recent acquisitions
FPI LTD. $7.85 (Toronto symbol FPL) earned $0.25 a share in the third quarter of 2006 compared with a loss of $0.35 a year earlier, thanks to cost controls and the extra earnings from recent acquisitions. However, sales fell 15.4%, to $174.5 million from $206.2 million, due to lower selling prices for fish products and the high Canadian dollar. Hold. FORDING CANADIAN COAL TRUST $24 (Toronto symbol FDG.UN) has reorganized itself from an income trust into a royalty trust. The change removed restrictions on foreign ownership, and should increase Fording’s liquidity (the units also trade in New York). The new structure will not affect Fording’s current $3.80 annual distribution rate, which yields 15.8%. Buy. GENNUM CORP. $14 (Toronto symbol GND) has gained over 40% in the past six months, mainly due to a new plan to improve customer service. The company also aims to expand its overseas sales. Gennum probably earned $0.55 a share in its fiscal year ended November 30, 2006. But profits could grow to $0.77 in fiscal 2007, and the stock trades at 18.2 times that figure. Buy....
FPI LTD. $7.85 earned $0.25 a share in the third quarter of 2006 compared with a loss of $0.35 a year earlier, thanks to cost controls and the extra earnings from recent acquisitions. However, sales fell 15.4%, to $174.5 million from $206.2 million, due to lower selling prices for fish products and the high Canadian dollar. Hold. FORDING CANADIAN COAL TRUST $24 has reorganized itself from an income trust into a royalty trust. The change removed restrictions on foreign ownership, and should increase Fording’s liquidity (the units also trade in New York). The new structure will not affect Fording’s current $3.80 annual distribution rate, which yields 15.8%. Buy. GENNUM CORP. $14 has gained over 40% in the past six months, mainly due to a new plan to improve customer service. The company also aims to expand its overseas sales. Gennum probably earned $0.55 a share in its fiscal year ended November 30, 2006. But profits could grow to $0.77 in fiscal 2007, and the stock trades at 18.2 times that figure. Buy....
APACHE CORP. $67 (New York symbol APA; Aggressive Growth Portfolio; Resources sector; WSSF Rating: Average) explores for and produces oil and natural gas in North America, the UK, Argentina, Australia and Egypt. Its reserves are roughly half oil and half natural gas. The company hedges just 10% of its production, which we feel is wise in today’s volatile energy environment. Not locking-in selling prices gives Apache more flexibility to adjust production to maximize profit. Apache likes to use acquisitions to expand its business and reserves. It recently acquired BP’s offshore operations in the Gulf of Mexico for $845 million. That’s down from an earlier price of $1.3 billion, since some investors exercised their options to purchase some of these fields....
We picked Agrium as our “Stock of the Year” in 2005, and again in 2006. We liked its low-cost operations, and its low p/e (then about 10). Although the company’s exposure to natural gas prices adds to its volatility, recent acquisitions have helped cut its risk. It should also benefit from increasing worldwide demand for food, and for renewable fuels. That’s why we are once again picking Agrium as our Stock of the Year for 2007. AGRIUM INC. $36 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; SI Rating: Average) is a leading producer of nitrogen, phosphate and potash fertilizers and crop protection products. It has 12 major production facilities in Canada and the United States, and one in Argentina that it operates through a joint venture....
WACHOVIA CORP. $56 (New York symbol WB; Conservative Growth Portfolio, Finance sector; WSSF Rating: Average) has used acquisitions to grow in the past few years, including the 2001 merger of First Union Corp. and Wachovia Corp. The company’s recent purchase of Golden West Financial Corp. increased its assets by $125 billion. It is now the fourth-largest bank in the United States, with assets of $700 billion. Wachovia offers a full range of banking services through roughly 3,400 branches in 21 states. It also provides brokerage and wealth management services....
BUCKEYE PARTNERS L.P. $43 (New York symbol BPL; Income Portfolio, Utilities sector; WSSF Rating: Average) transports gasoline and other refined petroleum products through a 5,350-mile pipeline network in 16 states, mainly in the Northeast and Midwest. It also operates pipelines under contract for major oil companies, and owns oil and chemical storage terminals. Buckeye has expanded aggressively in the past two years, mostly through acquisitions. While that adds to its risk, these new assets are profitable and broadened its geographic reach. The extra cash flow has also let Buckeye increase its distributions for nine consecutive quarters. The current rate of $3.05 a unit yields 7.1%. In the three months ended June 30, 2006, revenue grew 9.4%, to $111.5 million from $101.9 million a year earlier, mostly due to acquisitions and higher pipeline rates. However, higher costs for electricity and maintenance cut earnings in the quarter to $24.2 million from $24.4 million....
TORONTO-DOMINION BANK $59 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) wants to double the size of subsidiary TD Banknorth Inc., which operates around 600 branches in the northeastern United States. This subsidiary supplies about 10% of TD Bank’s total revenue. Most of the growth will come from acquisitions that enhance TD Banknorth’s market share in New York, New Jersey and Connecticut. It also plans to triple its advertising spending, and focus on improving customer service. In the second quarter of 2006, TD Banknorth’s earnings fell 2.3%, mostly due to one-time charges related to the integration of recent acquisitions. Without these items, profits rose 17.6%....
UNITED TECHNOLOGIES LTD. $62 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Above average) operates in two main fields. Its aerospace businesses include Pratt & Whitney (aircraft engines), Sikorsky (helicopters) and Hamilton Sundstrand (aircraft electronics). These operations supply about 40% of the company’s revenue, and 45% of its profit. It also supplies building equipment and services, which include Carrier (heating and air conditioning), Otis (elevators) and UTC Fire & Security (which provides sprinkler systems, intruder alarms and security services under the Chubb and Kidde banners)....
After a market rise like the one we’ve had in the past few years, investors often wonder, “When should I sell?” The answer depends as much on the stocks you hold as on the market outlook. Some stocks are made to be traded. That includes many of the more speculative stocks we analyze in Stock Pickers Digest, our affiliated publication which focuses on riskier, more aggressive investments than we do here in Wall Street Stock Forecaster. United Technologies (see below) has more than doubled for us since we first recommended buying it in April 2000 (we called it a “dull industrial with exciting prospects”). That alone may spur some investors to sell. But United has many of the earmarks of a well-established company with great long-term potential — one that is worth hanging on to through a market setback....
SYMANTEC CORP. $16 (Nasdaq symbol SYMC; WSSF Rating: Average) makes software that helps guard computers from viruses and electronic attacks. Its best-known product is Norton Anti-Virus, the world’s top selling anti-virus program. In the past few years, Symantec has aggressively expanded its corporate services operations. Selling a variety of programs to businesses gives it steadier revenue streams than consumer software sales. As part of this strategy, Symantec recently paid $11 billion in stock for Veritas Software Corp., which specializes in data storage products for businesses. That’s huge considering that Symantec earned just $0.26 a share (total $282.4 million) on revenue of $1.25 billion in its third fiscal quarter ended December 31, 2005. These figures exclude merger expenses and other one-time costs. The company spends 15% of its sales of $3.50 a share on research, so it’s more profitable than it appears....