oil and gas
Pat McKeough responds to many requests for specific advice on buying stocks and other questions on investment strategy and the economy from the members of his Inner Circle. 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. This week, an Inner Circle member asked about the world’s biggest heavy equipment maker, Caterpillar. With slower economic growth in its main markets, especially China, the company has seen its revenues slip. Pat examines Caterpillar’s ambitious acquisition policy and looks at the company’s financial outlook in the face of slowing demand in a still-sluggish global economy. ...
STANTEC INC. $46.56 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.2 million; Market cap: $2.1 billion; Dividend yield: 1.4%) sells a range of consulting, project delivery, design and technology services....
Zargon trades at just 3.1 times cash flow per share, but that cash flow may be headed down for a year or so. Trilogy trades at 9.6 times cash flow, high for an oil and gas stock, but that’s mostly because its shares are up 50% over the last year.
We see both stocks as worthwhile holds, but there are better oil and gas stocks available for new buying— such as Bellatrix (see box this page) and Chesapeake (see box on page 57).
ZARGON OIL & GAS $6.39 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 30.0 million; Market cap: $189.3 million; Dividend yield: 11.3%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota....
We see both stocks as worthwhile holds, but there are better oil and gas stocks available for new buying— such as Bellatrix (see box this page) and Chesapeake (see box on page 57).
ZARGON OIL & GAS $6.39 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 30.0 million; Market cap: $189.3 million; Dividend yield: 11.3%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota....
AEROPOSTALE $14.15 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 78.5 million; Market cap: $1.1 billion; No dividends paid) now plans to launch the Aeropostale brand in Mexico through a licensing agreement with Distribuidora Liverpool, S.A....
CHEMTRADE LOGISTICS INCOME FUND $17.30 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics- .com; Units outstanding: 41.7 million; Market cap: $716.7 million; Dividend yield: 7.0%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors....
COMPUTER MODELLING GROUP (Toronto symbol CMG; www.cmgroup.com) sells consulting services and software that help oil and gas producers use advanced recovery techniques to get more out of their existing wells. The company has customers in over 50 countries and offices in Calgary, Houston, London, Caracas and Dubai. In the three months ended March 31, 2013, Computer Modelling reported revenue of $19.3 million. That’s up 12.0% from $17.2 million a year earlier....
Caterpillar Inc., $87.97, symbol CAT on New York (Shares outstanding: 657.7 million; Market cap: $57.5 billion; www.caterpillar.com), is the world’s largest maker of earth-moving equipment, including tractors, scrapers, graders, compactors, loaders and pipe layers. It also makes lift trucks and diesel and turbine engines. The company gets 63% of its sales from outside the U.S. Its clients are mainly in the mining, logging, farming, construction and oil and gas industries. Caterpillar sells its machines through a worldwide dealer network. It also provides dealers and customers with equipment financing and insurance....
APACHE CORP. $83 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 391.9 million; Market cap: $32.5 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.0%; TSINetwork Rating: Average; www.apachecorp.com) has agreed to sell most of its offshore oil and gas properties in the Gulf of Mexico for $3.75 billion. The sale, which should close in September 2013, is part of Apache’s plan to focus on its less risky onshore operations.
The company aims to sell $4 billion of its less important assets in 2013. It will use half of the proceeds to buy back shares and the other half to pay down its $11.5-billion long-term debt.
Apache is a hold....
The company aims to sell $4 billion of its less important assets in 2013. It will use half of the proceeds to buy back shares and the other half to pay down its $11.5-billion long-term debt.
Apache is a hold....
APACHE CORP., $82.17, New York symbol APA, produces oil and gas in the U.S., Canada, the U.K., Australia, Egypt and Argentina. The stock fell 2% this week on concerns that political uncertainty in Egypt could disrupt the company’s operations in that country. Egypt accounted for 27% of Apache’s revenue in 2012. The unrest could also make it harder for the company to sell its Egyptian assets, which had a book value of $7.3 billion as of December 31, 2012. To put that in context, Apache’s current market cap (or the value of all its outstanding shares) is $32.2 billion....