oil and gas

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus....

PLEASE NOTE: One week from today, on January 24, 2014, shortly after the stock market closes at 4:00 p.m. Toronto time, we will reveal our #1 Aggressive Stock of 2014 to subscribers of Stock Pickers Digest. You can be among the first to hear about our #1 pick for 2014. Because you’re a loyal subscriber, we are happy to offer you a bargain-priced, no-risk introduction to Stock Pickers Digest. It gives you the first month—and the 2014 Stock of the Year—FREE. But you must act now. Click here. CAE INC., $14.10, Toronto symbol CAE, is our Stock of the Year for 2014. This is CAE’s third time as our #1 pick. It was our Stock of the Year in 2000, when it gained 130.0% for us. We picked it again for 2002, but 9/11 hurt air travel much more than we expected. Fuel prices also moved up, the economy weakened, and CAE dropped 54.2% that year....

PRECISION DRILLING CORP. $10 (www.precisiondrilling.com) has raised its quarterly dividend by 20.0%, to $0.06 a share from $0.05. The new annual rate of $0.24 yields 2.4%. Volatile oil and gas prices and a lack of pipelines have hurt drilling activity....

Our Canadian dollar spent most of the past three years within a few cents of parity with the U.S. dollar. That was an unusual period of calm for our dollar, and of relative strength in relation to the U.S. currency. The last time our dollar stayed that stable, and that close to the value of the U.S. dollar, was in the first half of the 1970s. After that, from 1976 through 2002, our dollar worked its way downward from $1.00 U.S. to a low of $0.63 U.S. From there it turned around and moved up for five years, to a peak of $1.08 U.S. in the final quarter of 2008. After that, the recession hit and our dollar slumped to around $0.76 U.S. By the end of 2009, it was back within a few cents of U.S. dollar parity. It mostly stayed close to parity till the end of last summer. This period of relative calm and strength may be ending. The Canadian dollar moved down more than $0.05 U.S. in the past three months; two cents of that drop occurred last week. Analysts are blaming last week’s drop on a convoluted analysis of the relative strength of U.S. and Canadian economic growth rates, and changing interest rate trends between the two countries....

Canoe EIT Income Fund, $11.99, symbol EIT.UN on Toronto (Units outstanding: 89.9 million; Market cap: $1.1 billion; www.canoefinancial.com), changed its name from EnerVest Diversified Income Trust in November 2013. The stock symbol remained the same. Canoe EIT is a closed-end fund that invests in a portfolio of stocks that are mainly listed on the Toronto exchange, with a focus on dividend income. The fund trades at a 16.6% discount to its net asset value and has an MER of 1.45%. The fund’s top holdings are TD Bank, Bank of Nova Scotia, Royal Bank of Canada, CN Rail, Crescent Point Energy, Telus, Microsoft, Boeing, Encana and Wells Fargo. Canoe EIT has 33.8% of its assets in finance stocks and 25.1% in oil and gas firms....

PLEASE NOTE: One week from today, on January 17, 2014, shortly after the stock market closes at 4:00 p.m. Toronto time, we will reveal our #1 Canadian Stock of 2014 to subscribers of The Successful Investor. You can be among the first to hear about our #1 pick for 2014. Because you’re a loyal subscriber, we are happy to offer you a bargain-priced, no-risk introduction to The Successful Investor. It gives you the first month—and the 2014 Stock of the Year—FREE. But you must act now. Click here. BELLATRIX EXPLORATION LTD., $8.37, symbol BXE on Toronto, has ended 2013 with record production of 38,000 barrels of oil equivalent a day (including natural gas). That’s a big improvement over its earlier forecast of 30,000 to 31,000. Several new wells about to enter production will boost that figure to 40,000 barrels a day. The company plans to spend $370 million on exploration and development this year. It aims to drill a total of 146 wells: 115 oil and 31 gas. It could end 2014 with production of over 47,000 barrels a day....

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus.

The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of highquality stocks.

Here are six international ETFs we like:

ISHARES MSCI JAPAN INDEX FUND $12.04 (New York Exchange symbol EWJ; buy or sell through brokers; us.ishares.com) is an exchange traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index.

The ETF’s top holdings include Toyota, 6.1%; Mitsubishi UFJ Financial, 3.1%; Softbank Corp., 3.0%; Honda Motor, 2.5%; Sumitomo Mitsui Financial, 2.4%; Mizuho Financial Group, 1.8%; Hitachi, 1.4%; Takeda Pharmaceutical, 1.3%; Canon, 1.3%; and Mitsubishi Estate Co., 1.3%.

The fund’s industry breakdown is as follows: Financials, 21.5%; Consumer Discretionary, 20.9%; Industrials, 19.3%; Information Technology, 10.4%; Consumer Staples, 6.3%; Health Care, 6.0%; Materials, 5.9%; Telecommunication Services, 5.8%; Utilities, 2.5%; and Energy, 1.2%.

iShares MSCI Japan Index Fund was launched on March 12, 1996....

New technology has increased oil production from North American shale rock formations. Even so, oil prices have held up due to the improving global economy and lower output from conventional wells....

Bonterra Energy, $53.94, symbol BNE on Toronto (Shares outstanding: 31.2 million; Market cap: $1.7 billion; www.bonterraenergy.com), produces oil and gas in Alberta, Saskatchewan and northeastern B.C., with a focus on the Pembina Cardium area of central Alberta. Its output is 68% oil and 32% gas. In the three months ended September 30, 2013, the company produced 11,794 barrels of oil equivalent a day (including gas), up 76.9% from 6,666 a year earlier. Cash flow per share rose 36.4%, to $1.50 from $1.10. The company’s long-term debt of $147.2 million is just 8.7% of its $1.7-billion market cap. That, plus its rising cash flow, gives it the funds to keep drilling and increasing its output. The stock trades at 8.5 times Bonterra’s forecast 2014 cash flow of $6.38 a share....

SHERRITT INTERNATIONAL (Toronto symbol S; www.sherritt.com) is a diversified natural resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 356 megawatts of power generation capacity in Cuba, with an additional 150 megawatts starting up soon....