oil prices

PENGROWTH ENERGY $3.35 (Toronto symbol PGF; Shares outstanding: 530.1 million; Market cap: $1.8 billion; TSINetwork Rating: Average; Dividend yield: 14.3%; www.pengrowth.com) has started injecting steam into its Lindbergh oil sands project in Alberta to loosen the tar-like bitumen and pump it to the surface. Pengrowth believes that Lindbergh’s low operating costs will let it generate positive cash flow, even at today’s depressed oil prices. As well, now that construction on Lindbergh has ended, the company’s 2015 capital spending will fall sharply from the $740 million to $770 million it probably spent in 2014....

The near-term direction of oil and gas prices remains uncertain, so we think the best way to cut risk is to look for companies with rising production that are trading at reasonable multiples to cash flow. Here are two with sound long-term prospects. PEYTO EXPLORATION & DEVELOPMENT CORP. $30.32 (Toronto symbol PEY; Shares outstanding: 153.7 million; Market cap: $4.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.4%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 77,592 barrels of oil equivalent is 90% gas and 10% oil. In the quarter ended September 30, 2014, Peyto’s cash flow rose 62.7%, to $1.09 a share from $0.67 a year ago. That’s because it raised its production by 37.7% and realized higher oil and gas prices....

TORSTAR $6.35 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $512.4 million; TSINetwork Rating: Average; Dividend yield: 8.3%; www.torstar.com) recently stopped publishing its Metro free daily commuter newspapers in seven smaller cities: Hamilton, Kitchener, London, Windsor, Regina, Saskatoon and Victoria. It now plans to shut down the Metro websites in these cities. This will let Torstar focus on Metro’s more profitable print and online editions in Halifax, Ottawa, Toronto, Winnipeg, Calgary, Edmonton and Vancouver. Torstar is a buy....

On a day like Monday, when the market falls more than 300 points, here’s a fact to keep firmly in mind: There’s a large random element in day-to-day stock-price movements. Many people spend lots of time studying minute-by-minute or hour-by-hour stock market fluctuations, in hopes of unlocking the “code” that will provide a source of fabulous wealth. These searchers do sometimes uncover repeating patterns. These findings may yield a string of small but seemingly risk-free gains. Unfortunately, the patterns inevitably quit repeating, sometimes with an abrupt reversal. This may happen just when the searchers have become confident enough to double their bets. It takes time to recognize the market’s random element. That’s partly because the media searches for logical explanations of any abrupt market move, and never fails to find them....

Black Hills Corporation, $51.44, symbol BKH on New York (Shares outstanding: 44.7 million; Market cap: $2.3 billion; www.blackhillscorp.com), serves 777,000 natural gas and electric utility customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. It also produces natural gas, oil and coal. The shares haven’t risen along with those of many U.S. electricity producers over the last year (such as Ameren Corp., symbol AEE on New York, up 27%; or Alliant Energy, symbol LNT on New York, up 31%—both recommendations of Wall Street Stock Forecaster). In contrast, Black Hills is up just slightly. That’s because of its exposure to falling oil prices through its oil and gas production interests....

WESTJET AIRLINES $32.05 (Toronto symbol WJA; TSINetwork Rating: Extra Risk)(1-877-493-7853; www.westjet.com; Shares outstanding: 127.8 million; Market cap: $4.1 billion; Dividend yield: 1.5%) serves 91 destinations in North America, Central America, the Caribbean and Europe. Its fleet of 109 modern Boeing 737s are 30% more fuel efficient than older jets.

In June 2013, the company launched WestJet Encore, its Canadian regional airline. This business now operates 14 Bombardier Q400 NextGen turboprop planes, which seat 78 passengers.

In the three months ended September 30, 2014, WestJet’s earnings, excluding one-time items, jumped 30.9%, to a third-quarter record of $85.4 million from $65.1 million a year earlier. Earnings per share gained 32.0%, to $0.66 from $0.50, on fewer shares outstanding. This was WestJet’s 38th consecutive quarter of profitability. Revenue rose 9.2%, to $1.0 billion from $924.8 million.

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CIMAREX ENERGY $102.82 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 87.2 million; Market cap: $8.6 billion; Dividend yield: 0.6%) produces and explores for natural gas and oil. Gas makes up 50% of the company’s output.

Cimarex’s properties are mostly in the Wolfcamp shale area of the Permian Basin in Texas and New Mexico, as well as the Cana-Woodford shale region in western Oklahoma.

In the three months ended September 30, 2014, Cimarex’s production averaged 942.4 million cubic feet of natural gas equivalent a day, up 31.5% from 716.8 million cubic feet a year earlier.

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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.

GENERAL ELECTRIC CO. (New York symbol GE; www.ge.com) recently agreed to form a major new alliance with France’s Alstom SA, a leading maker of electrical-transmission equipment and parts for power plants.

Under the deal, GE will form three 50/50 joint ventures with Alstom. One will combine the companies’ electrical grid operations, while a second will focus on products for renewable energy projects, like offshore wind farms. The third will hold Alstom’s nuclear-equipment division.

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Approach Resources, $7.13, symbol AREX on Nasdaq (Shares outstanding: 39.6 million; Market cap: $267.0 million; www.approachresources.com), develops, produces, acquires and explores for shale oil and gas reserves in the Midland Basin, part of West Texas’s Permian Basin. In the three months ended September 30, 2014, the company’s production rose 61.4%, to an average of 14.2 million barrels of oil equivalent a day from 8.8 million a year earlier. Its production is 69% oil and 31% gas. Cash flow per share rose 70.6%, to $1.16 from $0.68. Approach’s $339.5 million of debt is a high 127% of its $267.0-million market cap, but that’s mostly because its market cap has dropped lately, along with those of most oil and gas stocks....

ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $19.30 (New York symbol ESR; buy or sell through brokers) has 65.6% ofits 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), 14.1%; Lukoil (Russia: oil), 9.8%; Sberbank (Russia: bank), 6.2%; Magnit PJSC (Russia: retailing), 6.2%; MMC Norilsk Nickel (Russia: mining), 3.3%; PKO Bank Polski (Poland: banking), 4.1%; and Novatek (Russia: natural gas), 3.6%.

iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.67%.

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