transcanada

TRANSCANADA CORP. $32 has started building a gas-fired power plant near Phoenix, Arizona, that should start operating in May 2011. The $500-million U.S. cost is equal to 60% of the $319 million, or $0.51 a share, that TransCanada earned in the three months ended June 30, 2009. TransCanada has a 20-year deal to sell the plant’s power to an Arizona utility. This cuts the project’s risk. Best Buy. CANADIAN TIRE CORP. $58 is the subject of a “mini-tender” offer from a private investment firm that wants to buy 1.28% of the retailer’s class-A non-voting stock at $54.00 a share, or about 7% below the current price. Investors should ignore this offer. Canadian Tire is still a Best Buy. IGM FINANCIAL INC. $42 reported that as of August 31, 2009, its assets under management fell 3.0%, to $114.7 billion from $118.2 billion a year earlier. IGM’s fees rise and fall with the value of the mutual funds and other securities it manages, so the company’s revenue and earnings suffer when the value of these assets drops. However, IGM’s large sales force puts the company in a good position to grow as the economy and stock markets continue to rebound. Best Buy.

CRESCENT POINT ENERGY CORP. $35.67 (Toronto symbol CPG; Shares outstanding: 159.3 million; Market cap: $5.7 billion; SI Rating: Extra Risk) has made a couple of big acquisitions in Saskatchewan. The company has bought privately held Wave Energy for about $665.3 million in stock. It has also purchased producing assets from Provident Energy Trust for $258.5 million in cash. Crescent Point plans to issue new shares, and put the $230-million proceeds toward paying for the Provident assets. In total, these acquisitions add about 16% to Crescent Point’s production. They should also raise its cash flow per share....

Claymore 1-5 Yr Laddered Corporate Bond ETF (exchange-traded fund), $20.78, symbol CBO on Toronto (Shares outstanding: 8.8 million; Market cap: $182.9 million), invests in a portfolio of short-term bonds drawn from the DEX (formerly Scotia Capital) Bond Index. The ETF is a recent new issue that first sold units to the public at $20 each, and began trading on Toronto on February 25, 2009. It has a 0.25% annual management fee and pays a $0.0715 quarterly distribution, which yields 1.4% on a yearly basis. The fund’s 25 holdings are divided into five staggered, or “laddered,” equally weighted maturities that range from one to five years. Each maturity includes five or more bonds with a minimum credit rating of “A”. Each year, the longest-term bonds will reach maturity, and the shorter-term bonds will be a year older. The fund can use proceeds of the matured bonds to buy new bonds that restore the desired portfolio balance....

IESC-BFC, $14.49, symbol BIN on Toronto (Shares outstanding: 82.3 million; Market cap: $1.2 billion), changed its name from BFI Canada, effective June 1, 2009. That’s when BFI Canada amalgamated with its wholly owned subsidiary, IESI-BFC Ltd. The company will continue to operate as BFI Canada in Canada, and as IESI in the U.S. IESI-BFC is one of North America’s largest solid-waste management companies. However, its business does not include any management, collection or disposal of hazardous or liquid waste....

Enbridge Income Fund, $11.63, symbol ENF.UN on Toronto (Units outstanding: 34.6 million; Market cap: $403.3 million), holds a 50% interest in the Canadian portion of the Alliance Pipeline, and owns 100% of the Saskatchewan System. The Saskatchewan System operates crude-oil and liquids pipelines, including the Saskatchewan gathering, Westspur, Weyburn and Virden pipeline systems. The Alliance Pipeline, which went into operation in late 2000, is a 36-inch diameter pipeline with a daily capacity of 1.3 billion cubic feet of natural gas. It runs for 3,000 kilometres, from Fort St. John, British Columbia, to Chicago, Illinois. Alliance uses technology that makes it more efficient than many other pipelines. Aside from pipelines, Enbridge Income Fund holds a number of “green power” assets. These include a 50% interest in NRGreen Power Limited Partnership, which operates a waste heat recovery plant at Kerrobert, Saskatchewan. The plant converts exhaust heat from Alliance Pipeline’s natural-gas compressor station into electricity. The fund also owns a 50% interest in the SunBridge wind project in Saskatchewan, and a 33.3% interest in the Magrath and Chin Chute wind projects in southern Alberta....

POTASH CORP. OF SASKATCHEWAN, $101.95, Toronto symbol POT, moved up 4% on speculation that Brazilian mining company Vale SA is preparing to launch a takeover offer for U.S.-based potash producer Mosaic Co. (New York symbol MOS). Potash Corp. is down from last July’s high of $227 due to falling potash prices and demand. However, Vale’s potential interest in Mosaic has spurred the stock prices of most fertilizer producers, including Agrium (see below). The Vale-Mosaic speculation also helped Potash Corp. overcome a drop earlier in the week on news that Russian potash producer Silvinit agreed to sell potash to Indian Potash Ltd. for $460 a tonne (all amounts except share price in U.S. dollars). Indian Potash imports and distributes about 70% of India’s potash needs. The $460 price is a lot less than the $700 that Canpotex will receive from its recent contracts to sell potash to buyers in Japan, South Korea and Taiwan. Canpotex is a potash marketing and exporting firm that is jointly owned by Potash Corp., Agrium and Mosaic. Still, Silvinit’s price is far above potash’s average 2003-2008 price of $270 a tonne....

BMO DIVIDEND FUND $37.58 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) currently holds about 43.3% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 23.1%. The $3.7 billion BMO Dividend Fund’s largest holdings are Bank of Nova Scotia, CIBC, Royal Bank, Canadian National Railway, Manulife Financial, TD Bank, TransCanada Corporation, EnCana Corporation, Enbridge and Goldcorp. The fund’s MER is 1.71%. Over the five years to May 31, 2009, the fund posted a 3.7% annual rate of return. The S&P/TSX index returned 6.9% annually. The index gained from the big run up in resources prices that lasted until early in 2008. The S&P/TSX index holds a high 46% or so of its holdings in Resources stocks....

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $26.35 (Toronto symbol BA.UN: Units outstanding: 127.2 million; Market cap: $3.4 billion; SI Rating: Above average) reports that its revenue fell 1.2% in the three months ended March 31, 2009, to $828 million from $837.5 million. Lower local and long distance revenue declines offset strong demand for high-speed Internet and data services. However, earnings rose 10.1%, to $82.5 million or $0.51 a unit from $74.2 million or $0.46 a unit a year earlier. The gains came from higher-profit-margin Internet growth and cost cutting....

TRANSCANADA CORP., $31.49, Toronto symbol TRP, will buy the 20.01% of the Keystone pipeline that it doesn’t already own from its partner, ConocoPhillips (New York symbol COP), for $550 million U.S. Keystone will pump crude oil from Alberta to refineries in Illinois. The first phase should start operating early next year. TransCanada plans to extend Keystone to the U.S. Gulf Coast by 2012. Aside from the purchase price, TransCanada will assume $200 million U.S. in related short-term debt. In all, Keystone will cost $12 billion U.S. to build. TransCanada and ConocoPhillips have spent $2.7 billion U.S. to date. To put these figures in context, TransCanada’s market cap is $19.4 billion (Canadian)....

MDS INC., $5.72, Toronto symbol MDS, is a life-sciences company that conducts contract-drug research for pharmaceutical companies, sells analytical devices (which scientists use to detect diseases) and supplies medical isotopes for cancer research. The company lost $17 million, or $0.15 a share, in the three months ended April 30, 2009 (all amounts except share price in U.S. dollars). The loss included a $16-million writedown of buildings and equipment at its drug-testing division. In the year-earlier quarter, MDS earned $13 million, or $0.11 a share. If you disregard the writedown and several other unusual charges, earnings per share fell 62.5%, to $0.03 from $0.08. That was well below the $0.06 a share that analysts were expecting. Revenue fell 19.4%, to $282 million from $350 million. Still, this was higher than the consensus estimate of $274.4 million. If you exclude the impact of foreign-exchange rates and the businesses that MDS bought and sold, its revenue fell 10%....