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PEYTO EXPLORATION & DEVELOPMENT CORP. (Toronto symbol PEY; www.peyto.com) continues to generate higher cash flow. And it’s reinvesting that cash flow to expand production in order to deliver greater returns for its shareholders. The company produces and explores for oil and natural gas in Alberta. Peyto’s average daily production of 34,443 barrels of oil equivalent (including natural gas) is weighted 89% toward gas and 11% to oil....
Pat McKeough responds to many personal questions on stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. This week, an Inner Circle member asked Pat about one of Canada’s major mining stocks. Labrador Iron Ore Royalty has quietly built a position as a world leader in iron ore. Now it faces several challenges in today’s volatile commodity markets....
PEYTO EXPLORATION & DEVELOPMENT CORP. $21.98 (Toronto symbol PEY; Shares outstanding: 133.1 million; Market cap: $2.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.3%; www.peyto.com) produces and explores for oil and natural gas in Alberta. The company converted from an income trust to a dividend-paying stock on December 31, 2010. Peyto’s average daily production of 34,443 barrels of oil equivalent (including natural gas) is weighted 89% toward gas and 11% to oil. In the three months ended June 30, 2011, Peyto’s cash flow rose 31.8%, to $0.58 a unit from $0.44 a year earlier. The shares trade at 9.5 times the company’s forecast 2011 cash flow of $2.32 a share. Peyto’s long-term debt of $455 million is a low 15.7% of its $2.9-billion market cap....
Labrador Iron Mines Holdings Ltd., $6.90, symbol LIM on Toronto (Shares outstanding: 50.8 million; Market cap: $350.5 million; www.labradorironmines.ca), has restarted its iron ore projects in northwestern Labrador and northeastern Quebec. The company is now shipping ore to China. Iron Ore Company of Canada markets and ships the ore under an agreement with Labrador Iron Mines. The company’s projects consist of 20 deposits, containing about 166 million tonnes of iron ore. There is little processing required, and all the ore is loaded onto trains and shipped straight to the port town of Sept-Iles, Quebec. The properties are part of the historic Schefferville mining district, where Iron Ore Company of Canada operated from 1954 to 1982. The company holds cash of $87.5 million, or $1.62 a share, and has no debt. That gives it the funds to keep expanding its mining operations and exploring its properties....
Every industry and group has its own special jargon. This specialized language always has the same purpose. It simplifies communications within the industry, and helps make insiders feel they are part of a tightly knit community. It also helps the group pursue its goals. It does that by shaping concepts so that they facilitate lines of thought and discussions that match the industry’s view of the world. This natural human tendency has probably been going on ever since language began....
PENN WEST PETROLEUM $18.34 (Toronto symbol PWT; Shares outstanding: 466.9 million; Market cap: $8.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.9%) is one of North America’s largest oil and gas producers. The company produces an average of 156,107 barrels of oil equivalent per day (weighted 63% to oil and 37% to natural gas). In the three months ended June 30, 2011, cash flow per share rose 7.1%, to $0.85 from $0.62, mostly due to higher oil and gas prices. The company owns 50% of the huge Cordoba Embayment shale-gas project in B.C. Japan’s Mitsubishi Corp. owns 30%, state-owned Korea Gas Corp. owns 5%, and four other Japanese companies own 3.75% each. Penn West’s partners are spending a total of $850 million to earn their stakes....
When you learn more about stock market investment, you’ll realize there are two main ways a company can distribute its profits to shareholders. It can buy back its own shares, or it can pay dividends. Both dividends and buybacks pay off for investors. Here are 3 reasons why:
- A company boosts its per-share profit by buying back its shares back, because profits get divided among fewer shares.
- Boosting per-share profits can also push up share prices. Plus, buybacks let you defer taxes on those capital gains. That’s because you only pay capital-gains taxes when you sell. What’s more, you’ll pay tax at half the rate on capital gains than you would on ordinary income. And you can offset capital gains with capital losses.
- Dividends have tax advantages. You’ll pay tax on dividends in the year you get them, if you hold the shares outside your RRSP. However, dividends on Canadian companies receive favourable tax treatment in Canada, thanks to the dividend tax credit.
PEYTO EXPLORATION & DEVELOPMENT CORP. $22.04 (Toronto symbol PEY; Shares outstanding: 133.1 million; Market cap: $2.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.3%; www.peyto.com) produces and explores for oil and natural gas in Alberta. The company changed its name from Peyto Energy Trust after it converted from an income trust to a dividend-paying stock on December 31, 2010. Peyto’s average daily production of 31,531 barrels of oil equivalent (including natural gas) is weighted 88% toward gas and 12% to oil. In the three months ended March 31, 2011, Peyto’s cash flow rose 9.8%, to $0.56 a unit from $0.51 a year earlier. The shares trade at 9.4 times the company’s forecast 2011 cash flow of $2.35 a share. Peyto’s long-term debt of $450 million is a low 15.5% of its $2.9-billion market cap....
Investors often ask us how often they should sell investments they own and buy new ones. The answer: as rarely as possible. That’s because turnover in your portfolio cuts into your profits. (How much turnover you should have in your portfolio is one of the subjects we examine in our free report, “Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.” Click here to download your copy right away.) Here are three costs you face every time you buy and sell a stock:...
Some investors think by focusing our portfolio management strategy on stocks, and staying out of bonds and fixed-return investments, we’re missing out on bonds’ ability to lower portfolio volatility.
It’s true that bonds do tend to reduce your portfolio’s volatility, since they tend to rise when stock prices fall....
It’s true that bonds do tend to reduce your portfolio’s volatility, since they tend to rise when stock prices fall....