teck resources
Africa Oil, $1.68, symbol AOI on Toronto (Shares outstanding: 212.0 million; Market cap: $356.2 million; www.africaoilcorp.com), is a Canadian oil and gas exploration company with interests in properties in Kenya, Ethiopia, Somalia and Mali. Africa Oil plans to drill seven to 10 wells over the next 18 months. The company holds cash of $118.0 million, or $0.53 a share, so it will have no trouble funding this exploration. Africa Oil’s east African properties are in the same geological formation as the Albertine Graben, where two U.K.-based firms, Heritage Oil and Tullow Oil, made major discoveries in neighbouring Uganda....
Thompson Creek Metals Co. Inc., $8.59, symbol TCM on Toronto (Shares outstanding: 168.5 million; Market cap: $1.4 billion, www.thompsoncreekmetals.com), is a molybdenum producer with mining, milling, roasting and marketing operations in Canada and the U.S. The company’s operations include the Thompson Creek mine in Idaho, a roasting facility in Langeloth, Pennsylvania, and 75% of the Endako mine and roaster in B.C. Molybdenum is either mined directly or recovered as a by-product of copper mining. The metal strengthens and prevents rust in alloys and high-temperature steels....
CANADIAN PACIFIC RAILWAY LTD., $70.77, Toronto symbol CP, is our “Stock of the Year” for 2012. Next week, Stock Pickers Digest, our newsletter for aggressive investors, will reveal its #1 pick for 2012. We’ve had great success with CP since we recommended it in the first issue of The Successful Investor in January 1995. In October 2001 the old CP broke up into five separate companies: CP Rail, CP Ships, Fording Coal, Pan Canadian and Fairmont Hotels. In 2002, PanCanadian merged with Alberta Energy to form EnCana, which broke up into Encana and Cenovus in December 2009. All of these mergers and breakups unlocked significant shareholder value. Railways are highly cyclical. Unpredictable factors, such as weather, also add risk: in 2011, avalanches in B.C. and spring floods in the Prairies delayed CP’s trains and hurt its earnings....
Noranda Income Fund, $5.67, symbol NIF.UN on Toronto (Units outstanding: 50.0 million; Market cap: $283.5 million; www.norandaincomefund.com), was created in 2002 to buy the CEZinc processing facility and some assets that belonged to Noranda Inc. Falconbridge bought Noranda in 2005. Switzerland-based Xstrata plc then bought Falconbridge. Xstrata Canada holds a 25% interest in Noranda Income Fund. The fund first sold units to the public for $10 each and began trading on Toronto in May 2002. The fund’s CEZinc processing facility, located in Salaberry-de-Valleyfield, Quebec, is the second-largest zinc-processing facility in North America and the largest in eastern North America, where most of its customers are located....
CANADIAN PACIFIC RAILWAY CO., $63.80, Toronto symbol CP, reported higher revenue in its latest quarter. However, earnings fell short of the consensus estimate. In the three months ended September 30, 2011, CP’s revenue rose 4.3%, to $1.34 billion from $1.29 billion. That’s mainly because the company raised its shipping rates and fuel surcharges. In addition, CP shipped more coal and potash during the quarter; that offset lower volumes of manufactured goods and grain. Even with the higher revenue, earnings fell 5.3%, to $186.8 million, or $1.10 a share. That missed the consensus estimate of $1.11 a share. However, costs related to the early repayment of long-term notes cut earnings by $0.04 a share in the latest quarter. A year earlier, the company earned $197.3 million, or $1.17 a share....
iShares S&P/TSX Capped Materials Index Fund, $20.49, symbol XMA on Toronto (Shares outstanding: 12.8 million; Market cap: $262.3 million; ca.ishares.com), holds 66 stocks in resource-related fields, such as mining, fertilizer production and forestry. The fund’s MER is 0.55%. This fund aims to mirror the performance of the S&P/TSX Capped Materials Index, which is made up of the largest resource stocks in Canada. The weight of any one company is capped at 25% of the index’s market capitalization. So, every three months, if the market cap of any given stock has risen above 25% of the total market cap of all the stocks in the index, the fund will sell shares of that stock to bring its weight down to the 25% cap level. The fund then uses the proceeds of the sale to buy other stocks in the index on a proportional basis....
TECK RESOURCES LTD. $36 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 590.8 million; Market cap: $21.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.7%; TSINetwork Rating: Average; www.teck.com) is spending $1 billion to increase production at its metallurgical coal mines in B.C., and reopen its Quintette coal mine in northern B.C....
CANADIAN PACIFIC RAILWAY LTD. $52.02 (Toronto symbol CP; Shares outstanding: 170.7 million; Market cap: $8.2 billion; TSINetwork Rating: Average; Dividend yield: 2.3%; www.cpr.ca) reports that its operating ratio worsened in the three months ended June 30, 2011, to 81.8% from 77.8% a year earlier. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) Bad weather slowed the company’s shipments during the quarter; that was the main reason for the change. CP still aims to cut its operating ratio to around 70% in the next three to four years. To meet this goal, it will run longer trains and work more closely with its main customers to speed up the loading and unloading of cargo. A good example is CP’s new long-term deal with Teck Resources Ltd., which sells coal from its mines in B.C. to steelmakers in Asia....
CANADIAN TIRE CORP., $56.03, Toronto symbol CTC.A, closed its e-commerce site in 2009, because this site was never as profitable as the company’s retail stores. However, the trend toward online shopping continues to grow, so this week the company launched a new web site that mainly sells tires. Orders will be shipped to a nearby Canadian Tire store, where a mechanic can install them. Canadian Tire is one of the few retailers that sells tires over the Internet. That should give this new site an advantage. As well, customers will probably buy more goods at the company’s stores while they wait for their tires to be installed....
Thompson Creek Metals Co. Inc., $7.43, symbol TCM on Toronto (Shares outstanding: 172.3 million; Market cap: $1.3 billion, www.thompsoncreekmetals.com), is a Canadian molybdenum producer with mining, milling, roasting and marketing operations in Canada and the U.S. The company’s operations include the Thompson Creek mine in Idaho, a roasting facility in Langeloth, Pennsylvania, and 75% of the Endako mine and roaster in B.C. Molybdenum is either mined directly or recovered as a by-product of copper mining. The metal helps strengthen alloys and high-temperature steels, and prevents them from rusting....