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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American Hotel Income Properties REIT, $10.08, symbol HOT.UN on Toronto (Units outstanding: 35.0 million; Market cap: $351.8 million, www.ahipreit.com), owns 80 hotels, comprising 7,072 rooms in 27 U.S. states. Of that total, 45 of the hotels operate under the Oak Tree Inn brand. For the most part, hotel guests are railroad workers. American Hotel believes this is a profitable niche market, as contracts with large railways keep occupancy rates high relative to the overall hospitality industry. The hotels are close to large rail-switching yards and hubs, and the railway contracts keep them about 75% occupied. The specially designed buildings feature crew shuttles and 24-hour food service....
Alaris Royalty Corp., $29.36, symbol AD on Toronto (Shares outstanding: 36.3 million; Market cap: $1.1 billion; www.alarisroyalty.com), lends money to private businesses in exchange for royalties or distributions. Its goal is to generate stable cash flows in order to provide its shareholders with dividend payments. Since 2004, Alaris has provided over $595 million in funding to clients. They pay monthly distributions, and the company adjusts these rates annually based on certain criteria. Those include changes in a client’s gross sales or profits. Alaris currently collects distributions from 16 private businesses. Recent client additions include: Planet Fitness, which has 38 gyms in Maryland, Tennessee and Florida; Texas-based construction firm DNT; Sandbox, a Chicago-based advertising and marketing firm; Providence Industries, a California-based operator of clothing stores; Kimco Services, a janitorial company with more than 375 customers; and Federal Resources, which sells protective equipment for working with dangerous chemicals and radioactive materials....
Bird Construction Inc., $12.21, symbol BDT on Toronto (Shares outstanding: 42.5 million; Market cap: $515.3 million; www.bird.ca), focuses on projects in a number of markets, including industrial, commercial, institutional, civil construction and mining. The company began operating 96 years ago in Medicine Hat, Alberta. Today, it has offices in St. John’s, Halifax, Saint John, Montreal, Toronto, Winnipeg, Calgary, Edmonton and Vancouver. Bird’s industrial projects supplied 51% of its 2015 revenue, and include work in the petrochemical, oil sands, and wastewater-treatment sectors....
Canfor Corp., $14.50, symbol CFP on Toronto (Shares outstanding: 132.8 million; Market cap: $1.9 billion; www.canfor.com), is a leading North American producer of softwood lumber. It has 5.8 billion board feet of annual capacity located across Western Canada and the Southeastern U.S. Lumber accounts for 70% of Canfor’s total sales. The remaining 30% comes from its 51.9% stake in Canfor Pulp Products Inc., symbol CFX on Toronto. This business makes pulp and paper products. The U.S. is the company’s largest market (53% of its 2015 revenue), followed by Asia (31%), Canada (12%), Europe (2%) and other countries (2%)....
Exchange Income Corp., $29.88, symbol EIF on Toronto (Shares outstanding: 27.6 million; Market cap: $820.1 million; www.exchangeincomecorp.ca), operates in two main areas: aviation and manufacturing. The aviation business (76% of its 2015 revenue) serves communities in Manitoba, Ontario and Nunavut through regional airlines. They include Perimeter Aviation, Keewatin Air, Calm Air International, Bearskin Lake Air Service, Custom Helicopters and Regional One. The manufacturing business (24% of revenue) includes WesTower Communications Canada (a maker and installer of wireless communication towers), Jasper Tank, Overlanders Manufacturing, Water Blast Manufacturing and Stainless Fabrication....
Loblaw continues to report rising sales and earnings—and it now plans to use that strength to spend $1 billion to open new stores and upgrade existing locations. The stock is trading close to all-time highs for us, but we still see it as a safety-conscious buy. LOBLAW COMPANIES $70.28 (Toronto symbol L; Shares outstanding: 410.2 million; Market cap: $28.3 billion; TSINetwork Rating: Above Average; Dividend yield: 1.5%; www.loblaw.ca) currently operates over 1,100 supermarkets and 1,300 Shopper Drug Mart pharmacies across Canada. In the three months ended March 26, 2016, Loblaw earned $338 million, or $0.82 a share. That’s up 12.3% from $301 million, or $0.72, a year earlier. Sales rose 4.8%, to $13.9 billion from $13.6 billion. Excluding gas station revenue, same-store sales rose 2.6% at Loblaw. They rose 6.3% at Shoppers Drug Mart....
MANITOBA TELECOM SERVICES $37.43 (Toronto symbol MBT; Shares outstanding: 78.3 million; Market cap: $2.9 billion; TSINetwork Rating: Average; Dividend yield: 3.5%; www.mts.ca) has attracted a $3.1 billion takeover offer from BCE Inc. (see page 38). Under the deal, Manitoba Tel shareholders can choose either $40 in cash or 0.6756 shares of BCE for every MBT share they hold. However, BCE plans to limit its overall cash spending, so most Manitoba Tel investors will likely receive 55% of their payout in stock and the remainder in cash....
In 2011, gold shot up to a high of $1,950 U.S. an ounce, and silver reached a peak of $48.48. Gold prices then fell steadily, dropping to $1,050 in December 2015 for the first time since early 2010. That month, silver also declined to a five-year low of $13.65 an ounce. Each metal has since moved up to today’s price of $1,279 for gold and $17.35 for silver. The gains largely reflect higher commodity prices overall as well as the belief that slow global economic growth will keep interest rates low. That raises the prospect of higher inflation. ...
GLOBAL X COPPER MINERS ETF $15.44 (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Copper Miners Index, which includes 20 to 40 international companies that mine, refine or explore for copper. Germany-based Structured Solutions AG created this index. Canadian firms make up 36.6% of the ETF’s holdings. They also include companies based in Australia (14.2%), Peru (5.1%), Mexico (5.0%) and China (4.5%). The fund’s MER is 0.65%. Its top holdings are Teck Resources at 7.7%; Oz Minerals, 7.0%; CST Mining Group, 6.5%; Glencore plc, 5.8%; First Quantum Minerals, 5.8%; Capstone Mining, 5.6%; Kaz Minerals plc, 5.5%; Lundin Mining, 5.0%; Southern Copper, 4.8%; Freeport-McMoran, 4.7%; Sandfire Resources, 4.5%; and Grupo Mexico, 4.5%....
PEYTO EXPLORATION & DEVELOPMENT CORP. $30.95 (Toronto symbol PEY; Shares outstanding: 159.2 million; Market cap: $4.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.3%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 97,028 barrels of oil equivalent is 93% gas and 7% oil. In the three months ended December 31, 2015, Peyto’s cash flow fell 15.9%, to $0.95 a share from $1.13 a year ago. It raised its production by 16.5%, but that was offset by lower oil and gas prices. Its realized oil price year over year fell 28.1%, and natural gas prices fell 20.9%. The company has cut it’s original 2016 capital spending of $600 million to $650 million down to between $500 million and $550 million. It spent $594 million in 2015....