oil prices

PLEASE NOTE: Our next Hotline will go out on Friday, April 29, 2011. TECK RESOURCES LTD., $53.83, Toronto symbol TCK.B, rose 8% this week after the company reported better-than-expected first-quarter earnings. In the three months ended March 31, 2011, Teck’s earnings jumped 123.5%, to $0.76 a share from $0.34 a year earlier. These figures exclude several unusual items, such as gains on asset sales. On this basis, the latest earnings beat the consensus forecast of $0.75 a share. Revenue rose 24.9%, to $2.4 billion from $1.9 billion....

SASOL LTD. (ADR) $53.91 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082-883-9697; www.sasol.com; ADRs outstanding: 641.4 million; Market cap: $34.6 billion; Dividend yield: 1.7%) has developed a technology to convert coal and natural gas into motor fuels. The company is now the world’s largest producer of fuel from coal at its facility at Secunda, South Africa. Sasol also produces synthetic fuels from natural gas at plants in Qatar and Nigeria. In addition, the company has substantial chemical-production interests, and produces oil and gas in Africa. Sasol is also South Africa’s third-largest coal producer. In the six months ended December 31, 2010, Sasol’s revenue rose 15.8%, to $9.9 billion from $8.6 billion a year earlier (all figures in U.S. dollars). Earnings per ADR rose 19.9%, to $1.87 from $1.56....

Bombardier was a favourite of momentum traders in the 1990s, and the stock peaked at over $26 in 2000. However, 9/11 and two recessions cut the company’s share price to under $3 in 2009. In response, Bombardier aggressively cut its costs. It also expanded its railcar business. That lowered its exposure to the highly cyclical aircraft industry. These moves have significantly improved Bombardier’s earnings. That’s also helping the company develop new, more fuel-efficient airplanes and high-speed trains. These new products will help Bombardier increase its sales and market share, particularly in fast-growing countries like China and Brazil. BOMBARDIER INC. (Toronto symbols BBD.A $6.90 and...

Oil now trades at around $110 U.S. a barrel. That’s up over 29% from $85 U.S. a year ago, and 175% higher than its low of $40 U.S. in February 2009. We think oil prices could rise even further if the global economy continues to rebound, as we expect. Even so, we continue to advise against overindulging in Canadian oil stocks. That’s because the Resource sector (including oil) is highly volatile, and no one can accurately predict future oil prices. However, you can profit nicely over long periods by investing a reasonable portion of your portfolio in well-established or well-managed Canadian oil stocks, especially those with high-quality reserves and rising production. These companies are well-positioned to profit during periods of high oil prices, and are able to at least partly offset price declines by producing more oil....

Pulse Seismic, symbol PSD on Toronto, buys, sells and licenses seismic data to clients in western Canada. The company is one of the aggressive stock investing picks we analyze in our Stock Pickers Digest newsletter. Pulse’s main business is seismic-data licensing. It has built a library of seismic research that it licenses to clients, mostly oil and gas companies. Pulse usually buys seismic-survey data from oil and gas firms. It also performs what it calls “participation seismic surveys.” Oil and gas producers pay Pulse to participate in these surveys in return for a perpetual, non-exclusive licence to use the newly generated data. Pulse owns the data the surveys generate, and adds it to its library. Oil and gas firms, which may use different scientific models in their exploration, can then lease various selections and combinations of the data....

SeaDrill Ltd., $36.96, symbol SDRL on Nasdaq (Shares outstanding: 364.6 million; Market cap: $13.5 billion; www.seadrill.com), is a leading offshore drilling company. Norway-based SeaDrill has a fleet of 54 drilling rigs that can operate in shallow to very deep water. The company operates in 15 countries on four continents. In the three months ended December 31, 2010, SeaDrill’s revenue rose 33.0%, to $1.2 billion from $878.9 million a year earlier. Before one-time items, earnings rose 2.9%, to $413.1 million, or $0.96 a share, from $401.1 million, or $0.95 a share. The company’s debt is very high, at $8.6 billion, or 63.7% of its market cap, but it does hold cash of $1.4 billion, or $3.84 a share. The company only started up in 2005, so it owns modern drilling rigs that are in the greatest demand. As a result, SeaDrill’s utilization rates are high, in the 95% to 97% range....

PLEASE NOTE: Our next Hotline will go out on Thursday, April 7, 2011. BOMBARDIER INC., Toronto symbols BBD.A $7.09 and BBD.B $7.11, rose 12% this week after the company reported better-than-expected earnings. In its 2011 fiscal year, which ended January 31, 2011, Bombardier’s earnings rose 8.2%, to $755 million from $698 million in fiscal 2010 (all amounts except share price in U.S. dollars). Earnings per share rose 7.7%, to $0.42 from $0.39, on more shares outstanding. That easily beat the consensus estimate of $0.36 a share....

Exchange-traded funds (ETFs) offer very low management fees. As well, the best ETFs offer well-diversified, tax-efficient portfolios of high-quality stocks. But the quality of ETFs varies widely. All too many exist to tap into popular, but risky, themes and fads. So you need to be highly selective with your ETF holdings. Here are six foreign ETFs we like:...

ARC RESOURCES LTD. $26.34 (Toronto symbol ARX; Shares outstanding: 275.9 million; Market cap: $7.3 billion; TSINetwork Rating: Speculative; Dividend yield: 4.6%; www.arcresources.com) produces oil and natural gas in western Canada. Its average daily production of 84,686 barrels of oil equivalent (including gas) is weighted 61% to gas and 39% to oil. In the three months ended December 31, 2010, ARC’s revenue rose 18.2%, to $329.3 million from $278.6 million a year earlier. Cash flow per share rose 10.0%, to $0.66 from $0.60. Increased production and higher oil prices pushed up results. The company has $803.6 million of debt. That’s a low 11.0% of its market cap. The shares trade at 8.8 times ARC’s forecast 2011 cash flow of $2.99 a share. It plans to spend $625 million on exploration and development this year, up 5.8% from 2010....

PENGROWTH ENERGY $13.40 (Toronto symbol PGF; Shares outstanding: 320.1 million; Market cap: $4.3 billion; TSINetwork Rating: Average; Dividend yield: 6.3%; www.pengrowth.com) reported that its cash flow rose 9.9% in 2010, to $606.0 million from $551.4 million in 2009. Cash flow per share fell 3.8%, to $2.01 from $2.09, on more shares outstanding. The gain was mainly due to a 6.8% rise in the average price the company received per barrel of oil equivalent (including natural gas). That offset a 6.1% drop in its average daily production after it sold some properties in 2009. Natural gas accounted for 62% of Pengrowth’s 2010 production. Oil provided the remaining 38%. Gas prices haven’t matched rising oil prices over the last couple of years. Still, high oil prices could prompt industrial users to switch to gas. As well, new pipelines are being planned for the Rocky Mountains. That would help Pengrowth ship more gas to Asia....