How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
[text_ad]
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.
[text_ad]
Read More
Close
How To Invest Library Archives
TELUS $42.20 (Toronto symbol T; Shares outstanding: 605.0 million; Market cap: $25.5 billion; TSINetwork Rating: Above Average; Dividend yield: 4.1%; www.telus.com) earned $398 million in the three months ended September 30, 2015, up 2.8% from $387 million a year earlier. Earnings per share rose 3.1%, to $0.66 from $0.64, on fewer shares outstanding. Revenue gained 4.2%, to $3.2 billion from $3.0 billion. Telus continues to sign up high-speed Internet and TV customers, which is helping offset lower demand for traditional phone services. The company now aims to improve its earnings by cutting 3% of its workforce. That should lower its annual costs by $100 million to $125 million....
TRANSCANADA CORP. $42.69 (Toronto symbol TRP; Shares outstanding: 708.9 million; Market cap: $30.7 billion; TSINetwork Rating: Above Average; Dividend yield: 4.9%; www.transcanada.com) recently had its proposed Keystone XL pipeline rejected by the U.S. The line would have pumped oil sands crude to refineries on the U.S. Gulf Coast. So far, TransCanada has spent $2.4 billion U.S. on this $8.0-billion U.S. project. However, it can use some of the line’s equipment on other projects, which would minimize a writedown. Meanwhile, TransCanada has $35 billion of large-scale projects underway, as well as $13 billion in small- to medium sized developments set to come into service in the next three years....
TORSTAR $3.13 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $254.3 million; TSINetwork Rating: Average; Dividend yield: 8.2%; www.torstar.com) lost $164.8 million, or $2.04 a share, in the three months ended September 30, 2015. A year earlier, it lost $87.0 million, or $1.08 a share. Excluding costs related to job cuts and other measures in response to falling ad revenue at Torstar’s newspapers, the company lost $10.4 million, or $0.13 a share, in the latest quarter. Torstar expects its restructuring to cut $9.3 million from its annual costs in 2015 and a further $14.3 million in 2016. Overall revenue declined 7.3%, to $185.4 million from $199.9 million. Lower ad sales cut revenue at both the free weekly newspapers and flyer-distribution operations, as well as at the Toronto Star and other daily papers....
LOBLAW COMPANIES $66.80 (Toronto symbol L; Shares outstanding: 412.4 million; Market cap: $27.6 billion; TSINetwork Rating: Above Average; Dividend yield: 1.5%; www.loblaw.ca) is Canada’s largest food retailer, with about 1,200 supermarkets. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills. George Weston Ltd. (see below) owns 46% of the company. In the three months ended October 10, 2015, Loblaw earned $408 million, or $0.99 a share, up 10.0% from $371 million, or $0.90, a year earlier. Sales rose 2.5%, to $13.9 billion from $13.6 billion. Excluding gasoline, same-store sales rose 3.1% at Loblaw and 4.9% at the 1,300-store Shoppers Drug Mart chain, which the company bought for $12.3 billion in March 2014. Loblaw continues to integrate its operations with Shoppers Drug. It expects these moves to save it at least $222 million in 2016....
BANK OF NOVA SCOTIA $59.87 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $72.0 billion; TSINetwork Rating: Above Average; Dividend yield: 4.7%, www.scotiabank.com) has extended its Scene loyalty card program with Cineplex Inc. for an additional 10 years, to October 31, 2025. Scene lets cardholders earn points they can redeem for free movies at Cineplex’s theatres. It’s one of Canada’s most popular loyalty plans, with over seven million members. The deal gives the bank lots of opportunities to cross-sell other services to Scene members. In particular, Scene is very popular with young moviegoers. So it’s a great way to begin a relationship with them when they’re just starting to bank and use credit and debit cards....
ENBRIDGE INC. $47.24 (Toronto symbol ENB; Shares outstanding: 860.1 million; Market cap: $40.5 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.enbridge.com) has paid $200 million U.S. for 100% of the New Creek Wind Project in West Virginia. This development consists of 49 wind turbines that can generate a total of 103 megawatts. It should start up in December 2016. The company has long-term contracts to sell this power at fixed rates, which cuts the risk of this investment. Including this purchase, Enbridge has invested $5 billion (Canadian) in renewable power projects with a total capacity of 2,000 megawatts....
CANADIAN PACIFIC RAILWAY $190.97 (Toronto symbol CP; Shares outstanding: 152.9 million; Market cap: $29.4 billion; TSINetwork Rating: Above Average; Yield: 0.7%; www.cpr.ca) has offered to buy U.S. railway Norfolk Southern (New York symbol NSC). The combined company would be North America’s largest railway, with more than 56,000 kilometres of track. Buying Norfolk would also give CP greater access to ports on the U.S. Gulf Coast and Atlantic Ocean. Norfolk shareholders would receive $46.72 U.S. a share in cash and 0.348 of a CP share (or roughly 50% in cash and 50% in stock). That would give them 41% of the combined firm....
Human nature puts the odds against you when you invest in new stock issues (also known as IPOs or Initial Public Offerings). Insiders decide when to bring a new issue to market. They mostly do so only when it’s a good time for the company or its insiders to sell stock to the public. That means new issues tend to come to market when the company or its industry is enjoying what may be a temporary improvement in business or profit. If the improvement is only temporary, this generally isn’t a good time for you to buy. Investment industry practice makes things worse. Financial institutions know how to package a new issue to make it seem like a great deal. This tends to raise the price that you pay for a new issue, compared to a stock that is already trading in the market. That’s a second reason why new issues tend to be overpriced in relation to a balanced assessment of their prospects. In addition, the underwriting process adds costs, for commissions (usually 5% to 7% of the funds raised), plus legal and accounting expenses....
Kinaxis Inc., $47.86, symbol KXS on Toronto (Shares outstanding: 24.1 million; Market cap: $1.1 billion; www.kinaxis.com), provides cloud-based software that big companies use to manage their supply chains. The business concept is SaS—software as a service. Subscribers pay a monthly or yearly fee for software implementation, support and upgrades. This provides the software company with steady income, rather than series of larger one-time payments for the initial sale and upgrades. Kinaxis’s main product is RapidResponse. Applications include matching functions like production and inventory to demand, analyzing sales patterns and forecasting. This Ottawa-based company has a much longer history than most new issues, and is much more mature as a business. It was founded in 1984. It operated under the Webplan Inc. name until May 2005, when it changed its name to Kinaxis. It first sold shares to the public at $13 and began trading on Toronto in June 2014....
LendingClub Corp., $12.34, symbol LC on New York (Shares outstanding: 375.2 million; Market cap: $4.5 billion; www.lendingclub.com), operates an online marketplace that matches borrowers with potential lenders. The company’s software automates the application process, quickly determines a borrower’s creditworthiness and sets the interest rate on the loan. This method keeps LendingClub’s costs down, so its rates tend to be lower than bank lending rates. The company receives fees for originating loans, collecting payments from borrowers and passing them on to lenders. It doesn’t provide loans or assume any credit risk. Since it started up in 2007, Lending Club has helped more than 1.1 million borrowers get $13.4 billion worth of loans....