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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Canadian Apartment Properties REIT, $28.42, symbol CAR.UN on Toronto (Units outstanding: 112.3 million; Market cap: $3.2 billion; www.capreit.net), is a real estate investment trust that owns multi-unit residential properties, including apartment buildings and townhouses. In all, the trust owns 41,958 units, including 35,674 residential suites and 30 manufactured-home communities, or trailer parks, with a total 6,284 sites. Its occupancy rate is 97.9%. Fifty-eight per cent of CAP REIT’s units are in Ontario, followed by Quebec (21%), B.C. (9%), Alberta (6%), Nova Scotia (4%), Saskatchewan (1%) and Prince Edward Island (1%)....
When you let “theme investing” play a role in an investment decision, weigh your decision carefully before you act. Make sure you have other reasons to buy. After all, a powerful investing theme can overwhelm your judgment. It can lead you to buy stocks that have little genuine appeal. For example, the most powerful investing theme of the past few decades was the Internet stock mania. By the second half of the 1990s, it was clear that the web was going to have a huge impact on the economy and the world, and was going to create vast fortunes. Those assumptions were absolutely accurate. However, it’s easy to set up a company with an Internet-based business. It’s much harder hard to create a profit-making company, regardless of a link to a fashionable investing theme. That’s why unsuccessful Internet-based stock promotions vastly outnumbered the pioneering Internet stocks that prospered. It’s why most Internet speculations turned out to be terrible investments....
Sierra Wireless, $47.37, symbol SW on Toronto (Shares outstanding: 31.7 million; Market cap: $1.5 billion; www.sierrawireless.com; Manufacturing & Industry sector; TSI Network Rating: Extra Risk), makes modules that manufacturers use to connect products to the Internet. This is known as machine-to-machine (M2M), or more generally as the Internet of Things. Web-connected products can be remotely monitored—and potentially fixed—before they cause a major breakdown. For example, Sierra’s modules let doctors remotely monitor patients and help homeowners use their smartphones to control their home-security systems. They also help car owners send out distress signals and notify automakers of possible defects....
Mentor Graphics, $24.67, symbol MENT on Nasdaq (Shares outstanding: 115.1 million; Market cap: $2.8 billion; www.mentor.com; Manufacturing & Industry sector; TSI Network Rating: Extra Risk), makes hardware and software for improving the design of electronic products and speeding up their development. This has particular appeal for its connection to the Intelligent Auto investing theme. For example, Mentor’s software lets carmakers use less wiring in a car, identify potential safety issues, and minimize electromagnetic effects on sensitive components. The company sells its products and services worldwide, mainly to large firms in the communications, technology, military and transportation industries....
DirectCash Payments Inc., $16.95, symbol DCI on Toronto (Shares outstanding: 17.6 million; Market cap: $298.1 million; www.directcash.net), is the largest non-bank owner and operator of automated teller machines (ATMs) in Canada and Australia and the third-largest in the U.K. It also operates ATMs in Mexico and New Zealand. In addition, DirectCash serves credit unions and other small financial institutions that outsource their ATM transactions. The company now has 20,231 active ATMs, up 3.6% from 19,536 a year ago. Its machines processed 31.6 million transactions in the latest quarter, up 11.8% from 28.3 million....
Clearwater Seafoods, $14.67, symbol CLR on Toronto (Shares outstanding: 50.9 million; Market cap: $747.4 million; www.clearwater.ca), is one of North America’s largest seafood companies and the biggest holder of shellfish licenses and quotas in Canada. The stock has risen on the company’s strong financial results and a positive outlook for its seafood markets. In the quarter ended September 27, 2014, Clearwater’s revenue rose 17.6%, to a third-quarter record of $134.1 million from $114.0 million a year earlier. Cash flow rose slightly, to $22.85 million from $22.78 million, although cash flow per share fell 6.7%, to $0.42 from $0.45, on more shares outstanding....
Journey Energy, $5.75, symbol JOY on Toronto (Shares outstanding: 33.0 million; Market cap: $189.8 million; www.journeyenergy.ca), is an oil and gas producer that’s focused on southern Alberta. Its production is 55% oil and 45% natural gas. The company first sold shares to the public at $12 each and began trading on Toronto on June 19, 2014. In the three months ended September 30, 2014, Journey’s production jumped 103.5%, to 11,002 barrels of oil equivalent from 5,408 a year earlier. The gains mainly came from a major acquisition that closed in March 2014. Cash flow rose 24.5%, to $0.61 a share from $0.49....
Milestone Apartment REIT, $13.67, symbol MST.UN on Toronto (Units outstanding: 53.5 million; Market cap: $731.4 million; www.milestonereit.com), holds 57 “garden-style” apartment properties with 19,161 units in 12 cities throughout the U.S. Sunbelt. Milestone continues to grow by acquisition: it recently bought Heritage on Millenia, a 303-unit apartment community in South Orlando, Florida, for $40.0 million U.S.; in January 2015 it bought the Manor Homes of Arborwalk, a 280-unit apartment community in Lee’s Summit, in the Kansas City region, for $37.2 million U.S. At the same time, the trust is selling older properties to improve its portfolio’s overall quality. Growth by acquisition adds risk. Offsetting some of that risk is the fact that the Sunbelt’s population is forecast to grow by 9% over the next five years, ahead of the country’s overall rate of 5%....
Mobile TeleSystems OJSC (ADR), $10.08, symbol MBT on New York (ADRs outstanding: 1.0 billion; Market cap: $10.1 billion; www.mtsgsm.com), is the leading mobile phone service provider in Russia and the former Soviet Union. The company has 102.4 million subscribers and operates throughout Russia and in Belarus, Ukraine and Uzbekistan. Mobile TeleSystems has positive long-term growth prospects, especially as its subscribers migrate to smartphones, which generate higher fees than regular cellphones. But Russia’s conflict with Ukraine creates considerable uncertainty, mostly because Western sanctions are making it harder for Mobile TeleSystems to raise funds to invest in its networks. What’s more, Russian conglomerate Sistema owns 53.5% of Mobile TeleSystems, and Sistema’s chairman, Vladimir Yevtushenkov, was recently placed under house arrest in Russia. Mobile TeleSystems’ connection to Russia’s corruption issues through Sistema could hurt its shareholders....
Linn Energy, $13.13, symbol LINE on Nasdaq (Shares outstanding: 331.9 million; Market cap: $4.4 billion; www.linnenergy.com), acquires and develops oil and gas properties in the Mid-Continent region in the southern U.S., the Permian Basin (Texas and New Mexico) and the Hugoton Basin (Texas and Kansas), as well as in California, Michigan and Illinois. In December 2013, Linn bought Berry Petroleum for $4.3 billion in stock. The move added long-lasting, mature properties and boosted Linn’s growth prospects. Berry’s reserves were roughly 75% oil. Linn’s shares have dropped lately, along with oil and gas prices, despite the fact that its average daily oil and gas production rose 51% in the third quarter of 2014 from a year earlier....