oil and gas

BOMBARDIER INC., Toronto symbols BBD.A $3.86 and BBD.B $3.80, reported better-than-expected quarterly results this week. Before one-time items, Bombardier earned $192 million in the quarter ended June 30, 2014, up 21.5% from $158 million a year earlier (all amounts except share prices in U.S. dollars). Earnings per share rose 11.1%, to $0.10 from $0.09, on more shares outstanding. That beat the consensus estimate of $0.09. Overall revenue rose 10.4%, $4.9 billion from $4.4 billion, also exceeding the consensus forecast of $4.7 billion....

DEVON ENERGY CORP. $78.50 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 407.9 million; Market cap: $31.9 billion; Dividend yield: 1.2%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 53% gas and 47% 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 is narrowing its focus even further with its recent agreement to sell some of its properties to Linn Energy LLC for $2.3 billion. The sale includes Devon’s holdings in the Rockies, the onshore Gulf Coast and the Mid-Continent region (which includes Oklahoma, Kansas and Texas).

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BHP BILLITON LTD. ADRs $72 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 1.6 billion; Market cap: $115.2 billion; Price-to-sales ratio: 2.9; Dividend yield: 3.3%; TSINetwork Rating: Average; www. bhpbilliton.com) is the world’s largest mining company, with major operations in Australia, South Africa, the U.S. and the U.K. BHP’s main products include iron ore (31% of revenue; 43% of earnings), oil and potash (20%; 32%), copper (18%; 16%), coal (17%; 6%), and aluminum, manganese and nickel (14%; 3%). BHP cuts its risk by focusing on projects with high-quality, long-lasting reserves.

Oil and gas expansion spurred results

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An interesting historical analogy is playing out right now between the World War I centennial, and Russia’s Ukrainian venture. In fact, you can’t help but wonder if Russia is stage-managing events to foster the analogy. This could balloon the unsettling effects of Russia’s current Ukrainian venture, and cut the cost of acquiring more Ukrainian territory. Comment on World War I mostly centers on the idea that a seemingly minor incident, such as the assassination of an archduke, can topple a series of dominos and set off a global war. From there, it’s not too great a stretch to wonder if another seemingly minor incident, the downing of a Malaysian passenger jet, can do something like that today. It’s in Russia’s interest to have North American and European voters think that way. If so, they are less likely to pressure their governments to get involved. Instead they’ll want a negotiated settlement, which Russia also favours. That way, Russia can acquire parts of eastern Ukraine at only a slightly higher price than it paid for Crimea....

TUPPERWARE BRANDS CORP., $74.04, New York symbol TUP, makes household products, including educational toys and plastic food and beverage containers. It also produces a range of cosmetics, bath oils and fragrances. This week, the company reported quarterly earnings that matched the consensus estimate. However, weaker sales in developed markets like North America and Europe prompted it to cut its full-year sales and earnings projections. That caused the stock to fall 12%. Excluding unusual items, Tupperware’s earnings declined 4.1% in the three months ended June 28, 2014, to $75.1 million from $78.3 million a year earlier. Per-share earnings rose 0.7%, to $1.47 from $1.46, on fewer shares outstanding....

ALIMENTATION COUCHETARD $29.50 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard.com; Shares outstanding: 565.8 million; Market cap: $16.6 billion; Dividend yield: 0.5%) plans to keep looking for big acquisitions like its $2.7-billion purchase of Norway’s Statoil Fuel & Retail gas station chain in June 2012. However, the company has a long history of not overpaying for acquisitions; in 2010, it dropped its $2-billion U.S. hostile takeover offer for Casey’s General Stores after competitor 7-Eleven outbid it. And earlier this year, it stayed out of the running to buy oil and gas giant Hess Corp.’s 1,354 U.S. gas stations and convenience stores. Marathon Petroleum eventually paid $2.9 billion. Meanwhile, Couche-Tard’s sales rose 2.0% in the quarter ended April 27, 2014, to $9.0 billion from $8.8 billion a year ago. Earnings per share rose 10.0%, to $0.22 from $0.20. (All figures except share price and market cap in U.S. dollars. Per-share amounts adjusted for a 3-for-1 stock split on April 14, 2014)....

SHERRITT INTERNATIONAL $4.45 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 297.3 million; Market cap: $1.3 billion; Dividend yield: 0.9%) recently sold off all of its coal interests for $793 million in cash. The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has started up its 40%-owned 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 March 31, 2014, Sherritt’s revenue rose 13.0%, to $120.9 million from $107.0 million a year earlier. Cash flow per share was unchanged at $0.10....

DOREL INDUSTRIES $37.90 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 32.3 million; Market cap: $1.3 billion; Dividend yield: 3.3%) makes a range of items, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational goods, mainly bicycles. In the three months ended March 31, 2014, Dorel’s sales rose 9.0%, to $647.7 million from $594.2 million a year earlier (all figures except share price and market cap in U.S. dollars). Sales rose 18.1% at the recreational segment and 2.0% at the home-furnishing division. Juvenile products sales gained 5.5%. Earnings per share rose 11.4%, to $0.78 from $0.70. Sales of its high-profit Cannondale and Pacific Cycle premium bikes rebounded with an early spring in Europe. As well, Dorel’s 70% stake in Caloi, which it acquired last year, is now adding to its profits....

DEVON ENERGY CORP. $78.50 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 407.9 million; Market cap: $31.9 billion; Dividend yield: 1.2%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 53% gas and 47% 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 is narrowing its focus even further with its recent agreement to sell some of its properties to Linn Energy LLC for $2.3 billion. The sale includes Devon’s holdings in the Rockies, the onshore Gulf Coast and the Mid-Continent region (which includes Oklahoma, Kansas and Texas)....

ZARGON OIL & GAS $9.03 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403- 264-9992; www.zargon.ca; Shares outstanding: 30.1 million; Market cap: $270.9 million; Dividend yield: 8.0%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota. In the quarter ended March 31, 2014, the company produced 6,662 barrels of oil equivalent a day, down 12.9% from 7,648 a year earlier. That’s mainly because the company sold some less important properties. The lower output was more than offset by higher oil and gas prices in the latest quarter, increasing Zargon’s cash flow per share by 10.9%, to $0.51 from $0.46....