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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Sienna Senior Living Inc., $15.60, symbol SIA on Toronto (Shares outstanding: 36.4 million; Market cap: $567.5 million; www.siennaliving.ca), is one of Canada’s largest operators of seniors’ housing and Ontario’s biggest licensed long-term care provider. The company recently changed its name from Leisureworld Senior Care Corp. Sienna owns and operates 35 long-term care homes and 10 retirement residences containing a combined 6,799 beds/suites across Ontario and B.C. The company’s subsidiaries include Preferred Health Care Services, which provides professional nursing and personal-support workers, and a management division that consults with outside long-term care homes and retirement residences....
Avigilon Corp., $18.05, symbol AVO on Toronto (Shares outstanding: 46.6 million; Market cap: $841.8 million; www.avigilon.com), designs, makes and sells high-definition surveillance systems. Users can view the images from this equipment on computers, tablets and smartphones. In the three months ended March 31, 2015, Avigilon’s revenue jumped 35.3%, to $75.4 million from $55.8 million a year earlier. However, earnings before one-time items fell 6.0%, to $7.9 million from $8.4 million. In April 2014, the company raised $100 million by issuing 3.4 million shares at $29 each. The extra shares reduced its per-share earnings by 10.5% in the latest quarter, to $0.17 from $0.19....
Kroger Co., $74.42, symbol KR on New York (Shares outstanding: 491.1 million; Market cap: $36.5 billion; www.kroger.com), started up in 1883 and is now the largest grocery store operator in the U.S. by sales. The company has 2,625 locations (1,330 of which also sell gasoline), mainly in the southern, Midwestern and western U.S. In addition to Kroger, the company’s banners include City Market, Dillons, Food 4 Less, Fred Meyer, Fry’s, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith’s. Kroger’s other operations include 782 convenience stores, 326 jewellery stores and 37 plants that make its private label baked goods and dairy products....
Western Digital Corp., $95.23, symbol WDC on Nasdaq (Shares outstanding: 231.0 million; Market cap: $22.0 billion, www.westerndigital.com), develops, makes and sells hard-disk drives, which are mainly used in desktop computers, notebook computers, business applications and consumer electronics. Computer makers account for 63% of Western Digital’s revenue. The rest comes from direct sales to consumers and businesses. The company’s main competitors are Seagate and Toshiba. In its fiscal 2015 third quarter, which ended April 3, 2015, Western Digital’s revenue fell 4.1%, to $3.55 billion from $3.70 billion a year earlier. Weak computer demand cut the company’s hard-drive sales by 8.3%, to 55.4 million units from 60.4 million...
Starbucks Corp., $51.48, symbol SBUX on Nasdaq (Shares outstanding: 1.5 billion; Market cap: $77.2 billion; www.starbucks.com), is a leading seller and roaster of specialty coffee. Starbucks has 8,514 company-operated stores and 5,885 licensed outlets in over 60 countries. Stores in the Americas supply 69% of its sales, followed by China and the Asia-Pacific region (13%), and Europe, the Middle East and Africa (6%). It gets a further 9% of its sales by selling coffee and other beverages through supermarkets and 3% from other activities, like online sales. In its fiscal 2015 second quarter, which ended March 29, 2015, Starbucks’ sales rose 17.8%, to $4.6 billion from $3.9 billion a year earlier. That’s partly because it opened 210 stores, net of closures, during the quarter. On a same-store basis, sales rose 7%, reflecting a 3% increase in the number of transactions and a 4% rise in selling prices. Starbucks’ sales are also benefiting from stronger demand for breakfast and lunch foods....
Slate Office REIT, $7.48, symbol SOT.UN on Toronto (Units outstanding: 15.0 million; Market cap: $112.2 million; www.slateofficereit.com), owns 35 retail, industrial and office properties, mostly in Toronto (61%) of square footage and Winnipeg (32%). Slate changed its name from FAM REIT in March 2015. In the three months ended March 31, 2015, acquisitions increased the trust’s revenue to $14.1 million from $8.2 million a year earlier. Overall cash flow jumped 73.5%, to $3.6 million from $2.1 million, while cash flow per unit rose 5.9%, to $0.18 from $0.17, as the trust issued more units to fund its recent acquisitions. Slate now plans to sell off its 12 retail and office properties and focus on the office market. It also aims to improve on its 91.7% occupancy rate, which is below the industry average. However, a seven-property, $190-million suburban Toronto office portfolio Slate acquired in late 2014, which had an average occupancy rate of just 86%, has dragged down that figure....
Recently a portfolio management client asked our advice on the outlook for the U.S./Canada exchange rate. He plans to sell his Florida condo, and he wants to maximize his Canadian-dollar proceeds from the sale. It’s an interesting question, and more complicated than it sounds. The Canada/U.S. exchange rate seems like the most important factor in the decision. But that rate will come under the sway of at least two more major, unpredictable factors, and possibly others, in the next year or two. The first of these factors is political. Canada faces a federal election this October. The U.S. faces a Presidential election a little over a year later. Government policies always play a big role in foreign-exchange values. In this case, sizeable changes may take place on both sides of the border....
Hi, Pat: I’m considering adding Air Products to my RRSP. What do you think about this stock? Thanks.
Air Products & Chemicals Inc., $147.51, symbol APD on New York (Shares outstanding: 214.3 million; Market cap: $31.8 billion; www.airproducts.com), sells gases extracted from the atmosphere (oxygen, nitrogen) and other sources (hydrogen, helium) to clients including oil and gas exploration firms, industrial-equipment manufacturers, electronics makers and health care companies. It also provides products and services for designing, building and operating liquefied natural gas (LNG) plants. In its fiscal 2015 second quarter, which ended March 31, 2015, the company’s revenue fell 6.5%, to $2.41 billion from $2.58 billion. Air Products gets about 60% of its sales from outside of the U.S., and the strong U.S. dollar offset price increases and higher sales volumes....
Johnson & Johnson, $103.96, symbol JNJ on New York (Shares outstanding: 2.8 billion; Market cap: $290.4 billion; www.jnj.com), operates through three divisions:
- Pharmaceutical (44% of revenue) makes anti-infective, antipsychotic, contraceptive, dermatological and gastrointestinal drugs;
- Medical devices and diagnostics (36%) sells equipment for joint reconstruction and managing circulatory diseases;
- Consumer (20%) makes over-the-counter products like Band-Aid bandages, Tylenol and Motrin painkillers, Listerine mouthwash and Neutrogena skin cream.
Nemaska Lithium, $0.17, symbol NMX on Toronto, (Shares outstanding: 188.7 million; Market cap: $32.1 million; www.nemaskalithium.com), aims to bring its Whabouchi project in Quebec into production. Lithium is used in batteries, glass and ceramics, lubricants, refrigeration, pharmaceuticals, polymers and aluminum production. But the metal mostly goes into lithium-ion and lithium-metal batteries for electric and hybrid-electric cars. Whabouchi holds a deposit of spodumene, which is a hard rock that was once the most important lithium source. But most of today’s lithium comes from brine solutions drawn from salt lakes, such as the Chabyer in Tibet and the Salar de Atacama in Chile. This is cheaper than producing lithium from spodumene and other sources, and the recovered metal is suitable for most uses....