oil and gas

SNC-LAVALIN GROUP INC. $52 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 152.1 million; Market cap: $7.9 billion; Price-to-sales ratio: 1.0; Dividend yield: 1,8%; TSINetwork Rating: Average; www.snclavalin.com) has agreed to sell AltaLink to Berkshire Hathaway (New York symbol BRK.B), the holding company controlled by billionaire investor Warren Buffett.

Wholly owned AltaLink provides electricity to 85% of Alberta’s population through 12,000 kilometres of power lines and 280 substations.

The company will receive $3.2 billion (or $2.9 billion after taxes). The transaction should close by the end of this year.

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COMPUTER MODELLING GROUP LTD., $29.94, symbol CMG on Toronto, makes software and provides services that help its clients get as much oil as possible from their existing wells. The company makes mostly recurring revenue from software licences and consulting contracts, which gives it long-term stability. In the quarter ended March 31, 2014, Computer Modelling’s revenue rose 3.6%, to $20.0 million from $19.3 million a year earlier. Software licence sales (89% of total revenue) increased slightly. However, consulting and professional services revenue (11%) rose 39.1%, due to new projects and a large consulting deal. Earnings gained 6.7%, to $7.7 million from $7.25 million. Per-share earnings jumped 18.8%, to $0.19 from $0.16, on fewer shares outstanding. That matched the consensus estimate....

TORONTO-DOMINION BANK, $53.39, Toronto symbol TD, reported better-than-expected quarterly earnings this week, thanks to steady loan demand in Canada and the U.S. It’s also profiting from its recent deal with Aimia (Toronto symbol AIM) to become the main credit card issuer for the popular Aeroplan travel-reward program. In the quarter ended April 30, 2014, TD’s earnings rose 13.5%, to $2.1 billion from $1.8 billion a year earlier. Due to fewer shares outstanding, per-share earnings gained 14.7%, to $1.09 from $0.95. These figures exclude unusual items, such as costs related to the new Aeroplan card business. On that basis, the latest earnings beat the consensus estimate of $1.02 a share. Revenue rose 12.5%, to $7.4 billion from $6.6 billion. In addition to the new Aeroplan deal, TD is benefiting from last year’s purchase of retailer Target Corp.’s U.S. credit card portfolio. As well, higher debt-underwriting volumes and merger and acquisition fees pushed up revenue at TD’s wholesale banking division by 5.4%....

ENCANA CORP. $25.39 (Toronto symbol ECA; Shares outstanding: 740.9 million; Market cap: $19.0 billion; TSINetwork Rating: Average; Dividend yield: 1.2%; www.encana.com) has released more details regarding its plan to spin off its Clearwater oil and gas properties in southern Alberta.

The new company, called PrairieSky Royalty, will hold the oil and gas rights to 5.2 million acres. PrairieSky will not drill wells or explore for new reserves. Instead, it will collect royalties from other producers. That should generate steady cash flows for monthly dividends.

Encana plans to complete an initial public offering for PrairieSky in the next two to three months—although it will hang on to a majority stake. In the future, it may hand out that stake as a special dividend to its shareholders.

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ISHARES MSCI BRAZIL INDEX FUND $47.04 (New York Exchange symbol EWZ; buy or sell through brokers) is an ETF that is designed to track the Brazilian stock market.

Its top holdings are Petrobras (oil and gas), 10.3%; Cia Itau Unibanco Holding (banking), 8.7%; Vale do Rio Doce (mining), 8.1%; Cia de Bebidas das Americas (beer and beverages), 7.6%; Banco Brandesco, 6.4%; and BRF SA (food), 3.5%.

The ETF was launched on July 10, 2000. It has an expense ratio of 0.62%.

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Husky Energy Inc., $35.89, symbol HSE on Toronto (Shares outstanding: 983.5 million; Market cap: $35.3 billion; www.huskyenergy.com), is an integrated oil and gas company. Hong Kong-based billionaire Li Ka-Shing owns 68% of Husky’s shares. Husky’s growth prospects are sound and are supported by its Sunrise oil sands project in Alberta and its $6.5-billion Liwan offshore project in the South China Sea, where natural gas has started to flow. Husky operates the deepwater infrastructure at Liwan, while its partner, Chinese state-owned firm CNOOC Ltd., operates the shallow-water facilities and onshore gas terminal. CNOOC owns 51% of Liwan’s production, and Husky holds the rest. The stock trades at 6.3 times this year’s forecast cash flow of $5.73 a share. It yields 3.3%....

PASON SYSTEMS (Toronto symbol PSI; www.pason.com) is trading near all-time highs as it continues to gain from the boom in U.S. shale oil and gas drilling. Pason rents equipment for monitoring and managing oil and gas rigs. It also sells communication technology, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors throughout Canada, the U.S., Mexico, Argentina and Australia....

CAE INC., $14.55, Toronto symbol CAE, is the world’s leading maker of flight simulators for commercial airlines. It also makes simulators for militaries and operates pilot-training schools. In its fiscal 2014 fourth quarter, which ended March 31, 2014, CAE’s earnings rose 39.2%, to $60.0 million from $43.1 million a year earlier. Per-share earnings gained 35.3%, to $0.23 from $0.17, on more shares outstanding. That beat the consensus estimate of $0.20. Revenue rose 3.1%, to $583.4 million from $565.6 million. CAE received orders for eight flight simulators during the quarter, which brought its full-year total to a new record of 48. Since the quarter ended, it has sold an additional four simulators. The company’s military-related businesses also continue to win new contracts....

AIMIA INC, $19.15, symbol AIM on Toronto, owns and operates Aeroplan, Canada’s largest loyalty program, with over 4.8 million members who collect Aeroplan miles from participating companies. Members can exchange miles for flights, car rentals, hotel rooms and merchandise. The company also owns Nectar, the U.K.’s biggest loyalty program. In addition, it has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico. On January 1, 2014, TD Bank replaced CIBC as the main credit card issuer for Aeroplan. Under a new 10-year deal, TD is now launching new cards under the Aeroplan banner, including cards for frequent flyers and small businesses. The deal also let CIBC hang on to Aeroplan accounts held by customers who also bank at CIBC. That was about half the Aeroplan portfolio....

CHESAPEAKE ENERGY $29.23 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 666.2 million; Market cap: $20.0 billion; Dividend yield: 1.2%) is one of the largest U.S.-based oil and natural gas explorers and producers....