recent acquisitions
Thanks to a series of strategic acquisitions, Fortis’s assets have jumped from $4.6 billion in 2005 to $28.0 billion today. Expanding by acquisition is usually riskier than internal growth. That’s because new businesses often come with unexpected problems and costs that can offset the extra revenue and earnings they bring. Fortis cuts this risk by targeting established regulated utilities with predictable cash flows. The company plans to keep buying utilities that can benefit from its expertise, especially as today’s low interest rates cut its borrowing costs. At the same time, it’s investing in its current facilities, which will further spur its earnings growth....
Freehold Royalties Ltd., $17.42, symbol FRU on Toronto (Shares outstanding: 98.0 million; Market cap: $1.7 billion; www.freeholdroyalties.com), holds oil and natural gas rights on 3.5 million acres of land in Alberta, Saskatchewan, B.C., Manitoba and Ontario. These reserves are 47% natural gas, 24% light crude oil, 22% heavy crude oil and 7% natural gas liquids. Freehold collects royalties from oil and gas producers that operate over 38,000 wells on its land, in addition to holding royalty interests in seven potash mines in Saskatchewan. Long-life royalty properties account for about 75% of Freehold’s cash flow, and wells it has a working interest in, and shares the cost of operating, supply the remaining 25%....
Slate Office REIT, $7.48, symbol SOT.UN on Toronto (Units outstanding: 15.0 million; Market cap: $112.2 million; www.slateofficereit.com), owns 35 retail, industrial and office properties, mostly in Toronto (61%) of square footage and Winnipeg (32%). Slate changed its name from FAM REIT in March 2015. In the three months ended March 31, 2015, acquisitions increased the trust’s revenue to $14.1 million from $8.2 million a year earlier. Overall cash flow jumped 73.5%, to $3.6 million from $2.1 million, while cash flow per unit rose 5.9%, to $0.18 from $0.17, as the trust issued more units to fund its recent acquisitions. Slate now plans to sell off its 12 retail and office properties and focus on the office market. It also aims to improve on its 91.7% occupancy rate, which is below the industry average. However, a seven-property, $190-million suburban Toronto office portfolio Slate acquired in late 2014, which had an average occupancy rate of just 86%, has dragged down that figure....
BMTC GROUP $16.25 (Toronto symbol GBT; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 43.1 million; Market cap: $799.9 million; Dividend yield: 1.5%) recently received shareholder approval for its plan to simplify its capital structure by moving from two share classes to one. As a result, it has converted all of its class A (one vote per share) and B shares (20 votes per share) into a single class of common shares (one vote per share). The common shares trade on the Toronto exchange under the new GBT symbol. Meanwhile, BMTC earned $59,000, or nil per share, in the quarter ended March 31, 2015, compared to a loss of $1.5 million, or $0.03 a share, a year earlier. Sales rose 2.9%, to $149.3 million from $145.1 million. Same-store sales gained 1.6%....
AGT FOOD & INGREDIENTS INC., $28.51, symbol AGT on Toronto, buys and processes a range of pulses—which include peas, beans, lentils and chickpeas—as well as other specialty crops. The Saskatchewan-based company owns 13 processing plants in Canada, nine in Turkey, four in Australia, two in the U.S., one in China and one in South Africa. Before one-time items, AGT earned $0.42 a share in the quarter ended March 31, 2015, up 162.5% from $0.16 a year earlier. Revenue gained 23.7%, to $385.2 million from $311.3 million. The increases came from recent acquisitions and higher processing activity....
AGT FOOD & INGREDIENTS $28.73 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (604-231- 1100; www.alliancegrain.com; Shares outstanding: 23.1 million; Market cap: $669.37 million; Dividend yield: 2.1%) earned $0.42 a share in the quarter ended March 31, 2015, up 162.5% from $0.16 a year earlier. Revenue gained 23.7%, to $385.2 million from $311.3 million. The increases came from recent acquisitions and higher processing activity.
The company recently agreed to pay a total of $26.7 million for the assets of two firms: West Central Road & Rail Ltd. and Prairie Processing (1989) Ltd. These properties, which include five loading sites and a processing facility in Saskatchewan, should let AGT ship more crops and boost its efficiency. The company expects to complete these purchases in June 2015.
AGT Food & Ingredients is a buy.
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The company recently agreed to pay a total of $26.7 million for the assets of two firms: West Central Road & Rail Ltd. and Prairie Processing (1989) Ltd. These properties, which include five loading sites and a processing facility in Saskatchewan, should let AGT ship more crops and boost its efficiency. The company expects to complete these purchases in June 2015.
AGT Food & Ingredients is a buy.
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Our U.S. Stock of the Year for 2014, Newell Rubbermaid is up 30% and continues to grow on smart restructuring and key acquisitions.
NEWELL RUBBERMAID INC. $39 (New York symbol NWL; Aggressive Growth and Income Portfolios, Consumer sector; Shares outstanding: 269.0 million; Market cap: $10.5 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.9%; TSINetwork Rating: Average; www.newellrubbermaid.com) makes plastic storage bins, tools, window blinds, pens and many other household goods. Newell is up 30.0% since we made it our Stock of the Year for 2014 at $30 in our February 2014 issue. That’s mainly because of its successful multi-year cost-cutting plan, which included closing plants and merging distribution centres.
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Savings sent earnings soaring
TRANSCONTINENTAL INC. $18 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.1 million; Market cap: $1.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.8%; TSINetwork Rating: Average; www.tctranscontinental.com) is Canada’s leading printer of flyers, magazines, newspapers and books. It also publishes magazines and newspapers.
In its 2015 first quarter, which ended January 31, 2015, the company earned $36.1 million, up 36.7% from $26.4 million a year earlier. Earnings per share gained 35.3%, to $0.46 from $0.34, on more shares outstanding.
The gains mainly came from two recent acquisitions: in May 2014, Transcontinental bought U.S.- based Capri Packaging, a maker of plastic bags and pouches for cheese and other dairy products, for $146.1 million. And in June 2014, it paid Sun Media $78.8 million for 74 weekly newspapers in Quebec.
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In its 2015 first quarter, which ended January 31, 2015, the company earned $36.1 million, up 36.7% from $26.4 million a year earlier. Earnings per share gained 35.3%, to $0.46 from $0.34, on more shares outstanding.
The gains mainly came from two recent acquisitions: in May 2014, Transcontinental bought U.S.- based Capri Packaging, a maker of plastic bags and pouches for cheese and other dairy products, for $146.1 million. And in June 2014, it paid Sun Media $78.8 million for 74 weekly newspapers in Quebec.
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Ecolab Inc., $115.90, symbol ECL on New York (Shares outstanding: 297.4 million; Market cap: $34.6 billion; www.ecolab.com), makes chemicals for a variety of industrial uses, including cleaning, food purification, pest control and water treatment. The company sells these products through three main divisions:
- Global Industrial (35% of 2014 revenue) serves customers in the water, food and beverage, paper and commercial laundry businesses
- Global Institutional (30%) sells its products to restaurants, hotels, schools and hospitals;
- Global Energy (30%) makes chemicals for oil and natural gas exploration firms, oil refineries and pipeline operators.