investment

You’ll sometimes hear advisors or investors declare that they are contrarians. That means they believe it pays to go against the mood of the great mass of investors, as revealed to them by one or more of several indicators. These include discussions with friends and acquaintances, the positive or negative tone of media coverage, high or low levels of mutual fund cash holdings, the average sentiment of investor newsletters and so on....

RioCan’s units have steadily risen in the past year, mainly because its high, stable distributions continue to attract income-seeking investors. Even after this rise, we feel RioCan still has plenty of growth ahead. It continues to expand in the U.S., and it is diversifying into other real estate projects like office buildings and residential developments. Best of all, its high-quality properties and tenants give it the reliable cash flow it needs to invest in new growth projects and maintain—and raise—its distributions. RIOCAN REAL ESTATE INVESTMENT TRUST $27 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 291.3 million; Market cap: $7.9 billion; Price-to-sales ratio: 5.0; Dividend yield: 5.1%; TSINetwork Rating: Average; www.riocan.com) is Canada’s largest real estate investment trust (REIT)....

These five electric utilities are using their strong cash flows to make acquisitions and invest in new projects. These moves will enhance their long-term prospects and give them more cash for dividends. However, not all are buys right now. TRANSCANADA CORP. $44 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 704.0 million; Market cap: $31.0 billion; Price-to-sales ratio: 3.6; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.transcanada.com) is mainly known for its natural gas and oil pipelines. However, the company continues to expand its electrical-power business. TransCanada’s 19 power plants in Canada and the U.S. now supply 30% of its revenue. The company has agreed to build a new gas-fired power plant near Napanee, Ontario, as part of a deal with the Ontario Power Authority (OPA), which regulates the province’s power producers. This new plant will replace a plant that TransCanada previously agreed to build in Oakville, Ontario....

DUNDEE CORP. $24 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 54.7 million; Market cap: $1.3 billion; Price-to-sales ratio: 1.8; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) is a holding company with investments in wealth management, real estate, resources and agriculture. In the quarter ended June 30, 2012, Dundee lost $16.8 million, or $0.34 a share. That’s because it wrote down the value of securities it holds by $34.0 million. A year earlier, it earned $21.0 million, or $0.28 a share, partly due to $1.9 million in investment gains. Revenue jumped 40.7%, to $171.2 million from $121.7 million. Dundee is still a buy.

Economists and the media spend an awful lot of time trying to predict economic growth rates around the world, these days especially. Virtually all these forecasts will come in far from accurate. Few if any will provide meaningful help to investors, at least directly. The International Monetary Fund has just cut its forecasts for the second time since April. Its new forecasts are filled with provisos and uncertainties to explain why they are likely to be even less helpful than usual. They provide little investing guidance, but they do raise the kinds of questions that can keep investors awake at night. My view is that today’s many economic and financial uncertainties have a beneficial side effect: they tone down investor expectations. This is a good thing for today’s stock buyers, because low investor expectations tend to cut risk. Think about it: when investor expectations are low, investors tend to devote less money than usual to the stock market. They are braced for bad news. So, neutral news sounds favourable to them. Out-and-out good news seems like cause to rejoice. This can spur them to buy and drive prices up....

Turquoise Hill Resources, $8.23, symbol TRQ on Toronto (Shares outstanding: 1.0 billion; Market cap: $8.2 billion; www.turquoisehill.com), was formerly called Ivanhoe Mines. The company is an emerging copper producer that is focused on the Asia-Pacific region, particularly its main asset, the Oyu Tolgoi project in Mongolia, which is one of the world’s largest copper/gold deposits. Turquoise Hill owns 66% of Oyu Tolgoi, and the Mongolian government holds the remaining 34%. The company also owns 58% of Mongolian coal miner SouthGobi Resources, 59% of copper-gold miner Ivanhoe Australia and 50% of Altynalmas Gold, a private company that is developing the Kyzyl Gold Project in Kazakhstan. Turquoise Hill has formed a partnership with its largest shareholder, Rio Tinto (which holds 51% of the company) to develop Oyu Tolgoi. Construction is now well underway at the $6.2-billion mine, and it should begin production in late 2013....

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 stock market advice and other investment tips that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: ‘At market bottoms and market peaks, many investors seem to think we’ve entered a new age where the old rules don’t apply, but that’s just not true.’...

Canada’s real estate investment trusts (REITs) were the only category of trusts exempted from the federal government’s income trust tax. This has helped them remain popular with investors seeking both income and capital gains. Today we look at a major Canadian REIT that continues to add to its shopping centre empire, in the U.S. as well as Canada. RIOCAN REAL ESTATE INVESTMENT TRUST (Toronto symbol REI.UN; www.riocan.com) is Canada’s largest real estate investment trust (REIT). It has interests in 278 shopping malls in Canada, including 10 under development. These properties contain over 59 million square feet of leasable area....

Not long ago, a member of our Inner Circle asked a question that’s too broad for a simple answer: “With its large and cheap labour force, China has been exporting deflation to the rest of the world. It seems that this trend is now reversing and China will be exporting inflation. Chinese workers are demanding higher wages and are becoming consumers. What strategy can you suggest to prepare for this eventuality?”...

CENOVUS ENERGY INC., $34.42, Toronto symbol CVE, has agreed to buy oil sands properties in northern Alberta and Saskatchewan held by Oilsands Quest, which went bankrupt in November 2011. Cenovus will pay $10 million when the sale closes next week. This is a small purchase for the company, which reported cash flow of $925 million, or $1.22 a share, in the three months ended June 30, 2012. Most of these new properties are next to to Cenovus’s 100%-owned Telephone Lake oil sands project. If regulators approve, the company could begin developing Telephone Lake in 2014....