teck resources
LINAMAR CORP., $8.24, Toronto symbol LNR, jumped 80% this week after it reported better-than-expected first-quarter results. Linamar sells transmissions and other parts to several carmakers. This business accounts for about 85% of its revenue. The company also makes self-propelled, scissor-type elevating work platforms under the Skyjack name, plus consumer products, such as lawnmowers and cargo trailers. Linamar lost $12.6 million, or $0.19 a share, in the three months ended March 31, 2009. However, this was mainly caused by an $11.7-million writedown of goodwill. As well, slowing demand from carmakers prompted Linamar to cut its workforce by 12%, or 1,300 employees. This resulted in $4.4 million in severance payments. Without these items, the company lost just $0.01 a share. That’s a lot better than the loss of $0.15 a share that analysts were expecting. In the year-earlier quarter, Linamar earned $29.5 million, or $0.43 a share. Its sales fell 30.9%, to $424.9 million from $614.5 million....
PRECISION DRILLING TRUST, $5.70, Toronto symbol PD.UN, announced this week that it has issued $175 million in new long-term notes to the Alberta Investment Management Corporation (AIMCo). AIMCo is a crown corporation that manages Alberta’s public-sector pension plans and other special funds. Precision is making the move to strengthen its balance sheet. AIMCo also bought 35 million Precision units at $3.00 each, for a total of $105 million. Moreover, Precision will give AIMCo warrants to buy 15 million more units at $3.22 each over the next five years. (As of March 31, 2009, there were 206.2 million Precision units outstanding.) AIMCo now owns roughly 15% of Precision’s units. This will rise to 19% if it exercises all of the warrants....
Despite a stream of nerve-rattling financial news, starting with the failure of the first U.S. bailout package, the Dow Industrials and the S&P 500 managed to hold above Monday’s lows this week until just before Friday’s close. It’s a mistake to read too much into this, of course. But it is encouraging to see these two indexes move sideways in this depressing news environment. The plunge to new lows by the Canadian market reflects the heavy resources content in our economy and stock market. The Resources sector stands to suffer in an economic setback, and that’s already begun to happen with the drop in oil, copper and other metals. In addition to the decline in our market, our dollar lost nearly four cents this past week, relative to the U.S. dollar. We continue to recommend that you spread your investments our across the five main economic sectors, and devote around a quarter of your portfolio to U.S. stocks. Market turnarounds often occur in times of high volatility and bad news. Our advice is to resist any urge you may feel to sell good-quality stocks, just because you fear they may go lower....