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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Freehold Royalties Ltd., $17.42, symbol FRU on Toronto (Shares outstanding: 98.0 million; Market cap: $1.7 billion; www.freeholdroyalties.com), holds oil and natural gas rights on 3.5 million acres of land in Alberta, Saskatchewan, B.C., Manitoba and Ontario. These reserves are 47% natural gas, 24% light crude oil, 22% heavy crude oil and 7% natural gas liquids. Freehold collects royalties from oil and gas producers that operate over 38,000 wells on its land, in addition to holding royalty interests in seven potash mines in Saskatchewan. Long-life royalty properties account for about 75% of Freehold’s cash flow, and wells it has a working interest in, and shares the cost of operating, supply the remaining 25%....
BlackRock Inc., $353.45, symbol BLK on New York (Shares outstanding: 164.6 million; Market cap: $58.5 billion; www.blackrock.com), is one of the world’s largest publicly traded investment management firms. The company manages $4.8 trillion of assets on behalf of institutions and individuals through a variety of equity, fixed-income, cash-management, alternative-investment and advisory products. In the three months ended March 31, 2015, BlackRock’s earnings rose 8.9%, to $830 million, or $4.89 a share, from $762 million, or $4.43, a year earlier. Rising stock markets and strong demand from individual and institutional clients were behind the gain....
Imperial Oil continues to face low oil prices, and Alberta’s new NDP government could increase royalties or impose new environmental regulations. However, Imperial plans to keep expanding Kearl and Cold Lake, its two main oil sands properties in Alberta. These projects will prosper when oil prices recover, and they should last for decades. IMPERIAL OIL $49.32 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $41.9 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; www.imperialoil.ca) is a major integrated oil company with oil sands projects in Alberta and conventional oil and gas operations across Western Canada. It also operates three refineries and 1,700 Esso gas stations. Oil prices hit a high of $147 U.S. a barrel in July 2008, but then plummeted to a low of $32 in December 2008 as the recession took hold. Prices climbed back to over $100 in 2010, and remained near there until mid-2014 when oil plunged from $110 to less than half that price by the end of the year. Oil is now at $60 a barrel....
CRESCENT POINT ENERGY CORP. $28.03 (Toronto symbol CPG; Shares outstanding: 449.5 million; Market cap: $12.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.9%; www.crescentpointenergy.com) produces oil and natural gas in Western Canada, with a focus on its Bakken light oil development in southeastern Saskatchewan. The company is now buying heavily indebted Legacy Oil + Gas (Toronto symbol LEG) for $563 million plus the assumption of $967 million in debt. Activist investors put a lot of pressure on Legacy to complete a deal. The move will add about 22,000 barrels of oil a day to Crescent Point’s current output of 150,000 barrels. About 15,000 barrels of Legacy’s output is in Crescent Point’s core Bakken area....
ALGONQUIN POWER & UTILITIES CORP. $9.58 (Toronto symbol AQN; Shares outstanding: 238.9 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.9%; www.algonquinpower.com) has nearly tripled in size over the past three years through acquisitions. It plans to expand further with more purchases. The company’s regulated utility businesses now provide water, electricity and natural gas to over 489,000 customers, up sharply from 120,000 three years ago. In addition, its hydroelectric, thermal energy, solar and wind facilities generate 1,150 megawatts, up from 460. Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 21.0% of Algonquin....
PENGROWTH ENERGY $3.26 (Toronto symbol PGF; Shares outstanding: 534.6 million; Market cap: $1.8 billion; TSINetwork Rating: Average; Dividend: 7.4%; www.pengrowth.com) has started up its Lindbergh oil sands project in Alberta, which should produce 16,000 barrels a day by the end of 2015. Excluding Lindbergh, Pengrowth produced 69,334 barrels of oil equivalent a day in the first quarter of 2015. As well, for the remainder of 2015, the company has hedged 78% of its oil production at $93.87 (Canadian) a barrel, well above today’s price of $60.16 U.S. It has also hedged 57% of its gas output at $3.72 (Canadian) per thousand cubic feet, compared to the current price of $2.94 U.S. The company’s hedges were worth $354.3 million as of March 31, 2015. Pengrowth is still a buy.
We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of highquality stocks. Here’s a look at six international ETFs:...
LOBLAW COMPANIES $64.10 (Toronto symbol L; Shares outstanding: 412.6 million; Market cap: $26.0 billion; TSINetwork Rating: Above Average; Dividend yield: 1.6%; www.loblaw.ca) saw its sales jump 37.8% in the three months ended March 28, 2015, to $10.0 billion from $7.3 billion a year earlier. Shoppers Drug Mart contributed $2.6 billion to the latest quarterly sales. Even so, same-store sales at Loblaw’s supermarkets rose 4.0%, while Shoppers’ same-store sales gained 3.1%. Earnings per share rose 35.2%, to $0.73 from $0.54, mostly due to successful cost cutting. The strong earnings prompted Loblaw to raise its dividend by 2.0%. The new rate yields 1.6%....
ISHARES MSCI AUSTRALIA ETF $22.29 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 71 largest Australian stocks. Its MER is 0.48%. The fund’s top holdings include Commonwealth Bank of Australia, 11.1%; Westpac Banking Corp., 8.4%; BHP Billiton, 7.6%; Australia and New Zealand Banking Group, 7.4%; National Australia Bank, 7.1%; Wesfarmers, 3.9%; CSL Ltd., 3.6%; Woolworths, 2.8%; Woodside Petroleum, 2.2%; Telstra Group, 2.1%; Rio Tinto, 2.0%; Macquarie Group, 1.9%; and Scentre Group, 1.7%. Australia benefits from its stable banking and political systems and is rich in natural resources. Low commodity prices have hurt its economy, but its proximity to Asian markets with vast potential, including India and China, gives it strong long-term prospects....
TORSTAR $6.12 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $492.2 million; TSINetwork Rating: Average; Dividend yield: 8.6%; www.torstar.com) reported revenue of $192.3 million in the three months ended March 31, 2015. That was down 9.0% from $211.3 million a year earlier, mainly due to to lower ad revenue across its newspapers. However, cost cutting, including layoffs, kept its per-share earnings unchanged at $0.02, before one-time items. The company plans to launch a digital version of The Toronto Star for tablet computers in the fall of 2015. That should help it attract younger readers and spur online ad sales....