investment

BELLATRIX EXPLORATION $6.74 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266-8670; www.bellatrixexploration.com; Shares outstanding: 107.9 million; Market cap: $715.5 million; No dividends paid) has entered into a joint venture agreement with Grafton Energy that should speed up the development of its Cardium shale oil deposits in Alberta.

Under the agreement, Grafton will pay Bellatrix $100 million. In return, it will get 54% of the production from a 29-well, $122- million drilling program. Grafton will receive this share of the wells’ output until it earns back its $100 million, plus an 8% return on its original investment. It will then hold a 33% interest in each well.

On top of that, Bellatrix plans to spend a total of $210 million to $220 million on exploration and development this year.
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TRANSCONTINENTAL INC. (Toronto symbol TCL.A; www.tctranscontinental.com) gets 68% of its revenue from its commercial printing business, which is the largest in Canada. The remaining 32% comes from publishing newspapers and magazines. In its 2013 second quarter, which ended April 30, 2013, Transcontinental’s revenue fell 0.2%, to $521.3 million from $522.4 million a year earlier. Revenue from six recently acquired printing plants in Canada helped offset the loss of a contract to print flyers for the now-closed Zellers retail chain....

It pays to be skeptical of investment performance calculations that companies calculate for themselves. This includes calculations by brokers, money managers and newsletter publishers. There are just too many ways to manipulate or “fudge” the numbers. For instance, a number of brokerage firms publish the results of what they refer to as “model accounts”. These hypothetical accounts supposedly measure the results you might enjoy by following the broker’s research. In reality, the hypothetical account does much better than the broker’s clients, because it enjoys advantages that are unavailable in real life. For example, I recall one model account to which the broker could post new buys or sells after the close of trading, anytime up till the opening of trading in the morning. It based results of these late additions on the closing price of the night before....

Gluskin Sheff + Associates, $19.89, symbol GS on Toronto (Shares outstanding: 16.8 million; Market cap: $718.3 million; www.gluskinsheff.com), is a Toronto-based wealth management firm that serves wealthy clients and has a somewhat aggressive investment style. Gluskin Sheff has around $5.7 billion of assets under management. In the quarter ended March 31, 2013, Gluskin earned $0.23 a share, up 35.3% from $0.17 a share a year earlier. Revenue rose 10.9%, to $21.6 million from $19.5 million. Cash flow gained 42.7% in the latest quarter, to $8.3 million, or $0.29 a share, from $5.8 million or $0.20 a share. Gluskin’s fee income rises and falls with the value of the funds it manages, so the company’s revenue, earnings and cash flow rise when the value of these assets increases. Rising stock markets pushed up the value of the company’s assets under management in the latest quarter....

Scorpio Mining, $0.33, symbol SPM on Toronto (Shares outstanding: 198.6 million; Market cap: $65.5 million; www.scorpiomining.com), operates the Nuestra Senora silver/copper/zinc mine in Mexico, which the company expects to produce over 3 million ounces of silver this year. In addition, Scorpio holds a number of nearby exploration properties, as well as the El Cajón and San Rafael projects, both of which are in advanced stages of development. In the latest quarter, Scorpio reported cash flow of $0.02 a share, down from $0.03 a year earlier, mostly due to lower silver and by-product metal prices. The company plans to use its cash flow to keep exploring and developing its properties and to increase Nuestra Senora’s production....

U.S. oil production is up 40% since 2008. That’s largely because of new technologies like hydraulic fracturing, or fracking. This involves injecting water, sand and chemicals to break up shale and other tight rock formations and allow access to the oil and gas. The best way to profit from this volatile industry is through companies with high-quality reserves and diverse operations. Here is one of the diversified U.S. energy stocks we cover regularly....

The beginning of the summer holiday is a good time to defuse one of the predominant fears of stock market investing, market risk. While it pays to stay aware of market risk, you should never let it become an obsession. All investors need to recognize that stock prices do sometimes reach a market peak or ‘top’, then go into a slump. However, some investors and advisors make a career out of analyzing past market tops, especially those that were followed by deep declines....

CONAGRA FOODS INC., $34.93, New York symbol CAG, rose 5% this week after it reported better-than-expected earnings. In its 2013 fiscal year, which ended May 26, 2013, ConAgra earned $773.9 million, or $1.85 a share. That’s up 65.4% from $467.9 million, or $1.12 a share, in 2012. These gains are mainly due to Ralcorp Holdings, the largest maker of private label food in the U.S., which ConAgra recently bought for $4.75 billion. If you disregard costs to integrate this purchase and other unusual items, ConAgra’s earnings would have risen 17.4%, to $2.16 a share from $1.84. On that basis, the latest earnings beat the consensus estimate of $2.15 a share....

AIMIA INC., $15.74, symbol AIM on Toronto, rose over 13% this week after TD Bank agreed to become the primary credit card issuer for Aeroplan, Aimia’s main loyalty program. TD is a recommendation of The Successful Investor, our newsletter that focuses on conservative Canadian investing. Aeroplan is Canada’s largest loyalty program, with over 4.6 million members who collect Aeroplan miles from participating companies. Members can exchange their miles for flights, car rentals, hotel rooms and merchandise. Under this new 10-year deal, which would begin January 1, 2014, TD will launch new credit cards under the Aeroplan banner, including cards for frequent flyers and small businesses....

LOBLAW COMPANIES $48.89 (Toronto symbol L; Shares outstanding: 282.1 million; Market cap: $13.9 billion; TSINetwork Rating: Above Average; Dividend yield: 2.0%; www.loblaw.ca) has announced more details of its upcoming plan to set up 75% of its real estate holdings as a publicly traded real estate investment trust (REIT).

The company will transfer 425 properties, including 415 stores, nine warehouses and one office building, to a new entity called Choice Properties Real Estate Investment Trust. Following the transfer, Loblaw will rent the properties from this new trust. Loblaw will be the REIT’s main tenant, accounting for roughly 90% of its rental income. Its leases range from 10 to 18 years.

Choice Properties will sell units to the public, probably in the next month or two, at a yet-to-be-disclosed price. Loblaw will hang on to a majority stake.
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