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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ENCANA CORP. $20 (New York symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.3 million; Market cap: $16.2 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.6%; TSINetwork Rating: Average; www.encana.com) has formed a joint venture with PetroChina International Investment Company Ltd., which is controlled by the Chinese government, to develop its Duvernay property in central Alberta. This field mainly contains natural gas liquids, such as butane.
Under the terms of the deal, Encana sold a 49.9% stake in Duvernay to PetroChina for $2.2 billion (Canadian). Encana will own the remaining 50.1% and will operate the project. PetroChina has already paid Encana $1.2 billion. It will pay the remaining $1.0 billion over the next four years.
Joint ventures like this help speed up the development of promising new fields. Moreover, as PetroChina is buying only a minority interest in this project, the deal complies with the federal government’s new foreign investment guidelines. Ottawa brought in these new rules in response to the takeover of oil-sands operator Nexen Inc. by another state-owned Chinese oil company.
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Under the terms of the deal, Encana sold a 49.9% stake in Duvernay to PetroChina for $2.2 billion (Canadian). Encana will own the remaining 50.1% and will operate the project. PetroChina has already paid Encana $1.2 billion. It will pay the remaining $1.0 billion over the next four years.
Joint ventures like this help speed up the development of promising new fields. Moreover, as PetroChina is buying only a minority interest in this project, the deal complies with the federal government’s new foreign investment guidelines. Ottawa brought in these new rules in response to the takeover of oil-sands operator Nexen Inc. by another state-owned Chinese oil company.
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Pat McKeough responds to many personal questions about specific stock market advice and other investment topics from the members of his Inner Circle. 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, one question from an Inner Circle member concerned a leading Canadian waste company. This firm has made several acquisitions, and Pat takes a detailed look at the company’s strategy and the risks it takes in order to pursue the potential rewards of growth by acquisition. ...
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice, including stock trading advice that can help you reduce the risk of more aggressive investing. 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: “Thin-trading stocks can produce good results if you can manage the risk and identify stocks with real growth prospects.”...
One key part of our three-part investment strategy is to downplay stocks that are in the broker-media limelight. The problem with the limelight is that raises investor expectations. When stocks fail to live up to those heightened expectations, as some inevitably do, downturns can be sudden, brutal and, sometimes, permanent. However, some stocks deserve a longer stretch in the limelight than others. CP is one of them. Canadian Pacific Railway, $99.64, symbol CP on Toronto (Shares outstanding: 173.1 million; Market cap: $17.2 billion; www.cpr.ca), transports freight between Montreal and Vancouver and connects with hubs in the U.S. midwest and northeast....
Bank of Ireland (ADR), $6.56, symbol IRE on New York (ADRs outstanding: 753.3 million; Market cap: $4.9 billion; www.bankofireland.com), provides a range of banking, life insurance and other financial services, including personal and business loans, loan insurance, mortgages, foreign exchange, stock brokerage and credit cards. The bank’s customers are in Ireland and the U.K. Investing in the Bank of Ireland has attracted some investor interest in Canada lately after Fairfax Financial (Toronto symbol FFH) bought shares of the bank. However, Fairfax’s chairman and founder, Prem Watsa, has said that the investment may take as long as five years to pay off. That’s because the Irish economy remains fragile, and there are still fundamental problems at the bank itself. For example, it must pay high interest rates to depositors to gain market share from its competitors (which cuts its profit margins), and it is setting aside more money to cover bad loans....
PRECISION DRILLING CORP. (Toronto symbol PD; www.precisiondrilling.com) provides contract-drilling services to land-based oil and gas producers, mainly in North America. It had 363 rigs in service as of September 30, 2012. The company is slowly expanding its international operations: it now has a total of eight rigs in Mexico and Saudi Arabia. Precision’s overseas business now accounts for 5% of its revenue, up from just 1% a year ago....
Too much investor attention tends to be focused on economic forecasts. The fact is, forecasts provide little, if any, advantage when it comes to helpful stock market advice. That’s especially true today in light of the uncertainty over America’s looming “fiscal cliff” and the bitter political debate over how to tackle that country’s federal budget deficit and exploding debt....
