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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AirBoss of America Corp., $24.09, symbol BOS on Toronto (Shares outstanding: 23.0 million; Market cap: $554.7 million; www.airbossofamerica.com), makes proprietary rubber-based compounds manufacturers use in tires, auto parts, boots and other products. The company has plants in Ontario, Quebec, Vermont and North Carolina and owns 50% of a Malaysian joint venture. U.S. customers supply 70% of its revenue, followed by Canada (24%) and other countries (6%). AirBoss has three main divisions:...
Northland Power Inc., $15.92, symbol NPI on Toronto (Shares outstanding: 168.2 million; Market cap: $2.7 billion; www.northlandpower.ca), develops, builds, owns and operates natural-gas-fired power plants, wind farms, solar projects and hydroelectric facilities. The company converted to a corporation from an income trust on January 1, 2011. Northland owns or has stakes in 1,345 megawatts of operating generating capacity, with an additional 1,072 megawatts (692 megawatts net to Northland) under construction....
AutoCanada Inc., $32.33, symbol ACQ on Toronto (Shares outstanding: 24.5 million; Market cap: $822.8 million; www.autocan.ca), has 49 franchised car dealerships in eight provinces. The company sells numerous brands, including Chrysler, Dodge, Jeep, Ram, Fiat, Chevrolet, GMC, Buick, Cadillac, Nissan, Hyundai, Subaru, Audi, Volkswagen and BMW. However, Chrysler vehicles (including Dodge, Jeep, Ram and Fiat) supply around 70% of its revenue. In 2014, AutoCanada’s dealerships sold roughly 57,000 vehicles and processed about 786,000 service and collision-repair orders in their 822 service bays....
The drop in the stock market in the past few weeks is spurring renewed interest in market timing—the practice of trying to predict future trends and turning points in stock prices. For most people, this is wasted if not harmful effort. Random events tend to occur in bunches. Market timing generates a lot of random buy and sell signals, and some are bound to work out well. But few work out well enough to offset losses on the inevitable erroneous signals, and leave a decent profit besides. Instead of trying to master market timing, you are far better off to study the earmarks of successful investments. Your long-term investment results will improve a great deal if you simply learn to spot and recognize these earmarks, and understand how they differ from the common risk factors in unsuccessful investments....
With today’s low interest rates, investors are paying more attention to dividend yields (a company’s total annual dividends paid per share divided by the current stock price). Dividend-paying companies are responding by doing their best to maintain, or even increase, their payouts.
In fact, dividends can now contribute up to a third of your long-term investment returns, without even considering the tax-cutting effects of the dividend tax credit (see below).
In addition, dividends are far more reliable than capital gains. A stock that pays a $1 dividend this year will probably do the same next year. It may even increase its dividend payment.
Canadian dividends give you tax advantages
Taxpayers who hold dividend-paying Canadian stocks get an additional bonus: their dividends can be eligible for the dividend tax credit in Canada.
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In fact, dividends can now contribute up to a third of your long-term investment returns, without even considering the tax-cutting effects of the dividend tax credit (see below).
In addition, dividends are far more reliable than capital gains. A stock that pays a $1 dividend this year will probably do the same next year. It may even increase its dividend payment.
Canadian dividends give you tax advantages
Taxpayers who hold dividend-paying Canadian stocks get an additional bonus: their dividends can be eligible for the dividend tax credit in Canada.
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The Greek situation will remain highly volatile—and the economy and political system have deep structural deficiencies—so we don’t recommend investing in Greek stocks at this point.
However, if you do want to speculate on a Greek recovery, one way to do it is through the Global X FTSE Greece 20 ETF, $9.46, symbol GREK on New York (Units outstanding: 31.1 million; Market cap: $294.2 million; www.globalxfunds.com).
This fund holds 20 stocks and has a 0.61% MER....
However, if you do want to speculate on a Greek recovery, one way to do it is through the Global X FTSE Greece 20 ETF, $9.46, symbol GREK on New York (Units outstanding: 31.1 million; Market cap: $294.2 million; www.globalxfunds.com).
This fund holds 20 stocks and has a 0.61% MER....
The apparent price drop is because Baxter International, $37.83, symbol BAX on New York (Shares outstanding: 544.3 million; Market cap: $20.5 billion, www.baxter.com), recently completed the spinoff of Baxalta, $30.26, symbol BXLT on New York (Shares outstanding: 544.3 million; Market cap: $20.7 billion, www.baxalta.com).
Baxter handed out 80.5% of its Baxalta shares to its investors on July 1, 2015, on a one-for-one basis. This new company makes biopharmaceuticals, including vaccines and hemophilia drugs. Baxter plans to sell or distribute the remaining 19.5% over the next five years.
Now that the spinoff is complete, Baxter will focus on medical devices, such as intravenous pumps and kidney-dialysis equipment.
Your Baxalta shares should soon appear on your brokerage statements. Baxter is still a buy.
We’ll say more about Baxalta in the next issue of Wall Street Stock Forecaster, but for now it’s a hold.
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Baxter handed out 80.5% of its Baxalta shares to its investors on July 1, 2015, on a one-for-one basis. This new company makes biopharmaceuticals, including vaccines and hemophilia drugs. Baxter plans to sell or distribute the remaining 19.5% over the next five years.
Now that the spinoff is complete, Baxter will focus on medical devices, such as intravenous pumps and kidney-dialysis equipment.
Your Baxalta shares should soon appear on your brokerage statements. Baxter is still a buy.
We’ll say more about Baxalta in the next issue of Wall Street Stock Forecaster, but for now it’s a hold.
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Technology Select Sector SPDR Fund ETF, $41.91, symbol XLK on New York (Units outstanding: 316.2 million; Market cap: $13.3 billion; www.spdrs.com), aims to track the S&P Technology Select Sector Index, which consists of tech stocks in the S&P 500 Index. The fund’s MER is just 0.15%. The fund’s top 10 holdings are Apple, Google, Microsoft, Verizon, IBM, Cisco Systems, Facebook, AT&T, Visa and Oracle. The fund is broken down by segment as follows: technology, hardware, storage and peripherals, 21.6%; software, 17.2%; information technology services, 16.5%; Internet software and services, 16.4%; semiconductors and semiconductor equipment, 9.9%; diversified telecommunication services, 9.8%; communications equipment, 6.9%; and electronic equipment, instruments and components, 1.7%....
CF Industries Holdings Inc., $58.42, symbol CF on New York (Shares outstanding: 235.3 million; Market cap: $13.9 billion; www.cfindustries.com), makes nitrogen-based fertilizers from natural gas.
The company has six plants: four in the U.S. and two in Canada. It also owns 75.3% of Terra Nitrogen, which makes nitrogen fertilizers at an Oklahoma facility, and operates fertilizer plants in the U.K. and Trinidad through joint ventures.
In March 2014, CF sold its phosphate mining and manufacturing operations to Mosaic Co., symbol MOS on New York, for $1.4 billion. That’s the main reason why its revenue declined 15.8% in the three months ended March 31, 2015, to $953.6 million from $1.1 billion a year earlier.
Earnings fell 62.9%, to $0.96 from $2.58 (all per-share amounts adjusted for a 5-for-1 stock split in June 2015). Excluding unusual items, such as a gain on the sale of the phosphate business, per-share profits were unchanged at $0.97.
CF recently agreed to pay $580 million for the 50% of a U.K.-based joint venture that it doesn’t already own. The deal will close later this year. This business accounts for 40% of the U.K.’s fertilizer market.
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The company has six plants: four in the U.S. and two in Canada. It also owns 75.3% of Terra Nitrogen, which makes nitrogen fertilizers at an Oklahoma facility, and operates fertilizer plants in the U.K. and Trinidad through joint ventures.
In March 2014, CF sold its phosphate mining and manufacturing operations to Mosaic Co., symbol MOS on New York, for $1.4 billion. That’s the main reason why its revenue declined 15.8% in the three months ended March 31, 2015, to $953.6 million from $1.1 billion a year earlier.
Earnings fell 62.9%, to $0.96 from $2.58 (all per-share amounts adjusted for a 5-for-1 stock split in June 2015). Excluding unusual items, such as a gain on the sale of the phosphate business, per-share profits were unchanged at $0.97.
CF recently agreed to pay $580 million for the 50% of a U.K.-based joint venture that it doesn’t already own. The deal will close later this year. This business accounts for 40% of the U.K.’s fertilizer market.
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Thompson Creek Metals Co. Inc., $0.72, symbol TCM on Toronto (Shares outstanding: 220.9 million; Market cap: $152.4 million, www.thompsoncreekmetals.com), owns the Thompson Creek molybdenum mine in Idaho, a roasting facility in Langeloth, Pennsylvania, 75% of the Endako molybdenum mine and mill in B.C. and 100% of the Mount Milligan copper/gold mine, also in B.C. Molybdenum prices have fallen to 12-year lows, forcing Thompson to shut down both the Thompson Creek and Endako projects. Molybdenum is either mined directly or recovered as a by-product of copper mining. The metal strengthens and prevents rust in alloys and high-temperature steels. Thompson’s results now rest on Mount Milligan, which has yet to fully resolve the operating problems it has experienced since it started up early last year. Copper and gold prices also remain low, and the company’s weak balance sheet adds a lot of risk: it holds cash of $238.2 million U.S., but it also has a high $865.1 million U.S. of long-term debt....