transcanada

SNC-LAVALIN GROUP INC., $40.00, Toronto symbol SNC, fell 18% this week after the company warned that its 2011 earnings will be $80 million, or 18% below its earlier forecast. In 2010, SNC earned $437.0 million, or $2.87 a share. The earnings drop is partly due to $35 million in unusual payments related to certain construction contracts. Because of the recent civil war, SNC will also write down the value of its Libyan operations, including a prison, an airport and a water treatment system, by $23 million. The company did not say if the unusual payments are connected to its Libyan projects. SNC is working with its external auditors and legal advisors to examine these payments and certain other contracts. The company still aims to report its 2011 earnings by March 30, 2012. However, the stock will likely remain under pressure until SNC clarifies the nature and extent of these payments....

LOBLAW COMPANIES $34.72 (Toronto symbol L; Shares outstanding: 281.4 million; Market cap: $9.8 billion; TSINetwork Rating: Above Average; Dividend yield: 2.4%; www.loblaw.ca) continues to make progress with its multi-year plan to streamline its supply chain and avoid product shortages. The company says that about 99% of its products are now in stock at its 1,000 supermarkets across Canada. These upgrades have helped improve Loblaw’s results: in 2011, sales gained 1.3%, to $31.3 billion from $30.8 billion in 2010. Same-store sales rose 0.9%. Earnings rose 13.9% in 2011, to $769 million, or $2.71 a share, from $675 million, or $2.38. Loblaw is a buy....

ISHARES S&P/TSX 60 INDEX FUND $17.91 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good, low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets.

Most of the stocks in the index are high-quality companies. However, as it must ensure that all sectors are represented, the fund holds a few we wouldn’t include.

The index’s top holdings are Royal Bank, 6.9%; TD Bank, 6.4%; Bank of Nova Scotia, 5.2%; Suncor Energy, 5.0%; Barrick Gold, 4.5%; Canadian Natural Resources, 4.0%; Potash Corp., 3.7%; Goldcorp, 3.6%; Bank of Montreal, 3.4%; CN Railway, 3.1%; BCE Inc., 2.9%; CIBC, 2.8%; Enbridge, 2.7%; TransCanada Corp., 2.7%; Cenovus Energy, 2.5%; and Manulife Financial, 1.9%.

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TRANSCANADA CORP. $41.29 (Toronto symbol TRP; Shares outstanding: 704.0 million; Market cap: $29.1 billion; TSINetwork Rating: Above Average; Dividend yield: 4.1%; www.transcanada.com) is working to reroute its Keystone XL pipeline after the U.S. State Department rejected the company’s plan to cross environmentally sensitive areas in Nebraska. If approved, the pipeline could begin operating in 2014.

This setback may force TransCanada to write off the $1.9 billion U.S. that it has already spent on Keystone XL. Still, any writeoff would not hurt TransCanada’s ability to invest in other projects or prevent it from raising its $1.68 dividend, which yields 4.1%.

TransCanada is a buy.

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Gennum Corp., $13.52, symbol GND on Toronto (Shares outstanding: 35.6 million; Market cap: $481.7 million; www.gennum.com), has accepted a takeover offer from U.S.-based Semtech Corp. (Nasdaq symbol SMTC). Gennum designs electronic equipment and computer chips that let television broadcasters store, edit and transfer video signals without losing picture quality. It also designs chips that make computer networks faster. Semtech is offering $13.55 in cash for each Gennum share. That means the takeover price won’t drop as it might if Semtech was paying with shares instead. For example, Semtech shares could drop along with the market on any negative economic news, like a worsening of the European debt crisis....

CENOVUS ENERGY INC., $38.73, Toronto symbol CVE, spent $2.7 billion on capital upgrades in 2011. That’s up 28.7% from $2.1 billion in 2010. The company used about a third of this money to expand its 50%-owned Foster Creek and Christina Lake oil sands properties in Alberta; U.S.-based ConocoPhillips (New York symbol COP) owns the other 50%. As a result, Cenovus’s oil sands production rose 12.7% in 2011, to 66,533 barrels a day from 59,045 barrels in 2010. That helped offset a 3.5% drop in conventional oil production. Overall oil production rose 3.9%, to 134,239 barrels a day from 129,187 barrels. Natural gas production fell 11.0%, mainly because Cenovus sold some of its gas properties in 2010....

Enbridge continues to invest heavily in its pipelines and other businesses. Since 2008, it has started up over $12 billion worth of new growth projects. That’s equal to 39% of its market cap. The company now wants to take advantage of rising oil sands production by building the Northern Gateway pipeline, which would pump crude oil from Edmonton to a proposed storage terminal in Kitimat, B.C. From there, the oil would be shipped by tanker to refineries in Asia. At $5.5 billion, Northern Gateway is the single biggest pipeline project in Enbridge’s 63-year history. If regulators approve, the line could start up in 2017....

You may find that exchange-traded funds (ETFs) have a place in your portfolio. Unlike many other financial innovations, they don’t load you up with heavy management fees or tie you down with high redemption charges if you decide to withdraw. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. They have another advantage. Since shares are only added or removed when the underlying index changes, there’s a low turnover. That means you aren’t faced with the capital gains bills generated by the yearly distributions most mutual funds pay out to their unitholders....

TRANSCANADA CORP. $41.29 (Toronto symbol TRP; Shares outstanding: 704.0 million; Market cap: $29.1 billion; TSINetwork Rating: Above Average; Dividend yield: 4.1%; www.transcanada.com) is working to reroute its Keystone XL pipeline after the U.S. State Department rejected the company’s plan to cross environmentally sensitive areas in Nebraska. If approved, the pipeline could begin operating in 2014. This setback may force TransCanada to write off the $1.9 billion U.S. that it has already spent on Keystone XL. Still, any writeoff would not hurt TransCanada’s ability to invest in other projects or prevent it from raising its $1.68 dividend, which yields 4.1%. TransCanada is a buy.

Exchange traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....