How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
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Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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First National Financial Corp., $28.80, symbol FN on Toronto, (Shares outstanding: 60.0 million; Market cap: $1.8 billion; www.firstnational.ca), is Canada’s largest non-bank originator and underwriter of residential mortgages. It held $94.3 billion in mortgages under administration as of March 31, 2016. The company focuses its lending on mortgages for single-family homes and small apartment buildings. It has a limited number of commercial loans. First National was an income trust in May 2006 when it sold units to the public at $10 each and began trading on the Toronto Exchange. It then switched over to a conventional corporation on January 1, 2011. To free up capital for new lending, the company sells its mortgages to financial institutions. It also securitizes those loans by packaging them together and selling them as mortgage bonds. That securitization tends to lower earnings in the short term, but offers higher profit in the long term....
Slate Retail REIT, $13.97, symbol SRT.UN on Toronto (Units outstanding: 35.4 million; Market cap: $459.9 million; www.slateretailreit.com), owns 66 retail malls in 20 U.S. states. In all, those properties contain 7.7 million square feet. Slate’s overall occupancy rate was a high 94.4% as of March 31, 2016. The REIT took its current form on April 15, 2014. That’s when Slate Asset Management L.P. reorganized its publicly traded operations. This firm owns 6.7% of Slate Retail and manages the REIT....
AltaGas Ltd., $30.89, symbol ALA on Toronto (Shares outstanding: 147.3 million; Market cap: $4.5 billion; www.altagas.ca), processes, transports, stores and markets natural gas for producers. The company also operates natural gas utilities, and it is a power generator, with gas-fired, coal-fired, wind, biomass and hydroelectric plants. Acquisitions and $1.7 billion in new projects increased AltaGas’s revenue from $1.3 billion in 2011 to $2.4 billion in 2014—an 88% jump. Revenue then fell to $2.2 billion in 2015, due to lower selling prices for natural gas and weaker power prices in Alberta. Cash flow per share gained 42.5%, from $2.61 in 2011 to $3.72 in 2014; it declined to $3.41 in 2015....
Evertz Technologies Ltd., $17.11, symbol ET on Toronto (Shares outstanding: 74.2 million; Market cap: $1.3 billion; www.evertz.com), makes video and audio systems for telecommunications and other media industries. The company sells its hardware and software to content creators, broadcasters, specialty channels and TV service providers. Customers use it to support their complex digital and high definition television (HDTV) networks as well as their high-bandwidth Internet services. Customers have used Evertz’s hardware at events such as the Sochi Olympics in Russia, the FIFA World Cup, the Commonwealth Games and the U.S. midterm elections....
Stella-Jones Inc., $49.00, symbol SJ on Toronto (Shares outstanding: 69.1 million; Market cap: $3.4 billion; www.stella-jones.com), makes pressure-treated wood products. They include: railway ties (45% of sales); utility poles (34%); treated lumber products for the residential market (12%); lumber for industrial uses such as construction timbers and highway guardrails (6%); and logs and lumber (3%). The company gets most of its utility poles from timberlands that it leases in Quebec and B.C. It also buys wood for railway ties and other products from sawmills in the U.S. and Canada. The U.S. also provides 82% of its sales, while Canada supplies the remaining 18%....
Let me start with a quote I read this week that struck me as worth repeating: “My 2016 New Year’s resolution was to write down three moments of joy before going to bed each night. This simple practice has changed my life. Because no matter what happens each day, I go to bed thinking of something cheerful. Try it.” —Sheryl Sandberg, Facebook Inc.’s chief operating officer, speaking at a University of California at Berkeley 2016 commencement speech, on her personal struggles since the death of her husband in 2015....
A: CarMax, $50.97, symbol KMX on New York (Shares outstanding: 193.8 million; Market cap: $9.8 billion, www.carmax.com), operates 158 auto dealerships in 78 cities and is the largest used car retailer in the U.S. Last year it sold 619,936 vehicles. The company also has one of the largest wholesale vehicle auction businesses in the U.S. In the past year, it sold 394,437 cars and trucks through those on-site events. In the three months ended February 29, 2016, CarMax earned $0.75 a share. Excluding one-time items, that’s up 13.6% from $0.66 a year earlier. Revenue rose 5.5%, to $3.7 billion from $3.5 billion. Last year, the company opened 14 new dealerships and relocated another. In just the latest quarter, it opened five stores—three of them in new markets such as Boston and Peoria/Bloomington, Illinois....
A: Baker Hughes, $47.13, symbol BHI on New York (Shares outstanding: 437.9 million; Market cap: $20.1 billion, www.bakerhughes.com), is the world’s third-largest drilling services and equipment company. Until recently, Baker Hughes was the subject of a $35 billion takeover offer from Halliburton (symbol HAL on New York). However, the deal fell through because of opposition from U.S. and European antitrust regulators. The merger would have brought together the world’s No. 2 and No. 3 oil services companies. That raised concerns about possibly higher prices for oil producers....
A: Aequus Pharmaceuticals Inc., $0.45, symbol AQS on the TSX Venture Exchange (Shares outstanding: 44.9 million; Market cap: $20.2 million, www.aequuspharma.ca), is a Vancouver-based specialty pharmaceutical company. The company’s business model is to acquire or license what it sees as commercial or near-commercial products from drugmakers outside of Canada and then sell them in this country. For example, it hopes to sell Vistitan (bimatoprost 0.03%, ophthalmic solution) in the Canadian market. This product is used to treat some forms of glaucoma and other related eye diseases. Aequus and its partner plan to split the Canadian revenues. The company also aims to develop its own drugs. All of those medications are transdermal versions of existing medications. Transdermal applications of a drug are absorbed slowly through the skin, typically by using an adhesive patch....
This past week, after Ted Cruz and John Kasich dropped out of the race for the Republican Presidential nomination, the media began referring to the “Trump ascendancy.” Use of the phrase has since exploded. Google comes up with 374,000 hits for it. (In contrast, Google only finds 289 results in a search for “Romney ascendancy.”) The term seems to reflect a widely shared, negative point of view. “Ascendancy” started out as a reference to the rise to power in Ireland by a coalition of Protestant landowners, clergy and professionals, starting in the 1600s. Most historians would agree that the “Protestant Ascendancy” helped bring on a long stretch of poverty, mass emigration and intermittent starvation for the Irish. Judging by results of the Google search, the widely shared view about the Trump ascendancy is that it could be an awful thing for the economy and stock market. I bring this up because I see it as one more example of an orthodoxy that can cost you money by warping your stock-market decisions....