oil prices

BCE INC., $35.90, Toronto symbol BCE, continues to profit from recent upgrades to its wireless and high-speed Internet networks. As a result, BCE’s earnings rose 11.9% in 2010, to $2.2 billion from $1.9 billion in 2009. The company spent $500 million on share buybacks in 2010. Because of fewer shares outstanding, earnings per share rose 13.6%, to $2.84 from $2.50. These figures exclude costs related to a restructuring plan, which included cutting jobs, relocating employees and selling excess real estate. The latest earnings also beat the consensus estimate of $2.83 a share. Revenue rose 1.9% in 2010, to $18.1 billion from $17.7 billion. Wireline revenue (which accounts for 57% of BCE’s total revenue) rose just 0.3%. New high-speed Internet and satellite-TV subscribers offset lower local and long-distance telephone revenue. At the end of 2010, the company had 2.1 million high-speed Internet subscribers (up 2.0% from a year earlier) and 2.0 million TV subscribers (up 3.7%)....

Canada’s oil sands still face strong opposition from environmentalists. However, new technology has sharply lowered the oil sands’ greenhouse-gas emissions. As well, turmoil in Egypt and other Middle Eastern countries highlights the oil sands’ strategic importance to the U.S. and Canada. These factors make it less likely that Ottawa will introduce regulations that would slow oil-sands development. These three oil-sands producers have all moved up lately, but they still have plenty of room to grow. SUNCOR ENERGY INC. $40 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $64.0 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.0%; TSINetwork Rating: Average; www.suncor.com) became Canada’s largest oil company when it merged with Petro-Canada in August 2009. About 50% of Suncor’s production is conventional oil and natural gas. The remaining 50% comes from oil sands, including the company’s 12% stake in the massive Syncrude development. Suncor aims to expand its oil-sands operations until they account for about 70% of its production....

TUPPERWARE BRANDS CORP., $53.77, New York symbol TUP, rose 17% this week after it reported better-than-expected earnings. The company makes high-quality products for the home, including plastic food and beverage containers and children’s educational toys. It also makes wide range of cosmetics, bath oils and fragrances. In 2010, Tupperware earned $225.6 million, or $3.53 a share. That’s up 28.8% from $175.1 million, or $2.75 a share, in 2009. If you exclude unusual items, such as a writedown of goodwill, earnings per share would have risen 20.8%, to $3.72 from $3.08. On this basis, the 2010 earnings beat the consensus estimate of $3.60 a share by 3.3%. Revenue rose 8.1% in 2010, to $2.3 billion from $2.1 billion. The company gets over 85% of its revenue from outside the U.S. If you exclude the impact of foreign-exchange rates, revenue would have risen 6.0% in 2010....

SUNCOR ENERGY INC., $40.61, Toronto symbol SU, reported better-than-expected earnings this week. As well, the turmoil in Egypt has pushed up oil prices, and helped lift Suncor’s share price. In 2010, Suncor’s earnings jumped 113.4%, to $2.7 billion from $1.3 billion in 2009. Earnings per share rose 64.6%, to $1.74 from $1.06, on more shares outstanding. These figures exclude several unusual items, including gains on sales of assets Suncor received as a part of its 2009 takeover of Petro-Canada. On this basis, the 2010 earnings easily beat the consensus estimate of $1.57 a share. Cash flow per share rose 82.1% in 2010, to $4.26 from $2.34. Revenue gained 38.2%, to $34.4 billion from $24.8 billion....

We’ve chosen Tupperware as our Stock of the Year for 2011. We first recommended it in the May 2007 issue of Wall Street Stock Forecaster at $26. We felt its direct sales force was an overlooked asset. This independent dealer network keeps the company’s marketing costs low, and is a great way to enter developing markets with few retail stores. Tupperware could also use its network in the future to sell other products besides food containers and cosmetics. The stock has gained 80.8% since we first made it a buy. Even so, we feel it has lots more growth ahead. As well, Tupperware trades at less than 12 times its expected 2011 earnings. That’s a low p/e ratio in light of the company’s well-known brands and continued strong growth potential in emerging markets. TUPPERWARE BRANDS CORP. $47 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 63.2 million; Market cap: $3.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.tupperwarebrands.com) makes high-quality products for the home, including plastic food and beverage containers and children’s educational toys. These products account for 70% of its revenue. The remaining 30% comes from its beauty products division, which makes a wide range of cosmetics, bath oils and fragrances....

SeaDrill Ltd., $33.87, symbol SDRL on Nasdaq (Shares outstanding: 364.6 million; Market cap: $12.3 billion; www.seadrill.com), is a leading offshore drilling company. 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 September 30, 2010, SeaDrill’s revenue rose 24.5%, to $1.1 billion from $863 million a year earlier. Earnings rose 3.8%, to $357.5 million, or $0.85 a share, from $344.4 million, or $0.82 a share. The company’s debt is very high, at $9.5 billion, or 77.2% of its market cap, although it does hold cash of $1.1 billion, or $3.02 a share. The Norway-based company started up in 2005. As a result, it has the modern drilling rigs that are in the highest demand. As a result, SeaDrill’s utilization rates are high, in the 95% to 97% range....

PLEASE NOTE: This is our last Hotline for 2010. Our next Hotline will go out on Friday, January 7, 2011. VISA INC., $66.90, New York symbol V, fell 16% this week. That’s because the Federal Reserve proposed new limits on fees banks can charge for debit-card transactions. Companies that process these transactions, such as Visa and MasterCard Inc. (New York symbol MA), charge banks a percentage of the transaction’s cost. Right now, the average debit-card fee is 1.14%, or $0.44 per transaction. The Federal Reserve, acting under new legislation to regulate financial companies following the 2008 credit crisis, proposes to cap these fees at $0.12 per transaction. The proposals could also make it easier for new competitors to process transactions....

BECKMAN COULTER INC., $72.08, New York symbol BEC, rose 26.3% on Friday on media reports that the company has put itself up for sale. Beckman is reportedly talking with several possible buyers. However, the company could decide to stay public if it doesn’t attract an adequate offer. We’ll say more about this potential sale as more information becomes available....

BUCKEYE PARTNERS L.P. $67 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 51.6 million; Market cap: $3.5 billion; Price-to-sales ratio: 1.3; Dividend yield: 5.8%; TSINetwork Rating: Average; www.buckeye.com) operates over 8,700 kilometres of pipelines in the northeastern and midwestern U.S. These lines pump gasoline, jet fuel and other petroleum products. Buckeye also owns oil and natural-gas storage terminals and other related businesses. In the three months ended September 30, 2010, Buckeye earned $0.93 a unit, up 4.5% from $0.89 a year earlier. Revenue rose 73.5%, to $734.9 million from $423.4 million. The partnership is transporting more fuel due to the improving economy. As well, Buckeye’s fee income varies with fuel prices, and oil prices, in particular, have risen sharply. Buckeye recently agreed to buy an oil-products storage terminal in Puerto Rico from Royal Dutch Shell plc, for an undisclosed price. This is Buckeye’s first expansion into the Caribbean region. However, the partnership has signed long-term deals to store Shell’s fuel at the Puerto Rican terminal. That cuts the risk of this investment....

Buckeye Partners and Cedar Fair are master limited partnerships (MLPs). Investors who hold their units have similar rights to ownership and dividends as common shareholders in regular corporations. MLPs pay out most of their income to investors. That lets them avoid federal and state income taxes. In Canada, MLPs are not eligible for RRSPs or RRIFs. So you’ll be subject to a 35% U.S. withholding tax on income from these investments. However, you can usually claim a non-refundable Canadian tax credit to offset that U.S. withholding tax....