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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SPDR S&P CHINA ETF $79.29 (New York symbol GXC; buy or sell through brokers; www.spdrs.com) aims to track the S&P China BMI Index, which is made up of all publicly traded Chinese stocks available to foreign investors. Right now, the fund holds 307 stocks. The $1.0-billion fund’s top holdings are Tencent Holdings, 7.7%; China Mobile, 6.2%; Baidu, 6.1%; China Construction Bank, 5.7%; Industrial & Commercial Bank, 5.1%; Bank of China, 3.3%; China Life Insurance, 2.4%; CNOOC Ltd., 2.1%; PetroChina, 2.1%; and China Petroleum & Chemical, 1.9%. The ETF was launched on March 19, 2007. It has a 0.59% MER and yields 2.5%....
ISHARES AUSTRALIA INDEX FUND $23.48 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 79 largest Australian stocks. Its MER is 0.48%. The fund’s top holdings include Commonwealth Bank of Australia, 11.7%; Westpac Banking Corp., 9.1%; BHP Billiton, 8.5%; Australia and New Zealand Banking Group, 7.9%; National Australia Bank, 6.9%; Wesfarmers, 4.2%; CSL Ltd., 3.6%; Woolworths, 3.5%; Woodside Petroleum, 2.3%; Rio Tinto, 2.2%; Telstra Group, 2.2%, and Scentre Group, 1.7%; and Westfield Group, 1.5%. Australia benefits from its stable banking and political systems. It is also rich in natural resources and close to key Asian markets with vast potential, including India and China....
RIOCAN REAL ESTATE INVESTMENT TRUST $26.85 (Toronto symbol REI.UN; Units outstanding: 307.8 million; Market cap: $8.5 billion; TSINetwork Rating: Average; Dividend yield: 5.3%; www.riocan.com) continues to open new shopping malls and, with partners, mixeduse properties with office and residential space. The trust is also selling off less profitable properties. In the third quarter of 2014, RioCan’s net leasable area shrank by 2.5%, to 71.6 million square feet from 73.5 million a year earlier. But thanks to strong demand from retailers, it’s renewing leases at higher rental rates. That’s why its cash flow rose 7.4% in the latest quarter, to $131 million from $122 million. Cash flow per unit gained 5.0%, to $0.42 from $0.40, on more units outstanding. RioCan’s revenue rose 10.0%, to $296 million from $269 million....
SUN LIFE FINANCIAL $43.15 (Toronto symbol SLF; Shares outstanding: 611.6 million; Market cap: $25.9 billion; TSINetwork Rating: Above Average; Dividend yield: 3.3%; www.sunlife.ca) sells life insurance, savings, retirement and pension products to individuals and corporations. The company has $698.2 billion of assets under management. It mainly operates in Canada, the U.S. and the U.K., but it continues to expand into Asia. In August 2013, Sun Life sold its riskier, money-losing U.S. annuity business, which offers products that guarantee minimum long-term returns even if markets fall....
TELUS $42.03 (Toronto symbol T; Shares outstanding: 615.0 million; Market cap: $25.6 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.telus.com) added 113,000 wireless subscribers, net of cancellations, in the three months ended September 30, 2014, up 8.7% from a year earlier. It now has 8.0 million wireless users and continues to attract high-speed Internet and digital TV subscribers, as well. As a result, Telus’s revenue rose 5.4%, to $3.0 billion from $2.9 billion. Earnings gained 6.0%, to $387 million from $365 million. Telus spent $164 million on share buybacks in the latest quarter, so its per-share earnings rose 10.3%, to $0.64 from $0.58....
CANADIAN PACIFIC RAILWAY $224.79 (Toronto symbol CP; Shares outstanding: 171.0 million; Market cap: $37.7 billion; TSINetwork Rating: Average; Dividend yield: 0.6%; www.cpr.ca) has agreed to sell the southern portion of its Delaware & Hudson Railway in Pennsylvania and New York State to Norfolk Southern Corp. (New York symbol NSC). CP will keep the northern part of this line, which runs between the village of Rouses Point and Albany, New York. If U.S. transportation regulators approve, CP will receive $217 million U.S. That’s equal to 62% of the $400 million (Canadian), or $2.31 a share, that it earned in the third quarter of 2014. This line is losing money, so selling it will free up cash that CP can use to upgrade its other tracks and locomotives....
TORSTAR $6.36 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $513.2 million; TSINetwork Rating: Average; Dividend yield: 8.3%; www.torstar.com) earned $0.06 a share, excluding one-time items, in the three months ended September 30, 2014. A year earlier it made $0.08 a share. Revenue declined 7.1%, to $211.2 million from $227.4 million. The slow economy continues to hurt advertising revenue at Torstar’s newspapers. However, revenue improved at its Internet and flyer-distribution businesses. Torstar has also signed a new deal with the publisher of Montreal’s La Presse newspaper. In 2013, La Presse launched a free digital version for tablet computers. Under this agreement, Torstar will use La Presse’s technology to launch a digital version of its flagship paper, the Toronto Star....
Overall, the drop in oil prices is a favourable development for the universe of stocks we follow and recommend. It will cut into the earnings of our oil stock recommendations, of course. But for all other stocks we follow, and their customers, it will act like a major tax cut. Note, too, that lower oil prices will cut into the cash flow of the top international troublemakers—Russia, Iran, and Venezuela—in three key parts of the world. A steep plunge like this inevitably sparks predictions of an even bigger drop ahead. It pays to be skeptical of predictions like these, just as it pays to be skeptical of bullish predictions that follow a big rise in the price of a stock or a commodity. Most are extrapolations on the rise or fall that has already taken place....
WSP Global, $33.70, symbol WSP on Toronto (Shares outstanding: 62.3 million; Market cap: $2.1 billion; www.wspgroup.com), consults on engineering projects for public and private sector clients around the world. It employs about 17,500 people, mainly engineers, technicians, scientists, environmental experts and architects, in more than 300 offices across 30 countries. In the three months ended September 27, 2014, WSP’s revenue jumped 31.8%, to $537.4 million from $407.6 million a year earlier. Earnings per share gained 9.3%, to $0.46 from $0.43. WSP continues to grow rapidly by acquisition. The latest is its $1.35-billion purchase of Parsons Brinckerhoff, U.K.-based Balfour Beatty plc’s professional service business....
Brookfield Infrastructure Partners LP, $47.36, symbol BIP.UN on Toronto (Shares outstanding: 150.2 million; Market cap: $7.1 billion; www.brookfieldinfrastructure.com), owns and operates utilities, transport and energy assets in North and South America, Australasia and Europe. These holdings include power lines, railroads, ports, toll roads and energy storage facilities. The company has just bought a 23% interest in TDF, France’s largest independent communication tower operator, for $500 million. The telecom industry is new to Brookfield, but the company has been studying it for some time. Brookfield’s units yield 4.6%....