN on Toronto) for $33.0 million in September 2014. Dream Office owns 24.2% of Dream Industrial.

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Promoting clean, environmentally sound solutions for office design, DIRTT has a respected CEO but may struggle against strong competition.

AGRIUM INC., $144.38, Toronto symbol AGU, hit a new all-time high of $145.07 this week after reporting better-than-expected quarterly earnings. It also raised its outlook for 2015. In the three months ended December 31, 2014, Agrium’s earnings gained 4.1%, to $0.77 a share from $0.74 a year earlier (all amounts expect share price in U.S. dollars). These results exclude unusual items, mainly losses on contracts the company uses to lock in foreign exchange rates and commodity prices. On that basis, the latest earnings easily beat the consensus estimate of $0.60 a share. Revenue fell 5.7%, to $2.7 billion from $2.9 billion. That’s because Agrium had to cut production at its Vanscoy potash mine in Saskatchewan to complete a major expansion. An unplanned outage at its Redwater, Alberta, plant also slowed nitrogen-fertilizer output. Sales at its retail stores, which sell fertilizer and seeds to farmers, declined 2.1%....