stock pickers

BOMBARDIER INC. (Toronto symbols BBD.A $3.90 and BBD.B $3.76; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.4 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.6%; TSINetwork Rating: Average; www.bombardier.com) has received a firm order for 20 of its Q400 turboprop planes from WestJet Airlines Ltd. (Toronto symbol WJA); WestJet is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.

WestJet will use these planes for its new regional airline, which will serve smaller Canadian cities. Bombardier will begin delivering these planes in 2013.

The order is worth $683 million (all amounts except share price and market cap in U.S. dollars). If WestJet exercises all of its options to buy an additional 25 planes, the entire order would be worth $1.6 billion. That’s equal to 9% of Bombardier’s 2011 revenue of $18.3 billion.

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DUNDEE REIT, $38.84, symbol D.UN on Toronto, has announced plans to sell its portfolio of 86 industrial properties to a new trust called Dundee Industrial REIT. These buildings contain 6.6 million square feet of leasable space. No price has yet been set for the properties. Dundee Industrial REIT will pay for the properties by selling shares to the public through an initial public offering. The trust is selling off these holdings as part of its plan to focus entirely on office buildings. However, it does plan to retain an as-yet-unspecified interest in Dundee Industrial REIT after the share sale. That will let it continue to benefit from these properties’ future growth....

Natural gas prices recently dropped below $2 U.S. per million British thermal units (BTUs), a 10-year low. Prices have since moved up somewhat, to $2.82. Shale gas discoveries continue to increase supply. At the same time, demand is slowing due to the weak global economy. Even so, the long-term outlook for gas is positive—and one reason is the prospect of rising liquefied natural gas (LNG) exports to countries like Japan, China and South Korea, where gas sells at a big premium to North American prices....

PASON SYSTEMS INC., $14.24, symbol PSI on Toronto, saw its revenue jump 29.8% in the three months ended June 30, 2012, to $81.1 million from $62.4 million a year earlier. Cash flow rose 31.5%, to $30.1 million, or $0.37 a share, from $22.9 million, or $0.28 a share. Pason rents equipment for monitoring and managing land-based oil rigs. It also provides communication systems that companies use to remotely collect data from their drilling operations. The company serves oil and natural gas companies and drilling contractors throughout Canada, the U.S., Mexico and Argentina. Even with declining oil prices and continued low gas prices, drilling activity rose 6% in the U.S. and Canada in the latest quarter, with a combined 188,291 active days and a rig count of 2,069, compared to 177,791 days and 1,954 rigs a year earlier. That was the main reason for the higher revenue and cash flow. The company also benefited from stronger activity in all of its international markets, particularly Argentina, Brazil, Australia and Mexico....

DUNDEE REIT, $38.40, symbol D.UN on Toronto, owns and manages 27.6 million square feet of office, industrial and retail space. The real estate investment trust’s occupancy rate is 95.6%. In the three months ended June 30, 2012, Dundee’s revenue jumped 89.6%, to $181.2 million from $95.6 million a year earlier. Most of the increase came from properties the trust recently purchased. The best way to assess a real estate investment trust’s operating performance is to look at its cash flow, and Dundee’s cash flow rose 78.9% in the latest quarter, to $56.0 million from $31.3 million. Cash flow per unit rose 8.9%, to $0.61 from $0.56, due to more units outstanding (the trust issued new units to pay for recent property purchases)....

BOMBARDIER INC. (Toronto symbols BBD.A $3.90 and BBD.B $3.76; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.4 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.6%; TSINetwork Rating: Average; www.bombardier.com) has received a firm order for 20 of its Q400 turboprop planes from WestJet Airlines Ltd. (Toronto symbol WJA); WestJet is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing. WestJet will use these planes for its new regional airline, which will serve smaller Canadian cities. Bombardier will begin delivering these planes in 2013. The order is worth $683 million (all amounts except share price and market cap in U.S. dollars). If WestJet exercises all of its options to buy an additional 25 planes, the entire order would be worth $1.6 billion. That’s equal to 9% of Bombardier’s 2011 revenue of $18.3 billion....

ALARMFORCE INDUSTRIES, $10.91, symbol AF on Toronto, jumped over 21% this week after it announced that it is launching a strategic review of business opportunities, including a possible sale of the company. We moved AlarmForce to a buy in our July 2012 issue of Stock Pickers Digest, when we made it our Pick of the Month at $9.19. Meanwhile, AlarmForce’s sales rose 10.2% in the three months ended April 30, 2012, to a record $11.1 million from $10.1 million a year earlier. Even so, the company lost $238,021, or $0.02 a share, compared to a profit of $948,921, or $0.07 a share....

ENCANA $20.75 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $15.3 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.encana.com) has come under fire over media reports that the company colluded with U.S.-based Chesapeake Energy Corp. (New York symbol CHK) with regard to various land deals in Michigan in 2009 and 2010.

The companies are alleged to have agreed to avoid bidding against each other in order to keep prices of this land low. Now, recent discoveries of shale gas in Michigan have spurred strong demand for these properties for exploration purposes. (Chesapeake Energy is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.)

Encana is now investigating these allegations, which are also likely to spur a number of class-action lawsuits. However, anti-competitive lawsuits are often difficult to prove.

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FAIRFAX FINANCIAL HOLDINGS, $377.99, symbol FFH on Toronto, has increased its stake in Research in Motion, symbol RIM on Toronto. The company now owns 9.9% of RIM, up from 5.12%. RIM is a recommendation of our Successful Investor newsletter. Fairfax is now RIM’s largest shareholder. The company’s chairman and founder, Prem Watsa, is also on RIM’s board of directors. RIM’s revenue fell 42.7% in the latest quarter. That’s largely because customers are waiting for the company to launch updated phones that use its new BlackBerry 10 software. However, RIM has now delayed these devices to early 2013. As a result, they will miss the busy back-to-school and Christmas shopping seasons....

METRO INC. $53 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 98.9 million; Market cap: $5.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.6%; TSINetwork Rating: Average; www.metro.ca) is Canada’s third-largest supermarket operator, after Loblaw and Sobeys. The company has about 600 supermarkets in Quebec and Ontario. It also operates 260 drugstores under the Brunet, The Pharmacy and Drug Basics banners.

Metro’s sales rose 7.4%, from $10.6 billion in 2007 to $11.4 billion in 2011 (fiscal years end September 30). Earnings fell 5.0%, from $295.6 million in 2007 to $280.8 million in 2008. Metro is an aggressive buyer of its own shares. Because of fewer shares outstanding, per-share earnings fell 2.4%, from $2.54 to $2.48.

However, earnings turned around in 2009, rising 27.8%, to $359.0 million, or $3.23 share. That’s mainly because the company lowered its advertising costs by converting its various banners in Ontario to the Metro brand. Earnings continued to rise, and reached $400.6 million, or $3.87 a share, in 2011.

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