investment
An investment is an asset or property acquired to generate income or gain appreciation. Appreciation is the increase in the value of an asset over time. It requires the outlay of a resource today, like time, effort, and money, for a greater payoff in the future or for generating a profit.
An investment involves using capital in the present to increase an asset’s value over time.
Investments may include bonds, stocks, real estate, or alternative investments.
Investments can be diversified to reduce risk, though this may reduce the amount of earning potential.
In business contexts, investments are financial; however, consider how some people spend time to make higher incomes in the future (i.e. invest in a college education).
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Pat McKeough responds to many requests from members of his Inner Circle for specific tips on stock investing 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 “U.S. Stock Picks” on Thursday.
This week we had a question from an Inner Circle Member on a Canadian health care stock. Concordia Health Care takes a different approach from many larger drug firms, preferring to buy mature products as opposed to developing its own treatments. It recently acquired the rights to a second-generation epilepsy drug; its other main drug treats irritable bowel syndrome and enterocolitis. Concordia’s sales and share price have both risen. Pat looks at the challenges the company faces in finding new drugs and fighting off generic competition. Q: Hi: Would you give me your opinion on Concordia Health Care? Thank you.
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This week we had a question from an Inner Circle Member on a Canadian health care stock. Concordia Health Care takes a different approach from many larger drug firms, preferring to buy mature products as opposed to developing its own treatments. It recently acquired the rights to a second-generation epilepsy drug; its other main drug treats irritable bowel syndrome and enterocolitis. Concordia’s sales and share price have both risen. Pat looks at the challenges the company faces in finding new drugs and fighting off generic competition. Q: Hi: Would you give me your opinion on Concordia Health Care? Thank you.
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Windstream is spinning off some of its real estate assets, while Frontier (see box) recently expanded by acquisition. Both approaches should let these telecoms maintain their above-average dividend yields. However, their heavy focus on rural areas, plus the rising cost of expanding and upgrading their networks, limits their growth prospects. WINDSTREAM HOLDINGS INC. $10 (Nasdaq symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 602.8 million; Market cap: $6.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 10.0%; TSINetwork Rating: Average; www.windstream.com) gets 73% of its revenue by selling high-speed Internet and other communication services to 357,700 businesses....
Every Thursday we bring you 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.
IBM has a long history of drifting in and out of investor favour, mainly due to fear that new technologies will put it out of business.
However, IBM also has long history of shifting out of slowing businesses into faster-growing fields. For example, as computer prices fell in the 1990s, IBM expanded its more-profitable software and consulting operations. The company later unloaded its struggling personal computer operations, and is now selling its low-end server business. It will invest the proceeds in areas with better long-term potential, such as cloud computing and analytics software.
In addition, IBM’s well-known brand and global salesforce continue to give it a big advantage, particularly in developing countries.
INTERNATIONAL BUSINESS MACHINES CORP. (New York symbol IBM; www.ibm.com) started up in 1911 making machines that processed U.S. census data, as well as other industrial equipment such as time clocks and scales.
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IBM has a long history of drifting in and out of investor favour, mainly due to fear that new technologies will put it out of business.
However, IBM also has long history of shifting out of slowing businesses into faster-growing fields. For example, as computer prices fell in the 1990s, IBM expanded its more-profitable software and consulting operations. The company later unloaded its struggling personal computer operations, and is now selling its low-end server business. It will invest the proceeds in areas with better long-term potential, such as cloud computing and analytics software.
In addition, IBM’s well-known brand and global salesforce continue to give it a big advantage, particularly in developing countries.
INTERNATIONAL BUSINESS MACHINES CORP. (New York symbol IBM; www.ibm.com) started up in 1911 making machines that processed U.S. census data, as well as other industrial equipment such as time clocks and scales.
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If you visit a vacation resort this winter, you may get invited to a complimentary dinner, cocktail party or other event. In return for the free drinks, food or entertainment, all you’ll have to do is sit through a pitch for an “investment” in a time-share. It may be worthwhile to attend, depending on what else you have to do. But in my experience, time-share purchases rarely provide you with any real advantage. You might look on time-shares as the vacationers’ version of the new stock issue. Some of them seem to work out well for some people, at least for a while. But on the whole, it’s a good idea to stay out of new issues, and an even better idea to stay out of time-shares. Before buying any time-share, check the Internet for resales of comparable time-shares. You’ll often find they sell way below the initial time-share sales price....
Concordia Health Care, $46.76, symbol CXR on Toronto (Shares outstanding: 28.9 million; Market cap: $1.3 billion; www.concordiarx.com), is an Oakville, Ontario-based specialty pharmaceutical company that acquires and sells established drugs, mainly in the U.S. The company aims to acquire the rights to relatively small, mature products as opposed to the newer treatments that larger drug companies target. Concordia recently announced that it would acquire the North American rights to the epilepsy drug Zonegran from Eisai Inc. for $190 million. The purchase is expected to close shortly....
Every Monday we feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time. Adidas AG (ADR) (symbol ADDYY on the U.S. over-the-counter market; www.adidas.com) together with its subsidiaries, develops, makes and markets athletic equipment and clothing worldwide. The company operates through six segments: Wholesale, Retail, TaylorMade-Adidas Golf Company, Rockport, Reebok-CCM Hockey and Other Centrally Managed Brands....
TRANSCANADA CORP. $56.86 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $39.1 billion; TSINetwork Rating: Above Average; Dividend yield: 3.4%; www.transcanada.com) recently completed the purchase of three more Ontario solar power plants from Canadian Solar Inc. (Nasdaq symbol CSIQ).
TransCanada now owns seven of the nine solar farms it agreed to buy from Canadian Solar in 2011. It will probably take possession of the remaining two in 2015. In all, it will pay about $500 million.
The company has 20-year deals to sell the power from these solar farms, which cuts this investment’s risk.
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TransCanada now owns seven of the nine solar farms it agreed to buy from Canadian Solar in 2011. It will probably take possession of the remaining two in 2015. In all, it will pay about $500 million.
The company has 20-year deals to sell the power from these solar farms, which cuts this investment’s risk.
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ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $35.46 (Toronto symbol AP.UN; Units outstanding: 74.6 million; Market cap: $2.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.0%; www.alliedreit.com) owns 138 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.9 million square feet of leasable area.
Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to retail space. They usually feature exposed beams, interior brick and hardwood floors.
Allied bought $400 million of properties in 2012 and $182.4 million worth in 2013. In the first half of 2014, it added six more for $110.0 million.
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Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to retail space. They usually feature exposed beams, interior brick and hardwood floors.
Allied bought $400 million of properties in 2012 and $182.4 million worth in 2013. In the first half of 2014, it added six more for $110.0 million.
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ISHARES MSCI JAPAN INDEX FUND $11.76 (New York Exchange symbol EWJ; buy or sell through brokers; us.ishares.com) is an ETF that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index.
The fund has now regained all of the ground it lost in the recent market downturn. Its latest rise came after the Japanese government and the Bank of Japan announced huge increases in their economic stimulus programs.
Under Prime Minister Shinzo Abe’s so-called “Abenomics” strategy, the Bank of Japan has pumped money into the country’s economy. However, consumer spending has remained sluggish, especially after the government raised the sales tax to 8% from 5% on April 1, 2014.
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The fund has now regained all of the ground it lost in the recent market downturn. Its latest rise came after the Japanese government and the Bank of Japan announced huge increases in their economic stimulus programs.
Under Prime Minister Shinzo Abe’s so-called “Abenomics” strategy, the Bank of Japan has pumped money into the country’s economy. However, consumer spending has remained sluggish, especially after the government raised the sales tax to 8% from 5% on April 1, 2014.
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RIOCAN REAL ESTATE INVESTMENT TRUST $27 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 308.9 million; Market cap: $8.3 billion; Price-to-sales ratio: 5.8; Dividend yield: 5.2%; TSINetwork Rating: Average; www.riocan.com) continues to open new malls and, with partners, mixed-use properties with office and residential space. The trust is also selling less profitable properties.
In the third quarter of 2014, RioCan’s net leasable area shrank by 2.5%, to 71.6 million square feet from 73.5 million a year earlier. But thanks to strong demand from retailers, it’s renewing leases at higher rental rates. That’s why its cash flow rose 7.4% in the latest quarter, to $131 million from $122 million. Cash flow per unit gained 5.0%, to $0.42 from $0.40, on more units outstanding.
The units trade at a reasonable 15.9 times RioCan’s expected 2014 cash flow of $1.70 a unit. The $1.41 distribution yields 5.2%.
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In the third quarter of 2014, RioCan’s net leasable area shrank by 2.5%, to 71.6 million square feet from 73.5 million a year earlier. But thanks to strong demand from retailers, it’s renewing leases at higher rental rates. That’s why its cash flow rose 7.4% in the latest quarter, to $131 million from $122 million. Cash flow per unit gained 5.0%, to $0.42 from $0.40, on more units outstanding.
The units trade at a reasonable 15.9 times RioCan’s expected 2014 cash flow of $1.70 a unit. The $1.41 distribution yields 5.2%.
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