investment

Pat McKeough responds to many requests from members of his Inner Circle for specific 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 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. This week we had a question from an Inner Circle member about an offshore drilling company that has grown quickly in less than 10 years in business. Pat looks at the advantages Seadrill derives from its modern, high-quality drilling rigs as well as the pressure building new rigs puts on the company’s balance sheet. He also examines a recent deal Seadrill made with Russian oil producer Rosneft and the complications that may arise from European Union economic sanctions against Russia. Q: Hi Pat: What are your thoughts on Seadrill? Thanks....

SUN LIFE FINANCIAL $39.88 (Toronto symbol SLF; Shares outstanding: 610.6 million; Market cap: $24.2 billion; TSINetwork Rating: Above Average; Dividend yield: 3.6%; www.sunlife.ca) sells savings, retirement, pension and life insurance products to individuals and corporations. The company mainly operates in Canada, the U.S. and the U.K., but it continues to expand into Asia. It has $671.1 billion of assets under management. In August 2013, Sun Life sold its riskier, money-losing U.S. annuity business, which offers products that guarantee minimum long-term returns, even if markets fall....

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $34.31 (Toronto symbol AP.UN; Units outstanding: 69.5 million; Market cap: $2.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.1%; www.alliedpropertiesreit.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. The trust bought $400 million worth of properties in 2012 and $182.4 million more in 2013. So far in 2014, it has added five more for $101.7 million....

North American and European consumers continue to shift away from cash and toward credit and debit cards. As a result, banks on those two continents are buying fewer automated teller machines. But ATM demand remains high in developing nations, where many stores only accept cash. ATM makers NCR and Diebold are also diversifying into related products and offering more software and support services. We cover both of these stocks in our newsletter on U.S. investing, Wall Street Stock Forecaster. NCR CORP. (New York symbol NCR; www.ncr.com) gets 52% of its revenue from ATMs. It also makes cash registers and self-serve checkouts (32% of revenue) and kiosks for theatres and arenas (10%). Maintenance services supply the other 6%. Overseas markets account for 60% of NCR’s revenue....

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 advice on specific investment topics. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “Ethical or socially responsible investing can be a misleading concept. Often it’s an oversimplified reaction to a complex situation, having little impact on the companies targeted while limiting perfectly good investment opportunities.” From time to time, we are asked about ethical investing (or “socially responsible investing”). I’d say it works as a marketing angle for a handful of small investment companies, and it may make you feel better about your investments. But it won’t do much to improve your investment results, or cut down on what you see as unethical corporate behaviour....

COMPUTER MODELLING GROUP (Toronto symbol CMG; www.cmgroup.com) sells software and consulting services that help oil and gas producers use advanced recovery techniques to get more out of their wells. It has customers in over 50 countries and offices in Calgary, Houston, London, Caracas, Bogota, Kuala Lumpur and Dubai. The company is a leader in complex heavy oil and oil sands simulations. In the quarter ended March 31, 2014, Computer Modelling’s revenue rose 3.6%, to $20.0 million from $19.3 million a year earlier. Software licence sales (89% of total revenue) rose slightly, but consulting and professional services (11%) jumped 39.1%, thanks to new projects and a large consulting agreement. Earnings gained 6.7%, to $7.7 million from $7.25 million. Per-share earnings jumped 18.8%, to $0.095 from $0.08, on fewer shares outstanding....

Bombardier recently had to suspend test flights of its CSeries passenger plane because of a problem with its Pratt & Whitney engines, which are 20% more fuel-efficient than current models. This was the first major issue with this new engine in over three years of testing. The delay will probably add to the CSeries’ development costs, but Bombardier still expects to begin deliveries in the second half of 2015. BOMBARDIER INC. (Toronto symbols BBD.A and BBD.B; www.bombardier.com) is the world’s third-largest commercial aircraft maker, behind Boeing and Airbus. It is also the world’s leading passenger railcar manufacturer....

PETSMART INC., $67.28, Nasdaq symbol PETM, operates 1,340 pet stores in the U.S. and Canada. It also has 200 in-store PetsHotel boarding facilities for dogs and cats. The stock jumped 12% this week on news that activist investment firm Jana Partners now owns 9.9% of the company. Jana has a history of pressuring companies to improve shareholder value, typically by spinning off certain operations, buying back more shares or raising their dividends. PetSmart currently pays a quarterly dividend of $0.195 a share, for a 1.2% annualized yield. Jana could also encourage PetSmart’s management to sell the entire company....

Pat McKeough responds to many requests from members of his Inner Circle for specific 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 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. This week an Inner Circle member asked us about one of the energy stocks involved in developing alternate sources of fuel. Clean Energy Fuels serves customers who operate commercial vehicles powered by natural gas. T. Boone Pickens, a leading proponent of alternative energy to reduce American dependence on foreign oil, is a major shareholder in the company. Pat examines Clean Energy’s business and assesses its prospects as various alternatives to the internal combustion engine continue to compete for government support and consumer confidence. A: Clean Energy Fuels Corp. (symbol CLNE on Nasdaq; www.cleanenergyfuels.com), is a North American seller of compressed natural gas (CNG) and liquefied natural gas (LNG). Its customers operate natural-gas-powered vehicles in the refuse, transit, ports, shuttle, taxi, regional trucking, airport and municipal fleet markets....

The shift toward online shopping continues to pick up speed: over the next 10 years, e-commerce could account for 40% of all retail sales in developed nations and 30% in emerging markets. We feel the best way to profit from this trend is through shares of companies that process online payments and fulfill orders. Here are two such stocks we cover in our newsletter on U.S. investing, Wall Street Stock Forecaster. VISA INC. (New York symbol V; www.visa.com) operates the world’s largest electronic payments network, through which it processes credit, debit, prepaid and commercial transactions....