oil and gas
PRECISION DRILLING CORP. $10 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 276.9 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract-drilling services to land-based oil and gas producers, mainly in North America....
SNC-LAVALIN GROUP INC. $43 (www.snclavalin.com) continues to win new engineering contracts despite last year’s bribery scandal. ZADCO, a joint venture headed by Abu Dhabi’s stateowned oil company, recently hired SNC to design a major addition to its oil refinery....
SNC-LAVALIN GROUP INC., $44.62, Toronto symbol SNC, rose 8% this week after it said that it plans to sell all or part of AltaLink, which provides electricity to 85% of Alberta’s population through 12,000 kilometres of power lines and 280 substations. SNC could also spin off AltaLink as a separate publicly traded firm. The company did not say when it expects to complete this process. As of June 30, 2013, AltaLink’s net book value was $856.8 million. That’s equal to 13% of SNC’s $6.8-billion market cap (or the value of all its outstanding shares). The sale is part of SNC’s plan to sell some of its less important operations. The company will invest the cash from these sales in engineering projects in areas with strong potential, such as mining, water treatment and oil and gas....
RUSSEL METALS $26.72 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 60.9 million; Market cap: $1.6 billion; Dividend yield: 5.2%) is one of North America’s largest metal distributors. It serves 39,000 clients at 54 locations in Canada and 12 in the U.S.
In the quarter ended June 30, 2013, revenue rose 5.5%, to $758.1 million from $718.7 million a year earlier. Revenue at the company’s metal-services business declined 13%. That’s because the slower economy pushed down steel demand.
However, the energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue jump 63% on higher drilling activity.
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In the quarter ended June 30, 2013, revenue rose 5.5%, to $758.1 million from $718.7 million a year earlier. Revenue at the company’s metal-services business declined 13%. That’s because the slower economy pushed down steel demand.
However, the energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue jump 63% on higher drilling activity.
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Pat McKeough responds to many requests from members of his Inner Circle for specific advice on 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 one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....
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 $11.81 (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, 6.6%; Mitsubishi UFJ Financial, 3.1%; Sumitomo Mitsui Financial, 2.4%; Softbank Corp., 2.4%; Honda Motor, 2.3%; Mizuho Financial Group, 1.9%; Japan Tobacco, 1.5%; Takeda Pharmaceutical, 1.4%; Canon, 1.3%; and Hitachi, 1.2%.
The fund’s industry breakdown is as follows: Financials, 21.4%; Consumer Discretionary, 21.1%; Industrials, 19.6%; Information Technology, 9.6%; Consumer Staples, 6.3%; Materials, 6.2%; Health Care, 5.9%; Telecommunication Services, 5.1%; Utilities, 2.8%; and Energy, 1.2%.
iShares MSCI Japan Index Fund was launched on March 12, 1996....
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 $11.81 (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, 6.6%; Mitsubishi UFJ Financial, 3.1%; Sumitomo Mitsui Financial, 2.4%; Softbank Corp., 2.4%; Honda Motor, 2.3%; Mizuho Financial Group, 1.9%; Japan Tobacco, 1.5%; Takeda Pharmaceutical, 1.4%; Canon, 1.3%; and Hitachi, 1.2%.
The fund’s industry breakdown is as follows: Financials, 21.4%; Consumer Discretionary, 21.1%; Industrials, 19.6%; Information Technology, 9.6%; Consumer Staples, 6.3%; Materials, 6.2%; Health Care, 5.9%; Telecommunication Services, 5.1%; Utilities, 2.8%; and Energy, 1.2%.
iShares MSCI Japan Index Fund was launched on March 12, 1996....
SNC-LAVALIN GROUP INC. $41 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.6 million; Market cap: $6.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.2%; TSINetwork Rating: Average; www.snclavalin.com) is selling 66% of its stake in the Astoria II gas-fired electrical power plant near New York City.
The company did not say how much it would receive for this interest. However, it paid $70 million U.S. for a 20% stake in this facility in 2009.
The sale is part of SNC’s plan to sell some of its less important investments in concessions, which are rights that governments grant to run public facilities. The company will use the cash from these sales to focus on engineering projects in areas with greater potential, including mining, oil and gas, and water treatment projects.
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The company did not say how much it would receive for this interest. However, it paid $70 million U.S. for a 20% stake in this facility in 2009.
The sale is part of SNC’s plan to sell some of its less important investments in concessions, which are rights that governments grant to run public facilities. The company will use the cash from these sales to focus on engineering projects in areas with greater potential, including mining, oil and gas, and water treatment projects.
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SHAWCOR LTD. $43 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 59.6 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.2%; TSINetwork Rating: Average; www.shawcor.com) gets 90% of its revenue by making sealants and coatings that keep oil and gas pipelines from rusting. The remaining 10% comes from manufacturing industrial products, such as electrical wire and protective sheaths.
The company continues to benefit from recent acquisitions that have increased its North American manufacturing capacity. As well, demand for its pipeline-coating services continues to rise in Asia, Latin America and Europe. Asia now supplies 39% of ShawCor’s revenue, followed by North America (38%), Europe (15%) and Latin America (8%).
In the three months ended June 30, 2013, ShawCor’s revenue jumped 39.9%, to a record $457.3 million from $326.9 million a year earlier. That’s mainly because the company paid $30 million for the 49% of Socotherm LaBarge LLC that it did not already own. Texas-based Socotherm coats and insulates pipelines for deepwater oil and gas projects. Its clients operate in the Gulf of Mexico and off Africa’s west coast.
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The company continues to benefit from recent acquisitions that have increased its North American manufacturing capacity. As well, demand for its pipeline-coating services continues to rise in Asia, Latin America and Europe. Asia now supplies 39% of ShawCor’s revenue, followed by North America (38%), Europe (15%) and Latin America (8%).
In the three months ended June 30, 2013, ShawCor’s revenue jumped 39.9%, to a record $457.3 million from $326.9 million a year earlier. That’s mainly because the company paid $30 million for the 49% of Socotherm LaBarge LLC that it did not already own. Texas-based Socotherm coats and insulates pipelines for deepwater oil and gas projects. Its clients operate in the Gulf of Mexico and off Africa’s west coast.
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PENN WEST PETROLEUM $11.75 (Toronto symbol PWT; Shares outstanding: 485.0 million; Market cap: $5.7 billion; TSINetwork Rating: Average; Dividend yield: 4.8%; www.pennwest.com) is one of North America’s largest oil and gas producers. Its output is 63% oil and 37% gas.
In the quarter ended June 30, 2013, Penn West’s cash flow per share was unchanged at $0.57 from a year earlier. A 14.2% fall in daily output, to 140,083 barrels of oil equivalent from 163,181, offset higher oil and gas prices.
Penn West continues to shore up its finances and take measures to boost its value after it appointed Rick George as chairman and Allan Markin as vice-chairman.
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In the quarter ended June 30, 2013, Penn West’s cash flow per share was unchanged at $0.57 from a year earlier. A 14.2% fall in daily output, to 140,083 barrels of oil equivalent from 163,181, offset higher oil and gas prices.
Penn West continues to shore up its finances and take measures to boost its value after it appointed Rick George as chairman and Allan Markin as vice-chairman.
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