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
One of the least useful investment sayings you’ll ever hear is the oft-repeated “the secret of profitable investing is to buy low and sell high.” It can lead you to waste years in a costly search for a magic way to figure out where “low” is, and how to tell when a price has gone up to “high”. One obvious but erroneous answer to the first question is that a low price per share, particularly less than $1, is a good place to buy. This lures many beginning investors into penny stocks. After all, a winning penny stock can go from under $1 to several dollars. However, zeroing in on that rare event, much less making money at it, is a lot harder than many investors realize. Although the price may seem right, the average penny offers a poor long-term return. After all, it’s hard to create a successful business. It’s much easier and cheaper to set up a company and sell stock to the public. That’s why bad penny stocks always outnumber good ones. ...
: Cominar REIT, $16.28, symbol CUF.UN on Toronto (Units outstanding: 169.0 million; Market cap: $2.8 billion; www.cominar.com), is Quebec’s largest owner of commercial properties.
In all, the trust holds 567 properties, including 136 office buildings, 196 shopping malls and 235 industrial and mixed-use buildings. In all, these holdings contain 46.0 million square feet of leasable space located in Montreal (57%), Quebec City (22%), Ontario (13%), the Atlantic provinces (6%) and Western Canada (2%). Cominar’s occupancy rate is 92.3%.
The trust continues to grow by acquisition: in 2014, it bought 66 properties for a total of $2.0 billion, then added three more industrial buildings in Montreal for $34.5 million in the first half of this year.
Contributions from new properties increased Cominar’s revenue by 26.3% in the three months ended June 30, 2015, to $226.9 million from $179.6 million a year earlier. Cash flow rose 28.4%, to $65.7 million from $51.2 million. The trust sold new units to help fund its recent purchases, causing cash flow per unit to slip 2.5%, to $0.39 from $0.40, on more units outstanding.
The REIT pays monthly distributions of $0.1225 per unit, for a 9.0% annualized yield. It paid out 92.0% of its cash flow as distributions in the latest quarter. However, if you exclude payouts in units to investors in Cominar’s distribution reinvestment plan, the cash payout ratio was a moderate 64.6%. There are of course, no guarantees, but Cominar’s current distribution rate appears safe.
...
In all, the trust holds 567 properties, including 136 office buildings, 196 shopping malls and 235 industrial and mixed-use buildings. In all, these holdings contain 46.0 million square feet of leasable space located in Montreal (57%), Quebec City (22%), Ontario (13%), the Atlantic provinces (6%) and Western Canada (2%). Cominar’s occupancy rate is 92.3%.
The trust continues to grow by acquisition: in 2014, it bought 66 properties for a total of $2.0 billion, then added three more industrial buildings in Montreal for $34.5 million in the first half of this year.
Contributions from new properties increased Cominar’s revenue by 26.3% in the three months ended June 30, 2015, to $226.9 million from $179.6 million a year earlier. Cash flow rose 28.4%, to $65.7 million from $51.2 million. The trust sold new units to help fund its recent purchases, causing cash flow per unit to slip 2.5%, to $0.39 from $0.40, on more units outstanding.
The REIT pays monthly distributions of $0.1225 per unit, for a 9.0% annualized yield. It paid out 92.0% of its cash flow as distributions in the latest quarter. However, if you exclude payouts in units to investors in Cominar’s distribution reinvestment plan, the cash payout ratio was a moderate 64.6%. There are of course, no guarantees, but Cominar’s current distribution rate appears safe.
...
Merus Labs International Ltd., $1.97, symbol MSL on Toronto (Shares outstanding: 102.3 million; Market cap: $201.5 million; www.meruslabs.com), is a Toronto-based company that acquires the rights to established drugs.
Merus mainly targets relatively small, mature products, as opposed to the newer treatments that attract the attention of larger drug firms. The company outsources its manufacturing and other operations, so it has low operating costs and few employees. By focusing on acquisitions, it also spends nothing to develop new drugs.
The company’s main products include Enablex (an overactive-bladder treatment), Sintrom (anticoagulant) and Vancocin (antibiotic). It mainly sells these drugs in Canada and Europe.
In May 2015, Merus paid Novartis Pharma $29.5 million U.S. for the rights to two more drugs: Salagen (which relieves dry mouth symptoms in cancer patients undergoing radiation therapy) and Estraderm (a hormone replacement therapy for women). In 2014, these treatments had total revenue of $10 million U.S.; this deal lets Merus make and sell them in certain European countries.
In its fiscal 2015 third quarter, which ended June 30, 2015, the company’s revenue rose 32.3%, to $9.5 million from $7.2 million a year earlier. Its two new drugs (Salagen and Estraderm) accounted for 37% of the increase.
...
Merus mainly targets relatively small, mature products, as opposed to the newer treatments that attract the attention of larger drug firms. The company outsources its manufacturing and other operations, so it has low operating costs and few employees. By focusing on acquisitions, it also spends nothing to develop new drugs.
The company’s main products include Enablex (an overactive-bladder treatment), Sintrom (anticoagulant) and Vancocin (antibiotic). It mainly sells these drugs in Canada and Europe.
In May 2015, Merus paid Novartis Pharma $29.5 million U.S. for the rights to two more drugs: Salagen (which relieves dry mouth symptoms in cancer patients undergoing radiation therapy) and Estraderm (a hormone replacement therapy for women). In 2014, these treatments had total revenue of $10 million U.S.; this deal lets Merus make and sell them in certain European countries.
In its fiscal 2015 third quarter, which ended June 30, 2015, the company’s revenue rose 32.3%, to $9.5 million from $7.2 million a year earlier. Its two new drugs (Salagen and Estraderm) accounted for 37% of the increase.
...
Freeport-McMoRan Inc., $11.18, symbol FCX on New York (Shares outstanding: 1.1 billion; Market cap: $12.7 billion; www.fcx.com), is a leading producer of copper, gold and other metals from mines in the U.S., Indonesia, Africa and South America.
In 2013, the company diversified into oil and natural gas by acquiring McMoRan Exploration and Plains Exploration & Production, which have properties in Louisiana, Wyoming and California, as well as wells in the Gulf of Mexico. Freeport paid a total of $9 billion for both companies.
In 2014, copper supplied 60% of Freeport’s revenue, followed by oil and gas, 20%; gold, 7%; molybdenum (which strengthens and prevents rust in alloys and high-temperature steels), 6%; and other minerals, 7%.
The U.S. accounted for 48% of total revenue, followed by Indonesia (8%), Japan (7%), Spain (6%), China (5%), Switzerland (4%), Chile (3%), Turkey (2%) and South Korea (2%). Other countries supplied the remaining 15%.
In the three months ended June 30, 2015, Freeport lost $1.85 billion, or $1.78 a share, after the plunge in oil and gas prices forced it to write down its oil and gas holdings by $2.7 billion. Without unusual items, the company earned $143 million, or $0.14 a share, down 70.3% from $482 million, or $0.46, a year earlier.
...
In 2013, the company diversified into oil and natural gas by acquiring McMoRan Exploration and Plains Exploration & Production, which have properties in Louisiana, Wyoming and California, as well as wells in the Gulf of Mexico. Freeport paid a total of $9 billion for both companies.
In 2014, copper supplied 60% of Freeport’s revenue, followed by oil and gas, 20%; gold, 7%; molybdenum (which strengthens and prevents rust in alloys and high-temperature steels), 6%; and other minerals, 7%.
The U.S. accounted for 48% of total revenue, followed by Indonesia (8%), Japan (7%), Spain (6%), China (5%), Switzerland (4%), Chile (3%), Turkey (2%) and South Korea (2%). Other countries supplied the remaining 15%.
In the three months ended June 30, 2015, Freeport lost $1.85 billion, or $1.78 a share, after the plunge in oil and gas prices forced it to write down its oil and gas holdings by $2.7 billion. Without unusual items, the company earned $143 million, or $0.14 a share, down 70.3% from $482 million, or $0.46, a year earlier.
...
Schlumberger Ltd., $72.09, symbol SLB on New York (Shares outstanding: 1.3 billion; Market cap: $91.2 billion; www.slb.com), is the world’s leading oilfield services firm. It works with oil and gas producers from the exploration stage through to production.
Schlumberger feels its North American business is now bottoming out, although it doesn’t expect to see a big near-term rebound. Its earnings won’t likely begin improving until 2016, although that will depend on the direction of oil and gas prices and drilling activity. To maintain its profits, Schlumberger has cut 20,000 jobs so far this year and lowered its capital spending.
Meanwhile, the company is taking advantage of the downturn to buy oilfield equipment maker Cameron International (New York symbol CAM), a maker of valves, blowout preventers and other gear for controlling pressure at drill sites, for $14.8 billion.
The stock trades at 22.5 times this year’s forecast earnings of $3.20 a share. It yields 2.8%.
Schlumberger is okay to hold.
...
Schlumberger feels its North American business is now bottoming out, although it doesn’t expect to see a big near-term rebound. Its earnings won’t likely begin improving until 2016, although that will depend on the direction of oil and gas prices and drilling activity. To maintain its profits, Schlumberger has cut 20,000 jobs so far this year and lowered its capital spending.
Meanwhile, the company is taking advantage of the downturn to buy oilfield equipment maker Cameron International (New York symbol CAM), a maker of valves, blowout preventers and other gear for controlling pressure at drill sites, for $14.8 billion.
The stock trades at 22.5 times this year’s forecast earnings of $3.20 a share. It yields 2.8%.
Schlumberger is okay to hold.
...
Here’s the text of the quarterly letter I recently sent to our Portfolio Management clients:
“The subject of interest rates comes up regularly these days, in the news and in investor conversations. U.S. Federal Reserve Board members see a need for rates to move up. Prior to the recent market downturn, they were still undecided on ‘how soon’ and ‘how much’.
If stocks remain weak into the fall months, the Fed is likely to leave interest rates unchanged. However, now is still a good time to review the role of bonds as an alternative to stocks.
Bonds have been rising for 35 years
Interest rates have generally been going down, and bond prices have been going up, since 1980. That year, the yield on 10-year U.S. government bonds peaked at around 16%. Currently they yield around 2%.
...
“The subject of interest rates comes up regularly these days, in the news and in investor conversations. U.S. Federal Reserve Board members see a need for rates to move up. Prior to the recent market downturn, they were still undecided on ‘how soon’ and ‘how much’.
If stocks remain weak into the fall months, the Fed is likely to leave interest rates unchanged. However, now is still a good time to review the role of bonds as an alternative to stocks.
Bonds have been rising for 35 years
Interest rates have generally been going down, and bond prices have been going up, since 1980. That year, the yield on 10-year U.S. government bonds peaked at around 16%. Currently they yield around 2%.
...
Agnico Eagle Mines Ltd., $33.80, symbol AEM on Toronto (Shares outstanding: 217.2 million; Market cap: $7.2 billion; www.agnico-eagle.com), has five mines in Canada (LaRonde, Lapa, Meadowbank, Goldex and Malarctic), one in Finland (Kittila) and two in Mexico (Pinos Altos and La India).
The company produced 1.43 million ounces of gold in 2014 and expects to produce 1.6 million ounces this year.
Its two Nunavut projects, the Meadowbank mine and the development-stage Meliadine property, are riskier than its other operations because of the difficulties of operating in Canada’s Far North. Still, Agnico Eagle offers steady growth prospects and low political risk.
Like most gold firms, the company’s shares will be heavily influenced by the direction of gold prices.
Agnico Eagle is okay for aggressive investors to hold.
The company produced 1.43 million ounces of gold in 2014 and expects to produce 1.6 million ounces this year.
Its two Nunavut projects, the Meadowbank mine and the development-stage Meliadine property, are riskier than its other operations because of the difficulties of operating in Canada’s Far North. Still, Agnico Eagle offers steady growth prospects and low political risk.
Like most gold firms, the company’s shares will be heavily influenced by the direction of gold prices.
Agnico Eagle is okay for aggressive investors to hold.
Tucows, $30.88, symbol TC on Toronto (Shares outstanding: 11.0 million; Market cap: $340.9 million; www.tucows.com), provides network access, domain names and other Internet services, such as email hosting, through its OpenSRS division. OpenSRS manages over 14 million domain names, while the company’s Ting subsidiary offers mobile phone service to individuals and small businesses. In the three months ended June 30, 2015, Tucows’ revenue rose 20.5%, to $42.9 million from $35.6 million a year earlier (all figures except share price and market cap in U.S. dollars). Earnings per share jumped to $0.21 from $0.12....
Here’s a phenomena you may have noticed: Current economic problems sometimes provide solutions for problems inherited from previous years or decades.
For example, from the late 1990s through the mid-2000s, many employers and economists worried about a coming labour shortage. The baby boomers, who make up a large part of the North American workforce, are nearing retirement age. Specialists were leaving the workforce faster than they can be replaced. Younger people tend to switch jobs more often than older workers. They are also slow to accept entry- or low-level jobs. They are reluctant to go into apprenticeship or industrial-training programs.
Employers and economists worried about the risk of falling productivity and rising wages. After all, employers were likely to bid up wage levels, to attract scarce new workers who would need expensive training. This could provoke severe inflation.
Then the 2007-2009 recession and stock-market slide came along. It solved the problem, at least temporarily. Joblessness rose, as businesses re-structured and made do with fewer workers. Insecurity led many boomers to work longer than they planned. They felt their savings, investments and pensions were inadequate for their retirement needs. They also worried about the financing of the Canada Pension Plan and U.S. Social Security.
After all, soaring numbers of retirees were entitled to income from these plans, due to the retirement of the boomers and extended lifespans from modern medicine. At the same time, growth in the worker/taxpayer population was slowing. This was partly due to a continuing drop in the birth rate—the so-called “birth dearth”. So, fewer working taxpayers would have to support a growing number of pensioners.
...
For example, from the late 1990s through the mid-2000s, many employers and economists worried about a coming labour shortage. The baby boomers, who make up a large part of the North American workforce, are nearing retirement age. Specialists were leaving the workforce faster than they can be replaced. Younger people tend to switch jobs more often than older workers. They are also slow to accept entry- or low-level jobs. They are reluctant to go into apprenticeship or industrial-training programs.
Employers and economists worried about the risk of falling productivity and rising wages. After all, employers were likely to bid up wage levels, to attract scarce new workers who would need expensive training. This could provoke severe inflation.
Then the 2007-2009 recession and stock-market slide came along. It solved the problem, at least temporarily. Joblessness rose, as businesses re-structured and made do with fewer workers. Insecurity led many boomers to work longer than they planned. They felt their savings, investments and pensions were inadequate for their retirement needs. They also worried about the financing of the Canada Pension Plan and U.S. Social Security.
After all, soaring numbers of retirees were entitled to income from these plans, due to the retirement of the boomers and extended lifespans from modern medicine. At the same time, growth in the worker/taxpayer population was slowing. This was partly due to a continuing drop in the birth rate—the so-called “birth dearth”. So, fewer working taxpayers would have to support a growing number of pensioners.
...
Progressive Waste Solutions Ltd., $36.29, symbol BIN on Toronto (Shares outstanding: 109.3 million; Market cap: $4.0 billion; www.progressivewaste.com), is one of North America’s largest waste-management companies, collecting and disposing of non-hazardous solid waste for businesses, municipalities and homes in six provinces and 10 states.
In the three months ended June 30, 2015, Progressive’s revenue fell 4.0%, to $493.0 million from $513.5 million a year earlier (all amounts except share price and market cap in U.S. dollars). Excluding the effect of the higher U.S. dollar, revenue rose 0.4%. Earnings per share declined 29.3%, to $0.29 from $0.41, mostly due to costs related to flooding in Texas.
Progressive holds cash of $39.6 million, or $0.35 a share. Its $1.6 billion of long-term debt is a high, but manageable, 55% of its $4.0-billion market cap.
The stock trades at 30.8 times this year’s forecast earnings of $1.18 a share. Progressive’s profits could rise to $1.48 a share in 2016, and the stock trades at 24.5 times that estimate. The company has just raised its dividend by 6.3%; the shares now yield 1.9%.
Progressive Waste Solutions is okay to hold.
...
In the three months ended June 30, 2015, Progressive’s revenue fell 4.0%, to $493.0 million from $513.5 million a year earlier (all amounts except share price and market cap in U.S. dollars). Excluding the effect of the higher U.S. dollar, revenue rose 0.4%. Earnings per share declined 29.3%, to $0.29 from $0.41, mostly due to costs related to flooding in Texas.
Progressive holds cash of $39.6 million, or $0.35 a share. Its $1.6 billion of long-term debt is a high, but manageable, 55% of its $4.0-billion market cap.
The stock trades at 30.8 times this year’s forecast earnings of $1.18 a share. Progressive’s profits could rise to $1.48 a share in 2016, and the stock trades at 24.5 times that estimate. The company has just raised its dividend by 6.3%; the shares now yield 1.9%.
Progressive Waste Solutions is okay to hold.
...