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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How To Invest Library Archives
Central Fund of Canada, $12.69, symbol CEF.A on Toronto (Shares outstanding: 254.4 million; Market cap: $3.7 billion; www.centralfund.com), is a closed-end mutual fund that holds gold and silver bullion. It now holds 57.4% of its assets in gold bullion, 41.9% in silver bullion and 0.7% in cash.
Central Fund trades at a 10.9% discount to the per-unit value of the assets it holds. It has a 0.32% MER, and the units yield 0.09%.
If you want to buy gold or silver, we recommend staying away from gold or silver bullion, coins (unless you collect them as a hobby) or certificates representing an interest in bullion. That’s because commodity investments like gold and silver bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance, storage and so on. You either pay these costs directly or through a premium built into the price of, say, a futures contract.
That’s why we recommend that you invest in gold through gold- or silver-mining stocks. Unlike bullion, these stocks at least have the potential to generate income. However, Central Fund of Canada is a relatively low-cost and liquid way to hold physical gold and silver, and the 10.9% discount to its net asset value also adds appeal.
If you want to invest in gold and silver bullion, Central is okay to hold.
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Central Fund trades at a 10.9% discount to the per-unit value of the assets it holds. It has a 0.32% MER, and the units yield 0.09%.
If you want to buy gold or silver, we recommend staying away from gold or silver bullion, coins (unless you collect them as a hobby) or certificates representing an interest in bullion. That’s because commodity investments like gold and silver bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance, storage and so on. You either pay these costs directly or through a premium built into the price of, say, a futures contract.
That’s why we recommend that you invest in gold through gold- or silver-mining stocks. Unlike bullion, these stocks at least have the potential to generate income. However, Central Fund of Canada is a relatively low-cost and liquid way to hold physical gold and silver, and the 10.9% discount to its net asset value also adds appeal.
If you want to invest in gold and silver bullion, Central is okay to hold.
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Onex Corp., $64.53, symbol OCX on Toronto (Shares outstanding: 109.5 million; Market cap: $7.1 billion; www.onex.com), is a Toronto-based private equity firm with investments around the world.
The company’s holdings operate in a range of industries, including electronics, aviation, health care, insurance, construction, commercial vehicles, business trade shows, packaging, gaming and real estate.
Onex also makes investments, along with partners, through the Onex Partners and ONCAP funds.
By the nature of its business, Onex generates a lot of attention from brokers and the media. This tends to heighten investor expectations, which can lead to greater disappointment and share price declines when its investments backfire.
We don’t recommend Onex Corp.
The company’s holdings operate in a range of industries, including electronics, aviation, health care, insurance, construction, commercial vehicles, business trade shows, packaging, gaming and real estate.
Onex also makes investments, along with partners, through the Onex Partners and ONCAP funds.
By the nature of its business, Onex generates a lot of attention from brokers and the media. This tends to heighten investor expectations, which can lead to greater disappointment and share price declines when its investments backfire.
We don’t recommend Onex Corp.
MTY Food Group, $33.48, symbol MTY on Toronto (Shares outstanding: 19.1 million; Market cap: $640.2 million; www.mtygroup.com), franchises and operates quick-service restaurants.
As of August 31, 2014, MTY had 2,611 locations, of which 2,586 were operated by franchisees and 25 were company-run.
Its outlets operate under a number of banners, including La Crémière, Panini Pizza Pasta, Chick ‘n’ Chick, Cultures, Thai Express, Vanellis, TCBY, Yogen Früz, Sushi Shop, Koya Japan, Tutti Frutti, Taco Time, Country Style, Valentine, Jugo Juice, Mr. Sub and Mr. Souvlaki.
MTY’s locations are in food courts and shopping malls, on streets and in non-traditional places, like gas stations, convenience stores, cinemas and amusement parks. The street-front shops include Country Style, La Crémière, TCBY, Sushi Shop, Taco Time, Tutti Frutti, Valentine and Mr. Sub.
La Crémière (ice cream) and TCBY (frozen yogurt) mainly operate from April to September, while the other chains are open year-round.
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As of August 31, 2014, MTY had 2,611 locations, of which 2,586 were operated by franchisees and 25 were company-run.
Its outlets operate under a number of banners, including La Crémière, Panini Pizza Pasta, Chick ‘n’ Chick, Cultures, Thai Express, Vanellis, TCBY, Yogen Früz, Sushi Shop, Koya Japan, Tutti Frutti, Taco Time, Country Style, Valentine, Jugo Juice, Mr. Sub and Mr. Souvlaki.
MTY’s locations are in food courts and shopping malls, on streets and in non-traditional places, like gas stations, convenience stores, cinemas and amusement parks. The street-front shops include Country Style, La Crémière, TCBY, Sushi Shop, Taco Time, Tutti Frutti, Valentine and Mr. Sub.
La Crémière (ice cream) and TCBY (frozen yogurt) mainly operate from April to September, while the other chains are open year-round.
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QHR Corp., $1.15, symbol QHR on Toronto (Shares outstanding: 48.7 million; Market cap: $56.0 billion; www.qhrtechnologies.com), sells software and services for the health care sector. It operates through two main divisions:
QHR narrowed its focus when it sold its enterprise management solutions business for $20 million in December 2013. This unit specialized in workforce management software, which consisted of payroll, staff scheduling and human resource programs.
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- Electronic medical records (EMR): Under the Accuro brand, QHR makes software that manages electronic patient files for doctors, surgeons and other medical professionals. The company’s software also handles administrative functions like billing and patient scheduling. In addition, this division provides on- and off-site data storage.
- Revenue cycle management (RCM): Under its SoftCare brand, QHR helps health care providers exchange claim information for reimbursement.
QHR narrowed its focus when it sold its enterprise management solutions business for $20 million in December 2013. This unit specialized in workforce management software, which consisted of payroll, staff scheduling and human resource programs.
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Hexcel Corp., $43.28, symbol HXL on New York (Shares outstanding: 95.4 million; Market cap: $4.1 billion; www.hexcel.com), is one of the world’s leading makers of lightweight composite materials. Its products include carbon fibre, fibreglass electronic materials and structural fabrics.
The commercial airline market supplies 58% of Hexcel’s revenue, followed by space and defence (20%), business regional jets (7%), wind power (9%) and industrial (6%). Boeing accounts for 30% of Hexcel’s sales, and Airbus supplies 28%.
In the three months ended September 30, 2014, Hexcel’s revenue rose 9.6%, to $451.9 million from $412.3 million a year earlier. Commercial airline revenue gained 13.2%. Earnings per share increased 18.8%, to $0.57 from $0.48.
Hexcel holds cash of $37.7 million, or $0.40 a share. Its $430 million of long-term debt is just 10.5% of its $4.1-billion market cap.
The company’s exposure to the cyclical commercial airline industry adds risk. However, its products are widely used in the next generation of aircraft because they make airplanes quieter, up to 20% more fuel-efficient, stronger and more corrosion-resistant. Planes that use Hexcel’s materials include the Airbus 350 wide-body jetliner and the Boeing 787 Dreamliner.
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The commercial airline market supplies 58% of Hexcel’s revenue, followed by space and defence (20%), business regional jets (7%), wind power (9%) and industrial (6%). Boeing accounts for 30% of Hexcel’s sales, and Airbus supplies 28%.
In the three months ended September 30, 2014, Hexcel’s revenue rose 9.6%, to $451.9 million from $412.3 million a year earlier. Commercial airline revenue gained 13.2%. Earnings per share increased 18.8%, to $0.57 from $0.48.
Hexcel holds cash of $37.7 million, or $0.40 a share. Its $430 million of long-term debt is just 10.5% of its $4.1-billion market cap.
The company’s exposure to the cyclical commercial airline industry adds risk. However, its products are widely used in the next generation of aircraft because they make airplanes quieter, up to 20% more fuel-efficient, stronger and more corrosion-resistant. Planes that use Hexcel’s materials include the Airbus 350 wide-body jetliner and the Boeing 787 Dreamliner.
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LifeLogger Technologies, $0.48, symbol LOGG on the U.S. over-the-counter market (Shares outstanding: 81.0 million; Market cap: $38.9 million; www.lifelogger.com), is a Florida company that aims to market its gum-packet-sized LifeLogger wearable camera.
The grey plastic device has a pair of buttons on the side: one for recording HD video and another for taking photos. It slots onto a black plastic band that runs around the back of the user’s head and keeps the device in place against the side of a person’s face.
There is already competition in this area, including from Google’s Glass device, but LifeLogger hopes to distinguish itself by adding a subscription-based cloud service that processes and stores all recorded content.
This service includes software that lets users pick out the important parts of each recorded segment. For example, by using the camera’s GPS, users can see where they were during each moment of the video and which way they were facing, allowing them to jump to a specific spot.
The company’s cloud-based software also aims to organize video through face, voice and text recognition. In addition, LifeLogger plans to develop an application that will let other wearable cameras communicate with its cloud service.
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The grey plastic device has a pair of buttons on the side: one for recording HD video and another for taking photos. It slots onto a black plastic band that runs around the back of the user’s head and keeps the device in place against the side of a person’s face.
There is already competition in this area, including from Google’s Glass device, but LifeLogger hopes to distinguish itself by adding a subscription-based cloud service that processes and stores all recorded content.
This service includes software that lets users pick out the important parts of each recorded segment. For example, by using the camera’s GPS, users can see where they were during each moment of the video and which way they were facing, allowing them to jump to a specific spot.
The company’s cloud-based software also aims to organize video through face, voice and text recognition. In addition, LifeLogger plans to develop an application that will let other wearable cameras communicate with its cloud service.
...
Growth by acquisition can be risky, but BCE’s size lets it take advantage of attractive opportunities with a strong chance of success. Some, like its $3.2-billion purchase of Astral Media, further diversify its operations. Others, such as Bell Aliant, offer a low-risk way to expand its wireless and Fibe TV networks and cut overlapping costs. BCE INC. $51.08 (Toronto symbol BCE; Shares outstanding: 778.1 million; Market cap: $41.8 billion; TSINetwork Rating: Above Average; Dividend yield: 4.8%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also offers satellite and Internet TV across the country. In the three months ended September 30, 2014, BCE’s earnings per share rose 10.7%, to $0.83 from $0.75 a year earlier. Revenue increased 1.9%, to $5.2 billion from $5.1 billion....
ISHARES MSCI JAPAN INDEX FUND $11.76 (New York Exchange symbol EWJ; buy or sell through brokers; us.ishares.com) is an ETF that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index. The fund has now regained all of the ground it lost in the recent market downturn. Its latest rise came after the Japanese government and the Bank of Japan announced huge increases in their economic stimulus programs. Under Prime Minister Shinzo Abe’s so-called “Abenomics” strategy, the Bank of Japan has pumped money into the country’s economy. However, consumer spending has remained sluggish, especially after the government raised the sales tax to 8% from 5% on April 1, 2014....
ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $35.46 (Toronto symbol AP.UN; Units outstanding: 74.6 million; Market cap: $2.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.0%; www.alliedreit.com) owns 138 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.9 million square feet of leasable area. Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to retail space. They usually feature exposed beams, interior brick and hardwood floors. Allied bought $400 million of properties in 2012 and $182.4 million worth in 2013. In the first half of 2014, it added six more for $110.0 million....
IBM $161.82 (New York symbol IBM; Shares outstanding: 997.6 million; Market cap: $197.9 billion; TSINetwork Rating: Above Average; Dividend yield: 2.7%; www.ibm.com) is handing over its computer chip manufacturing operations to Globalfoundries Inc. IBM will not receive any payment for these assets. Instead, it will pay Globalfoundries $1.5 billion to take over this money-losing business. IBM has also agreed to buy chips from Globalfoundries for the next 10 years. This move is part of IBM’s plan to focus on its more profitable computer services and software divisions, which should spur its earnings as the economy rebounds. Meanwhile, its $4.40-ashare dividend seems safe and yields 2.7%. IBM is a buy.