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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Athabasca Oil Corp., $2.05, symbol ATH on Toronto (Shares outstanding: 402.9 million; Market cap: $862.3 million; www.atha.com), aims to develop oil sands and conventional oil and gas resources in northeastern Alberta’s Athabasca region. Its average daily production is 49% gas and 51% oil. Athabasca first sold shares to the public at $18 and began trading on Toronto in April 2010. The company’s major projects are still in the early stages of development, but it does have some production. In the three months ended March 31, 2015, its output fell 6.7%, to 5,877 barrels of oil equivalent a day from 6,299 a year earlier. Cash flow slipped to $0.01 a share from $0.02 on the lower production and a decline in oil and gas prices....
Typically, changes to the indexes are announced a couple weeks before they come into effect. Some academics have analyzed past price movements and concluded that after the announcement is made and before the effective date, stock prices typically rise for companies added to indexes and fall for those that are dropped. After the effective date, however, the studies show that the price changes mostly reverse themselves. The added firms give up some gains and the deleted firms recover nearly all of the ground they lost....
Loyalist Group, $0.08, symbol LOY on Toronto (Shares outstanding: 179.2 million; Market cap: $13.4 million; www.loyalistgroup.com), owns and operates private English as a second language (ESL) schools, career colleges and community colleges in Toronto, Vancouver, Victoria and Halifax, as well as student-recruiting agencies in South Korea. The company’s shares fell sharply in mid-June 2015 after it reported lower revenue and a big loss in the three months ended March 31, 2015. Loyalist also released its full-year financial results for 2014—which were overdue—and they showed a huge loss, as well. What’s more, the company is currently not in compliance with certain conditions agreed to with its lenders. Loyalist’s total debt of $17.7 million is a very high 116% of its market cap....
Rackspace Hosting Inc., $37.19, symbol RAX on New York (Shares outstanding: 142.8 million; Market cap: $5.4 billion; www.rackspace.com), provides cloud computing and information technology services for a range of businesses. Its offerings include web hosting and tools clients use to manage their data centres, networks and devices. The company gets about two-thirds of its revenue from managed cloud-hosting services, which combine cloud space with specialized client support. This approach appeals to businesses that want to outsource their computing needs so they can focus on their main operations. The remaining third comes from unmanaged (or public) cloud services. In the three months ended March 31, 2015, Rackspace’s revenue rose 14.1%, to $480.2 million from $421.0 million a year earlier. The rise came from an influx of new customers and higher sales to existing ones. The company gets about 30% of its revenue from outside of the U.S., and the higher U.S. dollar cut its sales by $11 million in the latest quarter....
DirectCash Payments Inc., $12.76, symbol DCI on Toronto (Shares outstanding: 17.6 million; Market cap: $231.1 million; www.directcash.net), is the largest non-bank owner and operator of automated teller machines in Canada, Australia and New Zealand and the third-largest in the U.K. It also operates ATMs in Mexico. In addition, the company serves credit unions and other small financial institutions that outsource their ATM transactions. DirectCash now has 20,984 active ATMs, up 5.6% from 19,874 a year ago. Its machines processed 30.4 million transactions in the latest quarter, up 3.0% from 29.5 million....
Throughout history, many nations have achieved great wealth and power, if only temporarily. These periods of military and/or financial success can lead to regional or global success. They can last a long time or a short one, but none lasts forever. Both beginning and end are erratic and unpredictable. The timing of both the rise and the fall surprises a lot of observers. Tiny countries like Holland, England and Portugal had their moments of glory. Huge countries like China and India had periods of great success, followed by weakness and failure. Many people now think the U.S. is coming to the end of a dominant period. Some delight at the thought, others despair. Something like this also happens in the stock market, on a shorter time scale. During these times, the stock goes into what we think of as “the broker/media limelight.”...
NYX Gaming Group Ltd., $4.32, symbol NYX on Toronto (Shares outstanding: 33.8 million; Market cap: $143.7 million; www.nyxgaminggroup.com), makes gaming software for over 130 online and brick-and-mortar casinos. The company is based in Guernsey (a tax haven off the coast of England), but its main subsidiaries are in the U.S., Sweden and Australia. NYX first sold shares to the public at $3.50 each and began trading on Toronto on December 30, 2014. The company has developed over 350 titles, including slots, bingo, lottery, poker and other casino games. It aims to create 25 to 50 new games a year. It also distributes 550 games under licence from other developers....
New Flyer Industries, $15.06, symbol NFI on Toronto (Shares outstanding: 55.5 million; Market cap: $849.4 million; www.newflyer.com), is the leading transit bus maker in the U.S. and Canada. It also provides parts and service. In the three months ended March 31, 2015, New Flyer’s revenue rose 17.4%, to $380.3 million from $323.9 million a year earlier (all figures except share price and market cap in U.S. dollars). The gain was mainly due to a 3.2% increase in bus deliveries, 12.2% higher selling prices and a 22.8% rise in parts and service revenue. Earnings per share doubled to $0.20 from $0.10. Bus manufacturing and service remain highly competitive businesses. However, New Flyer’s long-term outlook is sound. Transit spending is steadily rebounding as vehicle fleets age and government finances improve....
The “new global currency rules” idea is part of a marketing campaign by a promotional newsletter in the U.S. and an array of websites that link to it. The premise is that “on October 20th of this year, the International Monetary Fund (IMF) will announce a reserve currency alternative to the U.S. dollar, which will send hundreds of billions of dollars moving around the world, literally overnight.” What in fact might happen is that later this year the IMF may include the Chinese yuan in its official basket of reserve currencies, called special drawing rights (SDRs)....
Urbana Corporation, $2.25, symbol URB.A on Toronto (Shares outstanding: 67.5 million; Market cap: $151.9 million; www.urbanacorp.com), is an investment company with interests across the financial services industry, including banks, broker-dealers and investment managers. Caldwell Financial owns 53.5% of Urbana’s shares. The company’s investments include interests in privately owned entities like the Bombay Stock Exchange and seats on the Minneapolis Grain Exchange and Budapest Stock Exchange. It also holds shares of publicly traded companies like Citigroup, Franco-Nevada, Suncor Energy and Barrick Gold. We see a number of sources of risk with Urbana, including the fact that the company’s private business holdings and complex organizational structure make it difficult to value....