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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Imperial Oil is selling its remaining Esso gas stations. This will let the company focus on its oil sands operations. These projects will prosper when oil prices recover, and enhance the company’s growth prospects.
IMPERIAL OIL $41.25 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $34.4 billion; TSINetwork Rating: Average; Dividend yield: 1.4%; www.imperialoil.ca) is a major integrated oil company with oil sands projects in Alberta and conventional oil and gas operations across Western Canada....
IMPERIAL OIL $41.25 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $34.4 billion; TSINetwork Rating: Average; Dividend yield: 1.4%; www.imperialoil.ca) is a major integrated oil company with oil sands projects in Alberta and conventional oil and gas operations across Western Canada....
TRANSCANADA CORP. $49.18 (Toronto symbol TRP; Shares outstanding: 709.0 million; Market cap: $34.3 billion; TSINetwork Rating: Above Average; Dividend yield: 4.6%; www.transcanada.com) has run into difficulties lately in gaining approvals for new pipelines, including Energy East in Canada and Keystone XL in the U.S. However, the company has moved forward with its proposed acquisiton of Texas-based Columbia Pipeline Group (New York symbol GPCX) for $13 billion U.S. This is a big purchase for TransCanada, which has a market cap of $35.4 billion (Canadian)....
PEMBINA PIPELINE $34.61 (Toronto symbol PPL; Shares outstanding: 373.4 million; Market cap: $12.7 billion; TSINetwork Rating: Average; Dividend yield: 5.0%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil and almost all of B.C.’s oil. It also carries 30% of Western Canada’s natural gas liquids (NGLs). Pembina owns extensive facilities to extract, process and store NGLs, as well as natural gas processing plants. In the three months ended December 31, 2015, the company’s cash flow per share jumped 57.0%, to $0.77 from $0.49 a year earlier. New plants starting up boosted volumes at its NGL extraction business....
INNERGEX RENEWABLE ENERGY $13.82 (Toronto symbol INE; Shares outstanding: 104.0 million; Market cap: $1.4 billion; TSINetwork Rating: Extra Risk; Dividend yield 4.6%; www.innergex.com) has acquired eight wind power projects in northern France from a German company for $137 million. The purchase includes seven operating plants with 87 megawatts of generating capacity, plus a 44-megawatt project now under construction. All power generated at the eight plants is already sold under long-term power-purchase contracts averaging 13 years in length. The acquisition is Innergex’s first in Europe. It sees France as a big growth market and plans to buy or build more plants....
SUN LIFE FINANCIAL $41.71 (Toronto symbol SLF; Shares outstanding: 612.3 million; Market cap: $25.4 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.sunlife.ca) sells life insurance, savings, retirement and pension products to individuals and corporations. The company has $891.3 billion of assets under management and mainly operates in Canada, the U.S. and the U.K. It’s also expanding in Asia. In the three months ended December 31, 2015, Sun Life’s earnings per share rose 7.4%, to $0.87 from $0.81. The company continues to diversify in the U.S. At the same time, it’s focusing on highly profitable niche markets with low capital requirements....
ISHARES CHINA LARGE-CAP ETF $33.03 (New York symbol FXI; buy or sell through brokers) is an exchange traded fund that aims to track the Financial Times Stock Exchange (FTSE) China 50 Index, which is made up of the 50 largest, most-liquid Chinese stocks. Top holdings include Tencent Holdings, China Mobile, China Construction Bank, Bank of China and Ping An Insurance. The ETF has an MER of 0.74%. Chinese stocks are down sharply since last summer. National leader Xi Jinping seems focused on shoring up the Communist party and the Chinese stock market, rather than strengthening the Chinese economy. Meanwhile China still has strong long-term growth potential, but needs to get its economy back on track....
Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers almost $3 trillion U.S. across 175 mutual funds and ETFs. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds are only available in a limited number of provinces. Canadians can, however, buy Vanguard exchange traded funds that trade on stock exchanges. Here are two Vanguard ETF we see as low-fee buys....
CANADIAN PACIFIC RAILWAY $170.25 (Toronto symbol CP; Shares outstanding: 153.0 million; Market cap: $26.3 billion; TSINetwork Rating: Above Average; Dividend yield: 0.8%; www.cpr.ca) has agreed to sell a parcel of land—the Arbutus Corridor—to the City of Vancouver. Canadian Pacific stopped running trains through the Arbutus Corridor in 2001. Since then, the company has considered several options to re-develop the property. These included building a facility to store railcars. The municipal government opposed those plans. The sale price of $55 million is small next to the $1.6 billion, or $10.10 a share, that CP earned in 2015. But the deal also gives the company additional payments linked to future development of the property....
ARC RESOURCES $18.38 (Toronto symbol ARX; Shares outstanding: 348.3 million; Market cap: $6.2 billion; TSINetwork Rating: Speculative; Dividend yield: 3.3%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 119,243 barrels of oil equivalent is 66% gas and 34% oil. In the three months ended December 31, 2015, ARC’s cash flow per share dropped 26.6%, to $0.58 from $0.79 a year earlier. Production increased 1.1%, but its realized oil price fell 32.1%. Gas prices declined 37.6%. Like many oil and gas producers, ARC is cutting exploration and development spending. In 2016, it will devote $390.0 million to this purpose. That’s down 29.1% from $550.0 in 2015....
PENGROWTH ENERGY $1.54 (Toronto symbol PGF; Shares outstanding: 543.0 million; Market cap: $792.8 million; TSINetwork Rating: Average; No dividends paid; www.pengrowth.com) has moved up on news that prominent Toronto investor Seymour Schulich now owns 14.7% of the company’s shares. That makes him Pengrowth’s largest shareholder. Schulich has a long history of investing in small oil and mining firms. These include a 27.6% stake in Birchcliff Resources (Toronto symbol BIR). Birchcliff is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investments. Schulich’s involvement is likely a plus for Pengrowth. But its shares will need stronger oil prices in order to move higher....