oil prices

CANADIAN PACIFIC RAILWAY LTD. $202 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.5 million; Market cap: $34.6 billion; Price-to-sales ratio: 5.6; Dividend yield: 0.7%; TSINetwork Rating: Above Average; www.cpr.ca) is down 18.5% from its recent peak of $248, partly due to the drop in oil prices. Even through cheaper crude will cut CP’s fuel costs, investors fear that producers will defer new projects, which could hurt the company’s crude-by-rail volumes. Oil accounts for just 7% of the company’s revenue, so any production drop would have little impact on its earnings. Moreover, CP continues to do a good job of cutting its costs. In the third quarter of 2014, its operating ratio improved to 62.8% from 65.9% a year earlier. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.)...

GENERAL ELECTRIC CO. $24 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.0 billion; Market cap: $240.0 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.8%; TSINetwork Rating: Above Average; 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.

In all, GE will pay $10 billion when the Alstom deal closes in 2015. The new operations it brings should add about $0.07 a share to GE’s annual earnings, starting in 2016.

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NEWELL RUBBERMAID INC. $35 (New York symbol NWL; Aggressive Growth and Income Portfolios, Consumer sector; Shares outstanding: 271.1 million; Market cap: $9.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.9%; TSINetwork Rating: Average; www.newellrubbermaid.com) makes plastic storage bins, tools, window blinds, pens and many other household goods.

The company makes most of its products from oilbased resins, so it stands to gain from the recent drop in oil prices.

Newell continues to streamline its manufacturing and distribution operations, which should cut $270 million from its annual costs by mid-2015. The company now feels it can save an additional $200 million a year by the end of 2017.

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Spartan Energy, $2.49, symbol SPE on Toronto (Shares outstanding: 262.6 million; Market cap: $658.0 million; www.spartanenergy.ca), develops, produces and explores for oil and natural gas. The company was formed from the merger of Renegade Petroleum and Alexander Energy in February 2014. Following the merger, Alexander Energy was led by the former management of Spartan Oil, a company that Bonterra Energy bought for $441 million at the end of 2012. On March 3, 2014, Alexander Energy consolidated its shares on a 1-for-4 basis and changed its name to Spartan Energy. It’s now focused on producing and exploring for oil and natural gas in Saskatchewan....

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CAE INC. (Toronto symbol CAE; www.cae.com) gets 55% of its revenue by selling flight simulators and pilot-training services to commercial airlines. Another 40% comes from simulators and training for military clients, mainly in the U.S.

CAE gets the remaining 5% of its sales by making medical-simulation products, such as mannequins, for training nurses and medical students.

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TIM HORTONS INC., $84.91, New York symbol THI, shareholders will vote on the friendly takeover offer from BURGER KING WORLDWIDE INC., $34.81, New York symbol BKW, on Tuesday, December 9, 2014. If the deal is approved, Tim Hortons investors will have a number of options: They can sell their shares on the New York exchange and receive the current trading price of $84.91 (less brokerage commissions). If they don’t do that, they can opt for one of the three choices below by notifying their brokers no later than 5:00 p.m. ET on Tuesday, December 9, 2014....

TIM HORTONS INC., $96.97, symbol THI on Toronto, shareholders will vote on the friendly takeover offer from BURGER KING WORLDWIDE, $34.81, symbol BKW on New York, on Tuesday, December 9, 2014. If the deal is approved, Tim Hortons investors will have a number of options: They can sell their shares on the Toronto exchange and receive the current trading price of $96.97 (less brokerage commissions). If they don’t do that, they can opt for one of the three choices below by notifying their brokers no later than 5:00 p.m. on Tuesday, December 9, 2014....

Here’s an excerpt from Pat’s latest email to his Inner Circle members: “Overall, the drop in oil prices is a favourable development for the universe of stocks we follow and recommend. It will cut into oil stock earnings, but will act like a major tax cut for all other stocks we follow, and their customers.” “A steep plunge like this inevitably sparks predictions of an even bigger drop ahead. It pays to be skeptical of predictions like these. Nobody has ever consistently predicted the rise and fall of the oil market.”...

CRESCENT POINT ENERGY CORP. $29.65 (Toronto symbol CPG; Shares outstanding: 443.3 million; Market cap: $13.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.3%; www.crescentpointenergy.com) produces oil and natural gas in Western Canada, with a focus on its Bakken light oil development in southeastern Saskatchewan. Its output is 91% oil and 9% gas. In the three months ended September 30, 2014, Crescent Point’s cash flow rose 11.6%, to $618.4 million from $554.1 million a year earlier. The company raised its daily output by 19.7%, to 141,183 barrels of oil equivalent from 117,963. That, plus higher oil and gas prices, was the main reason for the rising cash flow. Cash flow per share rose at a slower rate of 2.1%, to $1.45 from $1.42, because Crescent Point issued shares to pay for acquisitions....

IMPERIAL OIL $53.20 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $43.9 billion; TSINetwork Rating: Average; Div. yield: 1.0%; www.imperialoil.ca) has suspended production at its Kearl oil sands project in northern Alberta due to problems with a machine that separates bitumen (heavy oil) from sand. Kearl produced 92,000 barrels a day in the third quarter of 2014, or 30% of Imperial’s total daily output of 307,000 barrels. Kearl’s second phase will add another 78,100 barrels per day to Imperial’s output in 2015. The company expects to complete the repairs at Kearl in the next few weeks. Due to the recent drop in oil prices, the outage will have only a small impact on Imperial’s fourth-quarter earnings....