merger
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. NEPTUNE TECHNOLOGIES & BIORESSOURCES INC. (symbol NTB on Toronto; www.neptunebiotech.com), makes omega-3 dietary supplements using a patented process for extracting oil from krill. (Krill are shrimp-like deepwater invertebrates that range in length from half an inch to two-and-a-half inches.) Omega-3 fatty acids reportedly help lower cholesterol and blood pressure when used as a dietary supplement....
Pat McKeough responds to many requests from members of his Inner Circle for advice on investing in 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 a report on one of the stocks profiled in these Q&A sessions. Beginning this week, we give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of our new approach offering you regular and specific buy, hold and sell advice in our daily posts. Every week you’ll get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday. This week we got a question from an Inner Circle member who is interested in a stock but concerned that it doesn’t pay a dividend. Gilead Sciences is a drug company that specializes in combatting viruses. Hepatitis C is the primary target of treatments developed by Gilead Sciences, but it also plays an important role in treatments for HIV/AIDS. Pat assesses the status of the company’s leading drugs and examines the challenges the company faces maintaining a position of leadership in a highly competitive field. Q: Please give your opinion on Gilead Sciences. It sounds very good to me as a physician, but it pays no dividend and I’ve bought into dividend investing. Thanks....
Symantec rises with successful restructuring plan
LOBLAW COMPANIES $53.05 (Toronto symbol L; Shares outstanding: 413.9 million; Market cap: $21.9 billion; TSINetwork Rating: Above Average; Dividend yield: 1.9%; www.loblaw.ca) is Canada’s largest food retailer, with about 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills.
In March 2014, the company completed the acquisition of the 1,250-store Shoppers Drug Mart chain. Loblaw paid $12.3 billion; $6.6 billion in cash and $5.7 billion in Loblaw common shares.
Loblaw’s parent company, George Weston Ltd. (see below), helped it pay for Shoppers by purchasing $500 million of new Loblaw shares. Due to the extra shares outstanding, Weston now owns 46% of Loblaw, down from 63% before the acquisition.
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In March 2014, the company completed the acquisition of the 1,250-store Shoppers Drug Mart chain. Loblaw paid $12.3 billion; $6.6 billion in cash and $5.7 billion in Loblaw common shares.
Loblaw’s parent company, George Weston Ltd. (see below), helped it pay for Shoppers by purchasing $500 million of new Loblaw shares. Due to the extra shares outstanding, Weston now owns 46% of Loblaw, down from 63% before the acquisition.
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LOBLAW COMPANIES $53.05 (Toronto symbol L; Shares outstanding: 413.9 million; Market cap: $21.9 billion; TSINetwork Rating: Above Average; Dividend yield: 1.9%; www.loblaw.ca) is Canada’s largest food retailer, with about 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills. In March 2014, the company completed the acquisition of the 1,250-store Shoppers Drug Mart chain. Loblaw paid $12.3 billion; $6.6 billion in cash and $5.7 billion in Loblaw common shares. Loblaw’s parent company, George Weston Ltd. (see below), helped it pay for Shoppers by purchasing $500 million of new Loblaw shares. Due to the extra shares outstanding, Weston now owns 46% of Loblaw, down from 63% before the acquisition....
ROYAL BANK OF CANADA $79 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $110.6 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s second-largest bank, with $895.9 billion of assets.
Royal recently completed the sale of its moneylosing Jamaican operations, which included 13 branches. The bank will record a one-time loss of $97 million on the deal, up from its earlier estimate of a $60-million loss.
Meanwhile, Royal earned $2.2 billion in the quarter ended April 30, 2014, up 15.3% from $1.9 billion a year ago. Per-share earnings rose 17.6%, to $1.47 from $1.25, on fewer shares outstanding.
Overall revenue gained 7.2%, to $8.3 billion from $7.7 billion. Revenue at Royal’s retail banking division (which supplied 40% of the total) gained 5.1%, thanks to stronger loan demand in Canada. The lower Canadian dollar also improved the results of its U.S. and Caribbean operations.
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Royal recently completed the sale of its moneylosing Jamaican operations, which included 13 branches. The bank will record a one-time loss of $97 million on the deal, up from its earlier estimate of a $60-million loss.
Meanwhile, Royal earned $2.2 billion in the quarter ended April 30, 2014, up 15.3% from $1.9 billion a year ago. Per-share earnings rose 17.6%, to $1.47 from $1.25, on fewer shares outstanding.
Overall revenue gained 7.2%, to $8.3 billion from $7.7 billion. Revenue at Royal’s retail banking division (which supplied 40% of the total) gained 5.1%, thanks to stronger loan demand in Canada. The lower Canadian dollar also improved the results of its U.S. and Caribbean operations.
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The U.S. Federal Reserve has indicated that it will probably end its bond-purchasing program, known as quantitative easing, as early as October 2014. After that, the Fed may raise interest rates, particularly if inflation becomes a problem. Higher interest rates in the U.S. would likely push up rates in Canada and elsewhere, slowing demand for mortgages and car loans. However, Canada’s big banks continue to expand into feebased services, like wealth management, which are less sensitive to interest rates. We continue to like all five banks, but we prefer TD and Bank of Nova Scotia for new buying....
CAE INC., $14.29, Toronto symbol CAE, has won new contracts to supply flight simulators and related services and equipment to several military clients, including the German and New Zealand air forces. In all, these deals are worth $110 million, or 5% of CAE’s $2.1 billion of annual revenue. The company’s military-related businesses supply 40% of its revenue, which cuts its reliance on cyclical commercial airlines. CAE is our #1 buy for 2014....
AT&T INC. $35 (New York symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 5.2 billion; Market cap: $182.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 5.3%; TSINetwork Rating: Average; www.att.com) is buying satellite TV provider DirecTV (Nasdaq symbol DTV) for $48.5 billion (70% stock and 30% cash). Satellite TV demand has slowed in the past few years as consumers switch to online services like Netflix. However, DirecTV’s rural customers are a good fit with AT&T’s urban U-verse fibre optic TV service. It’s a bold move, but it could pay off. The takeover will make AT&T the second-largest provider of pay-TV services in the U.S., with 27 million subscribers. That will help it compete with Comcast, which will have 30 million customers after it buys rival Time Warner Cable. It will also give AT&T more clout when buying entertainment and sports programming....