transcanada

Both TransCanada and Enbridge are building new oil pipelines. These are expensive projects, but the companies’ regulated businesses give them lots of cash flow for expansion and continued dividend increases. TRANSCANADA CORP. $40 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 703.0 million; Market cap: $27.3 billion; Price-to-sales ratio: 3.4; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.transcanada.com) operates a pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. It also owns or invests in over 20 power plants in Canada and the U.S. In June 2010, the company opened the first phase of its Keystone pipeline. This phase pumps crude oil from Alberta to refineries in Illinois. The second phase extends to Oklahoma, and began operating in February 2011....

TRANSCANADA CORP. $39.56 (Toronto symbol TRP; Shares outstanding: 691.7 million; Market cap: $27.9 billion; TSINetwork Rating: Above Average; Dividend yield: 4.3%; www.transcanada.com) has opened its second pipeline in Mexico. This new, 307-kilometre line pumps natural gas from the country’s west coast to another gas pipeline in Guadalajara. This new pipeline cost $360 million U.S. To put that in context, TransCanada earned $425 million (Canadian), or $0.61 a share, in the first three months of 2011. This is the eighth major project the company has launched this year. Mexico’s state-owned electric company has a 25-year contract for 100% of the pipeline’s capacity. That cuts the risk of this investment....

POTASH CORP. OF SASKATCHEWAN $56 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 854.8 million; Market cap: $47.9 billion; Price-to-sales ratio: 6.4; Dividend yield: 0.5%; TSINetwork Rating: Average; www.potashcorp.com) sells its potash fertilizer to customers outside of North America through Canpotex, a marketing and exporting firm that is equally owned by Potash Corp. and rival producers AGRIUM INC. $85 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $13.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.1%; TSINetwork Rating: Average; www.agrium.com) and Mosaic Co. (New York symbol MOS). Canpotex recently agreed to sell potash to China for $470 U.S. a tonne. That’s 4.4% higher than the previous contract, and higher than the consensus forecast price of $450 U.S. a tonne. This contract should make it easier for Canpotex to demand similar prices from buyers in India and other countries. Potash Corp. is still a hold, but Agrium is a buy....

ISHARES S&P/TSX 60 INDEX FUND $19.21 (Toronto symbol XIU; buy or sell through a broker; 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, it holds a few we wouldn’t include, such as Yellow Media Inc. The index’s top holdings are: Royal Bank, 6.9%; TD Bank, 6.3%; Bank of Nova Scotia, 5.4%; Suncor Energy, 5.2%; Potash Corp., 4.1%; Canadian Natural Resources, 3.9%; Barrick Gold, 3.9%; Goldcorp, 3.2%; CN Railway, 3.1%; Bank of Montreal, 3.1%; Manulife Financial, 2.6%; CIBC, 2.6%; BCE, 2.5%; TransCanada Corp., 2.5%; Cenovus Energy, 2.3%; and Teck Resources, 2.2%....

ISHARES MSCI CANADA INDEX FUND $31.84 (New York symbol EWC; buy or sell through brokers; ca.ishares.com) is like a market-cap-based index fund, but its managers try to improve performance by tinkering with the index-fund formula. They do this through their Morgan Stanley Capital International Canada Index. The fund has an MER of 0.50%. The index’s top holdings are Royal Bank, 6.0%; TD Bank, 5.4%; Bank of Nova Scotia, 4.8%; Suncor Energy, 4.7%; Potash Corp., 3.6%; Canadian Natural Resources, 3.4%; Barrick Gold, 3.4%; Goldcorp, 2.9%; Bank of Montreal, 2.6%; CN Railway, 2.6%; CIBC, 2.4%; Manulife Financial, 2.3%; TransCanada Corp., 2.3%; and Teck Resources, 2.2%. If you want to own a Canadian index fund, you should buy the iShares S&P/TSX 60 Index Fund. You’ll pay about a third of the management fees....

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....

These three leading industrial companies all face rising costs for labour and raw materials. However, all three continue to win new contracts that will help them offset these expenses. Moreover, all three continue to trade at attractive multiples to earnings. SNC-LAVALIN GROUP INC. $55 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.8 million; Market cap: $8.3 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.snclavalin.com) continues to win new contracts, thanks in part to its strong reputation. SNC is a leading Canadian engineering and construction company. It designs and builds large-scale public-works projects, such as roads, bridges, transit systems and water-treatment plants. It also builds mines, chemical plants and electrical-power systems....

TRANSCANADA CORP. $42 (www.transcanada.com) has restarted its Keystone crude oil pipeline after repairing a small leak at a pumping station in Kansas; Keystone pumps oil from Alberta to Oklahoma. The leak forced the company to shut down the pipeline for a week. This setback is not likely to hurt the company’s plan to extend Keystone to refineries on the U.S. Gulf Coast. U.S. regulators will make a final decision on the proposal later this year. Best Buy. SUNCOR ENERGY INC. $39 (www.suncor.com) produced an average of 162,000 barrels per day at its oil-sands projects in May 2011. That’s down 50.9% from 330,000 barrels in April 2011. The company has shut down one of its upgrading facilities for maintenance. Suncor expects to resume normal production by the end of June. Buy. IGM FINANCIAL INC. $49 (www.igmfinancial.com) reported that its assets under management rose 12.6%, to $133.5 billion, on May 31, 2011, from $118.5 billion a year earlier. IGM’s fee income varies with the value of the mutual funds and other investments it manages, so the company’s revenue and earnings gain when the value of these assets rises. Best Buy.

TRANSCANADA CORP. $42.91 (Toronto symbol TRP; Shares outstanding: 691.7 million; Market cap: $30.1 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.transcanada.com) has shut down part of its Keystone pipeline, which pumps crude oil from Alberta to Oklahoma. That’s because a broken valve inside a pumping station in North Dakota caused 500 barrels of oil to leak out. The company has repaired the station, and expects to soon restart the line. This leak could fuel opposition to TransCanada’s plan to extend Keystone to refineries on the U.S. Gulf Coast. However, its quick response limited the size of the leak. Moreover, it will inspect other pumping stations to lower the odds of another leak. TransCanada is a buy....

CANADIAN TIRE CORP., $62.38, Toronto symbol CTC.A, is buying The Forzani Group Ltd. (Toronto symbol FGL), which sells sporting goods through over 500 stores in Canada, including SportChek and Athlete’s World. Forzani gets 70% of its sales by selling clothing and footwear, so there is little overlap with the sports equipment (such as skates and hockey sticks) that Canadian Tire stores mainly sell. To put the $771-million purchase price in context, Canadian Tire earned $58.4 million, or $0.71 a share, in the three months ended April 2, 2011. That missed the consensus estimate of $0.72 a share. Still, the latest earnings are up 13.2% from $51.6 million, or $0.63 a share, a year earlier....