Another Way to Gain From Resource Boom

Article Excerpt

FINNING INTERNATIONAL INC. $39 (Toronto symbol FTT; SI Rating: Above average) sells, rents and services Caterpillar brand heavy equipment, including tractors, log loaders, front shovels and asphalt compactors. Customers mainly include the mining, construction, and forestry industries in Western Canada. It also has operations in the UK, Ireland and South America, but Canada provides 40% of its revenue. In November 2004, Finning sold $292.8 million worth of new common shares to fund acquisitions. Thanks to these extra shares, Finning’s per-share profits in the third quarter of 2005 fell 9.1%, to $0.50 from $0.55 a year earlier, although total income rose 3.9%, to $48.4 million from $43.1 million. Revenue grew 11.8%, to $1.23 billion from $1.1 billion. Finning’s expanding foreign operations increase its currency risk. In fact, the higher Canadian dollar cut Finning’s third quarter earnings by $0.08 a share. Like most companies, Finning uses hedging contracts to manage this risk. But even with these contracts, unfavourable foreign exchange rates will probably cut…

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