oil prices

IMPERIAL OIL LTD. $50 (Toronto symbol IMO; Conservative Growth and Income Portfolios, Shares outstanding: 847.6 million; Market cap: $42.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.0%; TSINetwork Rating: Average; www.imperialoil.ca) spent $5.7 billion on exploration and capital upgrades in 2014, down 29.5% from $8.0 billion in 2013. That’s mainly because it completed the first phase of its 71%-owned Kearl oil sands project. U.S.-based ExxonMobil (New York symbol XOM), which owns 69.6% of Imperial, owns the remaining 29% of Kearl. For 2015, Imperial expects to spend $4.0 billion on capital projects. Most of that will go toward expanding Kearl, as well as its Cold Lake oil sands property. These projects will last decades, so the recent drop in oil prices will have little impact on their long-term prospects. Imperial Oil is a buy....

ENBRIDGE INC. $62 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 851.6 million; Market cap: $52.8 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.enbridge.com) gets 90% of its revenue from pipelines that pump oil and natural gas from Western Canada to Eastern Canada and the U.S. The remaining 10% mainly comes from distributing gas to 2.1 million consumers in Ontario, Quebec, New Brunswick and New York State. Since 2008, Enbridge has spent $20 billion on 39 new pipelines and other projects. Thanks to these investments, the company’s revenue soared 164.1%, from $12.5 billion in 2009 to $32.9 billion in 2013. Its revenue probably increased to $37.7 billion in 2014....

Every Thursday we bring you one of our best U.S. stock picks. You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, most often from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster.

CINTAS CORP. (Nasdaq symbol CTAS; www.cintas.com) provides a range of products and services to over one million businesses, mainly in North America.

The company gets 71% of its revenue by renting uniforms that it makes and cleans. This business also rents a variety of related products, such as mats, towels, mops and cleaning supplies. Cintas gets a further 10% of its revenue by selling uniforms.

In addition, the company sells first aid kits, fire extinguishers, sprinklers and emergency-exit lights (11%). It also shreds corporate documents (8%). In April 2014, it merged its shredding operations with Shred-it International. In exchange, Cintas received 42% of the combined company, which uses the Shred-it brand, plus $180 million in cash.

Cintas used the proceeds from the deal to pay a special dividend of $0.85 a share. It also increased its regular annual dividend by 10.4%, to $0.85 a share from $0.77. The new rate yields 1.1%. The company has now raised the payout annually for the past 31 years.

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WESTJET AIRLINES LTD., $31.15, symbol WJA on Toronto, reports that its earnings jumped 33.8% in the three months ended December 31, 2014, to a fourth-quarter record of $90.7 million from $67.8 million a year earlier. Earnings per share gained 34.6%, to $0.70 from $0.52, on fewer shares outstanding. That was well ahead of the consensus estimate of $0.28. This was WestJet’s 39th consecutive quarter of profitability. Revenue rose 7.3%, to $994.4 million from $926.4 million....

CAE INC., $15.58, Toronto symbol CAE, earned $52.1 million, or $0.20 a share, in its fiscal 2015 third quarter, which ended December 31, 2014. That beat the consensus forecast of $0.19. The latest earnings are also up 14.5% from $45.5 million, or $0.17 a share, a year earlier. Overall revenue rose 11.0%, to $559.1 million from $503.9 million, also beating the consensus forecast of $554.4 million. Revenue from sales of flight simulators and pilot-training services to commercial airlines (57% of the total) rose 14.2%. That’s mainly due to higher simulator sales and the positive impact of the lower Canadian dollar (overseas customers supply 90% of CAE’s revenue)....

Pat McKeough responds to many requests from members of his Inner Circle on specific stock picks 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.

This week an Inner Circle Member asked us about a stock that has risen and fallen sharply in the past year. AutoCanada has almost four dozen franchised auto dealerships across Canada and continues to add more through takeovers. While the company has benefited from a rebound in car sales, it also faces several challenges in a cyclical, competitive business. Pat examines the risk of its growth-by-acquisition strategy and the potential impact of lower oil prices on Western Canadian car sales.

Q: Pat: I am a new member and I have a question. What is your current view of AutoCanada? Thanks.

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CENOVUS ENERGY $25.04 (Toronto symbol CVE; Shares outstanding: 757.1 million; Market cap: $19.4 billion; TSINetwork Rating: Average; Dividend yield: 4.3%; www.cenovus.com) has cut its capital spending plans for the second time in two months due to lower oil prices. The company now expects to spend $1.8 billion to $2.0 billion in 2015, down from $2.5 billion to $2.7 billion in its earlier plan (and down from an estimated $3.1 billion in 2014). As part of these cuts, it will suspend drilling for conventional oil in Alberta and Saskatchewan, and defer some oil sands work. Cenovus now expects its cash flow for the year to fall by roughly half, to $1.4 billion, or $1.85 a share. That could prompt the company to cut its $1.065-a-share dividend, which yields 4.3%. Cenovus’s dividend payments total $800 million a year....

Canada’s inflation rate has dropped to 1.5%, below the Bank of Canada’s target of 2.0% and down from 2.4% in October 2014. This reflects falling oil prices and slowing growth, so the bank has cut its key interest rate to 0.75% from 1.0%. Even so, the long-term outlook is for higher interest rates. That’s because heavy deficit spending and the expansion of the money supply in the past few years make higher inflation more likely. We continue to advise against investing in bonds right now. That’s because today’s low interest rates make bonds unattractive, and rising rates would push down their future value....

POWER CORP. $31.38 (Toronto symbol POW; Shares outstanding: 412.6 million; Market cap: $15.1 billion; TSINetwork Rating: Above Average; Divd. yield: 3.7%; www.powercorporation.com) is a diversified holding company. It holds its financial assets through 65.7%-owned Power Financial. These financial assets include 68.1% of Great- West Lifeco, one of Canada’s largest life insurers, and 58.7% of IGM Financial, a leading Canadian mutual fund provider. Power Financial also owns 50% of holding company Parjointco, which holds 55.5% of Switzerland- listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European companies: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), SGS (inspection, testing and certification services) and Lafarge (cement and building materials). Power Corp. also has investments in Asia....

AutoCanada Inc., $38.29, symbol ACQ on Toronto (Shares outstanding: 24.5 million; Market cap: $886.8 million; www.autocan.ca), has 46 franchised car dealerships in eight provinces. The company sells numerous brands, including Chrysler, Dodge, Jeep, Ram, Fiat, Chevrolet, GMC, Buick, Cadillac, Nissan, Hyundai, Subaru, Audi, Volkswagen and BMW. However, Chrysler vehicles (including Dodge, Jeep, Ram and Fiat) supply around 70% of its revenue. In 2013, AutoCanada’s dealerships sold roughly 36,000 vehicles and processed about 364,000 repair and maintenance orders in their 381 service bays....