oil prices
Every Monday we feature “A Stock to Sell” as our daily post. We give you a full explanation of why we advise against investing in it at this time.
Liquor Stores N.A. Ltd. (symbol LIQ on Toronto; www.liquorstoresna.ca) is North America’s largest private liquor store operator, with 244 outlets. Of that total, 173 are in Alberta, 35 are in B.C., 23 are in Alaska and 13 are in Kentucky.
Liquor Stores’ banners include Liquor Depot, Liquor Barn and Brown Jug.
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Liquor Stores N.A. Ltd. (symbol LIQ on Toronto; www.liquorstoresna.ca) is North America’s largest private liquor store operator, with 244 outlets. Of that total, 173 are in Alberta, 35 are in B.C., 23 are in Alaska and 13 are in Kentucky.
Liquor Stores’ banners include Liquor Depot, Liquor Barn and Brown Jug.
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PLEASE NOTE: Due to the Good Friday holiday, our next Hotline will go out on Thursday, April 2, 2015. CAE INC., $14.86, Toronto symbol CAE, announced this week that it has sold five flight simulators to WestJet and other customers. In all, these orders are worth $70 million, or 3% of CAE’s $2.2 billion of annual revenue. The company has now sold 36 simulators in its 2015 fiscal year, which began April 1, 2014. It sold a record 48 simulators in fiscal 2014....
FedEx’s stock has risen 80% since the start of 2013. That’s mainly because more consumers are shopping online, which has translated into more packages for the company’s delivery services. Companies are also relying on its just-in-time shipping services to cut their inventory costs and increase their efficiency. We feel FedEx has lots more growth ahead. And its recent costcutting plan— combined with falling fuel costs— will spur its earnings for years to come. FEDEX CORP. $165 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 283.8 million; Market cap: $46.8 billion; Price-to-sales ratio: 1.0; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) began offering air-delivery services in 1973, under the Federal Express banner. It’s now one the world’s largest shipping firms....
A: Liquor Stores N.A. Ltd., $15.04, symbol LIQ on Toronto (Shares outstanding: 27.3 million; Market cap: $408.4 million; www.liquorstoresna.ca), is North America’s largest private liquor store operator, with 244 outlets. Of that total, 173 are in Alberta, 35 are in B.C., 23 are in Alaska and 13 are in Kentucky.
Liquor Stores’ banners include Liquor Depot, Liquor Barn and Brown Jug.
Alberta privatized retail liquor sales in 1993, prompting Irv Kipnes to found Liquor Depot and Henry Bereznicki to start Liquor World that year. Kipnes and Bereznicki, both Edmonton-based real estate developers, merged their companies and founded Liquor Stores Income Fund in 2004. The fund first sold units to the public at $10 each and began trading on Toronto in September 2004.
Liquor Stores Income Fund converted to a corporation on December 31, 2010, in response to Ottawa’s income trust tax.
The company’s strategy is to offer more choice, typically two to three times more products than its competitors. Liquor Stores lets each location juggle its product mix to meet local tastes.
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Liquor Stores’ banners include Liquor Depot, Liquor Barn and Brown Jug.
Alberta privatized retail liquor sales in 1993, prompting Irv Kipnes to found Liquor Depot and Henry Bereznicki to start Liquor World that year. Kipnes and Bereznicki, both Edmonton-based real estate developers, merged their companies and founded Liquor Stores Income Fund in 2004. The fund first sold units to the public at $10 each and began trading on Toronto in September 2004.
Liquor Stores Income Fund converted to a corporation on December 31, 2010, in response to Ottawa’s income trust tax.
The company’s strategy is to offer more choice, typically two to three times more products than its competitors. Liquor Stores lets each location juggle its product mix to meet local tastes.
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SHAWCOR LTD. $35 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.5 million; Market cap: $2.3 billion; Priceto- sales ratio: 1.2; Dividend yield: 1.7%; TSINetwork Rating: Average; www.shawcor.com) lost $0.32 a share in the fourth quarter of 2014, mainly due to writedowns of its pipelinecoating facilities in Texas and a joint venture in Venezuela. Without these charges, it earned $0.76 a share, up 105.4% from $0.37 a year earlier.
Revenue rose 22.0%, to $500.0 million from $409.8 million, partly because the lower Canadian dollar enhanced its overseas projects’ results.
Lower oil prices will probably slow pipeline construction and hurt demand for ShawCor’s services. However, the company has $766 million worth of orders that it expects to complete in 2015. It is also bidding on other jobs worth a total of $800 million.
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Revenue rose 22.0%, to $500.0 million from $409.8 million, partly because the lower Canadian dollar enhanced its overseas projects’ results.
Lower oil prices will probably slow pipeline construction and hurt demand for ShawCor’s services. However, the company has $766 million worth of orders that it expects to complete in 2015. It is also bidding on other jobs worth a total of $800 million.
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PRECISION DRILLING CORP. $7.69 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 292.8 million; Market cap: $2.3 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.6%; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) plans to spend $467.0 million on capital upgrades in 2015, down 38.1% from $754.9 million in 2014. That’s because lower oil prices have prompted producers to curtail drilling, hurting demand for new rigs.
Even with the lower capital spending, Precision expects to deliver 17 new rigs in 2015 (13 for the U.S., three for Canada and one for Kuwait), up from 15 in 2014. The company has already signed agreements with drillers to operate these rigs, which cuts the risk of these projects.
Due to the drop in oil prices and drilling activity, Precision will probably earn just $0.11 a share in 2015. The stock trades at 69.9 times that depressed estimate. However, Precision’s earnings could recover to $0.25 a share in 2016, and it trades at a more reasonable 30.8 times that forecast.
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Even with the lower capital spending, Precision expects to deliver 17 new rigs in 2015 (13 for the U.S., three for Canada and one for Kuwait), up from 15 in 2014. The company has already signed agreements with drillers to operate these rigs, which cuts the risk of these projects.
Due to the drop in oil prices and drilling activity, Precision will probably earn just $0.11 a share in 2015. The stock trades at 69.9 times that depressed estimate. However, Precision’s earnings could recover to $0.25 a share in 2016, and it trades at a more reasonable 30.8 times that forecast.
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ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $17.39 (New York symbol ESR; buy or sell through brokers) has 65.6% of its assets invested in Russia, followed by Poland at 27.2%; Czech Republic, 3.6%; and Hungary, 3.2%.
The fund’s top holdings are Gazprom (Russia: gas utility), 13.4%; Lukoil (Russia: oil), 11.2%; Magnit PJSC (Russia: retailing), 5.7%; Sberbank (Russia: bank), 5.3%; MMC Norilsk Nickel (Russia: mining), 4.5%; and Novatek (Russia: natural gas), 3.5%.
The iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.67%.
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The fund’s top holdings are Gazprom (Russia: gas utility), 13.4%; Lukoil (Russia: oil), 11.2%; Magnit PJSC (Russia: retailing), 5.7%; Sberbank (Russia: bank), 5.3%; MMC Norilsk Nickel (Russia: mining), 4.5%; and Novatek (Russia: natural gas), 3.5%.
The iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.67%.
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ENCANA CORP. $15.20 (Toronto symbol ECA; Shares outstanding: 741.1 million; Market cap: $11.6 billion; TSINetwork Rating: Average; Dividend yield: 2.3%; www.encana.com) produced 416,700 barrels a day (74% gas, 26% oil) in the three months ended December 31, 2014. That’s down 20.4% from 523,400 barrels a year earlier.
As well, Encana’s realized gas prices, which include the benefit of hedging contracts, fell 4.1%, while oil prices declined 0.9%. As a result, the company’s cash flow per share fell 44.0%, to $0.51 from $0.91.
Encana plans to spend $2.0 billion to $2.2 billion on new projects and upgrades in 2015, down from its earlier forecast of $2.7 billion. Even so, that’s more than its projected cash flow of $1.4 billion to $1.6 billion.
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As well, Encana’s realized gas prices, which include the benefit of hedging contracts, fell 4.1%, while oil prices declined 0.9%. As a result, the company’s cash flow per share fell 44.0%, to $0.51 from $0.91.
Encana plans to spend $2.0 billion to $2.2 billion on new projects and upgrades in 2015, down from its earlier forecast of $2.7 billion. Even so, that’s more than its projected cash flow of $1.4 billion to $1.6 billion.
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SASOL LTD. (ADR) $33.44 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082- 883-9697; www.sasol.com; ADRs outstanding: 650.9 million; Market cap: $21.6 billion; Dividend yield: 3.4%) is a South Africa-based company that converts coal and natural gas into motor fuels, produces oil and gas and mines coal. In its fiscal 2015 first half, which ended December 31, 2014, Sasol’s sales rose 1.6%, to 99.8 billion South African rand from 98.2 billion rand a year earlier (1 rand = $0.1099 U.S.). Earnings per ADR gained 6.0%, to 32.00 rand from 30.19. The U.S. dollar rose against the rand, increasing the value of Sasol’s foreign sales. That offset a 19% decline in realized oil prices. Despite the improved results, Sasol now plans to bring in an aggressive plan to conserve cash, including layoffs, lower spending on oil and gas exploration and development, and a 12.5% dividend cut. The ADRs yield 3.4%, based on the lower rate....
ARC RESOURCES $24.16 (Toronto symbol ARX; Shares outstanding: 335.0 million; Market cap: $8.2 billion; TSINetwork Rating: Speculative; Dividend yield: 5.1%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 117,986 barrels of oil equivalent is 61% gas and 39% oil. In the quarter ended December 31, 2014, ARC’s cash flow per share rose 3.9%, to $0.79 from $0.76 a year earlier. Realized oil prices fell 12.5%, to $72.49 a barrel from $82.85, but ARC’s production gained 17.0%, and its realized gas prices rose 15.0%. Like many oil and gas producers, ARC plans to cut back on exploration and development spending. This year, the company will devote $750.0 million to this purpose, down from $945.5 million in 2014....