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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Solar technology continues to advance, but one key drawback to investing in it is that it is still heavily dependent on government subsidies. Many of these subsidies seem likely to continue, at least for now, in China, Japan and the U.S., and that’s fuelling demand from utilities for large-scale solar plants. However, solar subsidies have lost support in many countries, including Germany and Spain. Meanwhile, low prices for oil, natural gas and coal make solar power less cost-competitive. We haven’t found any solar stocks we recommend as buys. However, here’s a look at a leading solar ETF:...
The most valuable advice I can give you today is this: don’t be too quick to take profits in your U.S. stocks. Since the 1995 launch of our first advisory service, The Successful Investor, we’ve been advising Canadian investors to include up to 25% or so of their portfolios in U.S. stocks The U.S. market gives you access to the world’s top stocks. These stocks come in a range of size and quality that’s largely unavailable in Canada. In 1995, many of these stocks seemed likely to get even more successful as years passed, and that’s what happened. We think things will work out much the same in the next 20 years....
The most valuable advice I can give you today is this: don’t be too quick to take profits in your U.S. stocks. Since the 1995 launch of our first advisory service, The Successful Investor, we’ve been advising Canadian investors to include up to 25% or so of their portfolios in U.S. stocks The U.S. market gives you access to the world’s top stocks. These stocks come in a range of size and quality that’s largely unavailable in Canada. In 1995, many of these stocks seemed likely to get even more successful as years passed, and that’s what happened. We think things will work out much the same in the next 20 years....
Silver Spring Networks Inc., $11.94, symbol SSNI on Nasdaq (Shares outstanding: 50.3 million; Market cap: $625.8 million; www.silverspringnet.com), helps power companies make their transmission grids more efficient. Its main products include meters and related software that can automatically adjust home thermostats and streetlights. The company is bringing this expertise to technology for monitoring and analyzing data from a wider variety of Internet-connected devices, including smartphones, tablets, vehicles and appliances. This “Internet of Things” could total over 30 billion devices by 2020, and tapping into the information they generate should help Silver Spring’s clients improve their products and make better decisions. Since it started up in 2002, the company has shipped more than 22.3 million network-connected devices. It first sold shares to the public on March 13, 2013, at $17.00 each....
Alaris Royalty Corp., $22.65, symbol AD on Toronto (Shares outstanding: 36.0 million; Market cap: $829.9 million; www.alarisroyalty.com), loans money to private businesses in exchange for royalties or distributions, with the goal of generating stable, predictable cash flows for dividend payments to its shareholders. Since 2004, Alaris has provided over $595 million in funding. Recent clients include Kimco Services, a janitorial company with more than 375 customers; Planet Fitness, which has 38 gyms in Maryland, Tennessee and Florida; Texas-based construction firm DNT; and Federal Resources, which sells protective equipment for working with dangerous chemicals, radioactive materials and explosives. In the three months ended September 30, 2015, Alaris’s revenue rose 8.8%, to $19.1 million from $17.5 million a year earlier. However, a writedown of bad loans cut earnings by 60.0%, to $0.18 a share from $0.45....
CPI Card Group, $14.30, symbol PNT on Toronto (Shares outstanding: 56.5 million; Market cap: $808.0 million; www.cpicardgroup.com), makes plastic credit and debit cards, mostly for U.S. lenders like Bank of America, American Express, Visa and MasterCard. It produces 35% of all such cards issued in the U.S. The Colorado-based company first sold shares to the public and began trading on the Toronto and Nasdaq exchanges on October 15, 2015, at $10 U.S. per share. CPI sold 15.0 million shares in its initial public offering, raising proceeds of $142.5 million U.S. It originally hoped to raise $300 million U.S. but insufficient demand forced it to cut the number of shares it sold and their price. The company is benefiting as the U.S. shifts to debit and credit cards that use chip-and-PIN technology and away from magnetic stripes. This change accelerated with the EMV (EuroPay, MasterCard and Visa) payment networks’ liability shift, which came into effect in the U.S. on October 1, 2015....
Brookfield Asset Management, $41.21, symbol BAM.A on Toronto (Shares outstanding: 981.1 million; Market cap: $40.2 billion; www.brookfield.com), is a holding company with a focus on real estate, infrastructure and power generation....
TransCanada is now challenging the U.S. government’s recent decision to block its proposed Keystone XL pipeline, which would have pumped crude oil from Alberta to the U.S. Gulf Coast. Even if it has to abandon this project, the company still has many other projects under development. These investments will also let TransCanada increase its dividend by between 8% and 10% each year through 2020. TRANSCANADA CORP. $44.61 (Toronto symbol TRP; Shares outstanding: 709.0 million; Market cap: $31.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.7%; www.transcanada.com) operates 68,000 kilometres of natural gas pipelines and over 11,800 megawatts of power generation in Canada and the U.S. In the three months ended September 30, 2015, the company earned $440 million, or $0.62 a share, down 2.2% from $450 million, or $0.63, a year earlier. That was mainly because of lower power prices in Alberta and unplanned power plant outages. However, gains from its pipelines and U.S. power plants boosted revenue by 20.1%, to $2.9 billion from $2.45 billion....
ENCANA $6.96 (Toronto symbol ECA; Shares outstanding: 840.8 million; Market cap: $6.2 billion; TSINetwork Rating: Average; Divd. yield: 1.2%; www.encana.com) continues to take steps to conserve cash while it waits for oil and gas prices to recover. Encana has cut its quarterly payout by 78.6%, to $0.015 a share from $0.07 (all amounts except share price in U.S. dollars). The stock now yields 1.2%. This should save the company $185 million a year. As well, Encana will spend $1.5 billion to $1.7 billion to expand and upgrade its properties in 2016, down about $600 million from 2015....
PEMBINA PIPELINE $29.06 (Toronto symbol PPL; Shares outstanding: 354.7 million; Market cap: $10.7 billion; TSINetwork Rating: Average; Dividend yield: 6.0%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil. Pembina also owns facilities that extract, process and store NGLs. In the three months ended September 30, 2015, the company’s cash flow per share jumped 25.0%, to $0.60 from $0.48 a year earlier. That’s mainly because of new plants starting up and boosting volumes at its NGL extraction business....