spin off

These three medical-related stocks are down or flat since they either announced a spinoff (Baxter) or became separate firms (Bausch + Lomb, and embecta—see box). We like all of them, but see only two as buys right now.


BAXTER INTERNATIONAL INC....

3M COMPANY $101 is a buy for long-term gains. The company (New York symbol MMM; Manufacturing & Industry sector; Shares o/s: 552.0 million; Market cap: $55.8 billion; Divd. yield: 5.9%; Takeover Target Rating: Medium; www.3m.com) plans to spin off its Health Care division as a separate firm at some point between late 2023 and early 2024....

Pipeline giant TC Energy (formerly called TransCanada Pipelines) recently announced a new plan to unlock value for its investors. The strategy includes spinning off the company’s oil pipelines business and selling some of its other assets to pay down debt.


The stock dropped on the announcement....

CAE INC., $31.66, Toronto symbol CAE, remains a buy for long-term gains.

The company is a leading maker of flight simulators for commercial and military aircraft. It also operates pilot-training schools in over 40 countries and makes mannequins and other medical-simulators for training health professionals.

CAE continues to gain as air travel volumes return to pre-pandemic levels....

TC ENERGY INC., $48.19, Toronto symbol TRP, remains a buy.

TC generates steady cash flow for investors mainly through a 93,700-kilometre pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. Its other operations include 4,900 kilometres of crude oil pipelines and nine power plants.

With the April 2023 payment, the company raised your quarterly dividend by 3.3%, to $0.93 a share from $0.90....

Loblaw and TC Energy are leading competitors in their respective markets. We see both stocks as buy.


LOBLAW COMPANIES, $116.73, is a buy. The retailer (Toronto symbol L; Shares outstanding: 316.9 million; Market cap: $36.8 billion; TSINetwork Rating: Above Average; Dividend yield: 1.5%; www.loblaw.ca) operates 1,104 supermarkets under several banners, including Loblaws, Zehrs, Provigo, Real Canadian Superstore and No Frills....

CANADIAN PACIFIC KANSAS CITY LTD., $109.93, Toronto symbol CP, is your #1 Conservative Buy for 2023.

The company took its current form on April 14, 2023, when Canadian Pacific Railway Ltd. completed its acquisition of U.S.-based railway Kansas City Southern.

CP paid $31 billion U.S....

You Can See Our Spinoff Stock Portfolio For August 2023 Here.

Why we like spinoffs so much
We think that spinoffs are the closest thing you can find to a sure thing for two main reasons:


1) The management of a parent company will only hand out shares in a subsidiary to its own investors if it’s all but certain that business, and the parent, will be better off after the spinoff.


2) Spinoffs involve a lot of work and legal fees....

As stock markets rebound from a disappointing 2022, more companies are turning to spinoffs to further increase value for their shareholders. Here’s our take on two upcoming spinoffs.


KELLOGG COMPANY $67 is a spinoff buy. The company (New York symbol K; Consumer sector; Shares outstanding: 342.8 million; Market cap: $23.0 billion; Divd.ield: 3.6%; Takeover Target Rating: Medium; www.kelloggcompany.com) will spin off its North American (U.S., Canadian, and Caribbean) cereal business in the fourth quarter of 2023....

TECK RESOURCES LTD. $55 remains a buy. The company (Toronto symbol TECK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 515.0 million; Market cap: $28.3 billion; Price-to-sales ratio: 1.8; Dividend yield: 0.9%; TSINetwork Rating: Extra Risk; www.teck.com) sold 6.2 million tonnes of metallurgical coal (a key ingredient in steelmaking) in the second quarter of 2023, down 1.6% from 6.3 million tonnes a year earlier....