oil and gas
COMPUTER MODELLING GROUP $12.59 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 78.8 million; Market cap: $990.2 million; Dividend yield: 3.2%) sells software and consulting services that help oil and gas producers use advanced recovery techniques to get more out of their wells.
In the quarter ended September 30, 2014, Computer Modelling’s revenue rose 14.8%, to $19.7 million from $17.2 million a year earlier. Earnings gained 33.3%, to $7.5 million, or $0.09 a share, from $5.6 million or $0.07. The company cut its costs, pushing its earnings higher.
Computer Modelling holds cash of $65.4 million, or $0.83 a share, and has no debt. The stock yields 3.2%.
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In the quarter ended September 30, 2014, Computer Modelling’s revenue rose 14.8%, to $19.7 million from $17.2 million a year earlier. Earnings gained 33.3%, to $7.5 million, or $0.09 a share, from $5.6 million or $0.07. The company cut its costs, pushing its earnings higher.
Computer Modelling holds cash of $65.4 million, or $0.83 a share, and has no debt. The stock yields 3.2%.
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SHERRITT INTERNATIONAL $2.62 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 297.5 million; Market cap: $779.5 million; Dividend yield: 1.5%) sold off all of its coal interests for $793 million in cash in April 2014.
The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba.
In the three months ended September 30, 2014, Sherritt’s revenue jumped 55.0%, to $302.7 million from $195.3 million a year earlier. That’s mainly because Ambatovy started up. Cash flow per share rose 25.0%, to $0.15 from $0.12.
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The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba.
In the three months ended September 30, 2014, Sherritt’s revenue jumped 55.0%, to $302.7 million from $195.3 million a year earlier. That’s mainly because Ambatovy started up. Cash flow per share rose 25.0%, to $0.15 from $0.12.
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BOMBARDIER INC., Toronto symbols BBD.A $3.77 and BBD.B, $3.71, reported better-than-expected quarterly results this week. Without costs related to its recent restructuring, which included laying off 2% of its workforce, Bombardier’s earnings rose 34.5% in the quarter ended September 30, 2014, to $222 million, or $0.12 a share (all amounts except share prices in U.S. dollars). That beat the consensus estimate of $0.10 a share. A year earlier, the company earned $165 million, or $0.09 a share. Overall revenue gained 20.9%, $4.9 billion from $4.1 billion, also beating the consensus forecast of $4.82 billion....
Pat McKeough responds to many requests from members of his Inner Circle for specific advice on buying 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. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday.
Recently an Inner Circle member asked about the prospects of a Canadian oil service stock. Aveda provides transportation services for oil and gas producers in both Canada and the United States, with three quarters of its revenue coming from the U.S. The company has made several key acquisitions this year that have added to its profits—and its debt. Pat takes a hard look at the company’s balance sheet and considers its prospects in light of the dampening effect lower oil prices have on energy projects.
Q: Dear Pat: A company that would seem to be moving in the right direction is oil-service firm Aveda. Perhaps I can have your input regarding this prospect?
A: Aveda Transportation and Energy Services Inc. (symbol AVE on Toronto; www.avedaenergy.com) provides transportation services to oil and gas producers in Western Canada and the U.S., mainly in Texas, Pennsylvania, West Virginia and North Dakota. The U.S. supplies around 75% of the company’s revenue.
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Recently an Inner Circle member asked about the prospects of a Canadian oil service stock. Aveda provides transportation services for oil and gas producers in both Canada and the United States, with three quarters of its revenue coming from the U.S. The company has made several key acquisitions this year that have added to its profits—and its debt. Pat takes a hard look at the company’s balance sheet and considers its prospects in light of the dampening effect lower oil prices have on energy projects.
Q: Dear Pat: A company that would seem to be moving in the right direction is oil-service firm Aveda. Perhaps I can have your input regarding this prospect?
A: Aveda Transportation and Energy Services Inc. (symbol AVE on Toronto; www.avedaenergy.com) provides transportation services to oil and gas producers in Western Canada and the U.S., mainly in Texas, Pennsylvania, West Virginia and North Dakota. The U.S. supplies around 75% of the company’s revenue.
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VANGUARD FTSE EMERGING MARKETS ETF $40.01 (New York symbol VWO; buy or sell through brokers) aims to track the Financial Times Stock Exchange (FTSE) Transitions Index, which is made up of common stocks of companies in developing countries. The fund’s MER is just 0.15%.
The Vanguard FTSE Emerging Markets ETF’s top holdings include Taiwan Semiconductor (Taiwan: computer chips), China Mobile (China: wireless), Petroleo Brasileiro SA (Brazil: oil and gas), Itau Unibanco Holding SA (Brazil: banking), China Construction Bank, Tencent Holdings (China: Internet), Industrial & Commercial Bank of China, Naspers Ltd. (South Africa: media) and Hon Hai Precision Industry (Taiwan: electronics).
The $59.3-billion fund’s breakdown by country is as follows: China (20.6%), Taiwan (13.7%), Brazil (13.7%), India (9.9%), South Africa (9.7%), Mexico (5.7%), Russia (5.4%), Malaysia (5.2%), Indonesia (2.9%), Thailand (2.8%), Turkey (1.9%), Chile (1.7%), Poland (1.7%) and others (5.1%).
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The Vanguard FTSE Emerging Markets ETF’s top holdings include Taiwan Semiconductor (Taiwan: computer chips), China Mobile (China: wireless), Petroleo Brasileiro SA (Brazil: oil and gas), Itau Unibanco Holding SA (Brazil: banking), China Construction Bank, Tencent Holdings (China: Internet), Industrial & Commercial Bank of China, Naspers Ltd. (South Africa: media) and Hon Hai Precision Industry (Taiwan: electronics).
The $59.3-billion fund’s breakdown by country is as follows: China (20.6%), Taiwan (13.7%), Brazil (13.7%), India (9.9%), South Africa (9.7%), Mexico (5.7%), Russia (5.4%), Malaysia (5.2%), Indonesia (2.9%), Thailand (2.8%), Turkey (1.9%), Chile (1.7%), Poland (1.7%) and others (5.1%).
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VANGUARD GROWTH ETF $98.25 (New York symbol VUG; buy or sell through brokers) aims to track the Center for Research in Security Prices (CRSP) U.S. Large Cap Growth Index, a broadly diversified index that mainly consists of large U.S. companies. The fund’s MER is just 0.09%.
The $42.4-billion Vanguard Growth ETF’s top holdings are Apple, Google, Coca-Cola, Facebook, Oracle, Schlumberger, Comcast, Qualcomm, Gilead Sciences and Walt Disney Co.
The fund’s breakdown by industry is as follows: Technology (23.8%), Consumer Services (19.7%), Financials (12.3%), Health Care (12.2%), Industrials (11.8%), Consumer Goods (9.9%), Oil and Gas (8.1%), Materials (1.6%), Utilities (0.3%) and Telecommunication Services (0.3%).
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The $42.4-billion Vanguard Growth ETF’s top holdings are Apple, Google, Coca-Cola, Facebook, Oracle, Schlumberger, Comcast, Qualcomm, Gilead Sciences and Walt Disney Co.
The fund’s breakdown by industry is as follows: Technology (23.8%), Consumer Services (19.7%), Financials (12.3%), Health Care (12.2%), Industrials (11.8%), Consumer Goods (9.9%), Oil and Gas (8.1%), Materials (1.6%), Utilities (0.3%) and Telecommunication Services (0.3%).
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DOMINO’S PIZZA INC., $84.84, symbol DPZ on New York, shot up over 12% this week after reporting strong quarterly results. The company operates the world’s largest chain of pizza stores that offer takeout and delivery. It has 10,900 outlets in the U.S. and over 70 other countries. Franchisees run most of them. In the three months ended September 7, 2014, the company’s earnings per share jumped 18.9%, to $0.63 from $0.53 a year earlier, beating the consensus estimate of $0.61....
MCCOY GLOBAL $5.00 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780- 453-8451; www.mccoyglobal.com; Shares outstanding: 27.7 million; Market cap: $142.7 million; Dividend yield: 4.0%) has now sold its Inotec Coatings and Hydraulics business for $9.3 million. Inotec makes coatings for oil and gas drilling tools and mining equipment. It also repairs and maintains hydraulic cylinders. This deal follows McCoy’s sale of its mobile solutions unit earlier this year and completes the company’s shift toward its faster growing and more profitable energy products and services segment. This business sells hydraulic gear, including power tongs, for drilling rigs. (Power tongs are large wrench-like tools that tighten and loosen the pipe in the drill hole.)...
DEVON ENERGY CORP. $55.14 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 409.1 million; Market cap: $22.6 billion; Dividend yield: 1.7%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 48% gas and 52% oil. In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company narrowed its focus even further with the July 2014 sale of some of its properties to Linn Energy for $2.3 billion. The sale included Devon’s holdings in the Rockies, the onshore Gulf Coast and the Mid-Continent region (which includes Oklahoma, Kansas and Texas)....
TRILOGY ENERGY CORP. $20.22 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogyenergy.com; Shares outstanding: 105.1 million; Market cap: $2.8 billion; Dividend yield: 2.1%) reported production of 36,187 barrels of oil equivalent a day (including gas) in the quarter ended June 30, 2014. That’s down 2.7% from 37,209 barrels a year earlier. Cash flow per share rose 9.6%, to $0.80 from $0.73, as higher oil and gas prices offset the production drop. The company plans to spend $375 million on exploration this year, down 5.5% from the $397 million it spent in 2013. As well, it’s now focusing on its shale oil prospects at Kaybob, Alberta and spending less on its more mature oil pools in the same area. That shift could push Trilogy’s average daily output to over 42,000 barrels late next year, but it will continue to weigh on the company’s production growth in the meantime....