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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target="_blank"Amaya Gaming Group, $31.00, symbol AYA on Toronto (Shares outstanding: 129.3 million; Market cap: $4.0 billion; www.amayagaming.com), provides a range of gaming products and services, including casino games, poker, sports betting, player-management software, lotteries and slot machines. The company offers physical products, as well as gaming software and mobile apps. Amaya’s clients are among the world’s largest gaming operators and casinos. The company owns the Ongame network, which connects poker players around the world, including in Canada. More than two dozen websites use Ongame for their poker rooms, most notably partypoker.net....
Virtus Oil and Gas Corp., $2.01, symbol VOIL on the OTCQB market (Shares outstanding: 49.7 million; Market cap: $99.9 million; www.virtusoilandgas.com), began trading in June 2014. The OTCQB market, formerly called the U.S. over-the-counter bulletin board, has no minimum financial standards and includes shell companies and penny stocks with minimal operations. Virtus was originally formed as Curry Gold Corp. It had planned to operate and franchise food trucks in Switzerland that would serve a German snack known as currywurst to German tourists. The company later planned to expand into New York, Washington, Boston and Chicago, because those cities had the largest numbers of German tourists and expatriates in the U.S....
Graphite is one of two naturally occurring crystalline forms of carbon (the other is diamond). Graphite is a soft, greyish-black mineral with a metallic sheen. A graphite crystal is made up of loosely stacked one-atom-thick layers, much like a deck of cards. These layers can slide around, which makes graphite a good lubricant. Graphite is also an excellent conductor of heat and electricity and is relatively inert, being unaffected by most chemicals. It maintains its properties even at temperatures in excess of 3,500°C. Many investors are interested in graphite because it is used in the lithium-ion batteries that power electric cars. But it has a number of other profitable uses, as well....
First National Financial Corp., $21.90, symbol FN on Toronto (Shares outstanding: 60.0 million; Market cap: $1.3 billion; www.firstnational.ca), is Canada’s largest non-bank mortgage originator and underwriter, with $79.9 billion of mortgages under administration. The company mainly offers mortgages for single-family homes and apartment buildings. It also conducts some commercial lending. To free up capital for further expansion, First National sells its mortgages to financial institutions, such as banks. It is also increasingly securitizing its mortgages, or packaging them together and selling them as mortgage bonds. However, in both cases, First National continues to manage the mortgages....
ZENN Motor Company, $0.19, symbol ZNN on Toronto (Shares outstanding: 54.4 million; Market cap: $10.3 million; www.zenncars.com), aims to make and sell what it sees as innovative batteries for cars and other vehicles. ZENN owns 71.3% of EEStor Inc. Using this company’s technology, ZENN hopes to develop a new kind of battery that will be lighter than traditional lead-acid batteries. However, the company reported earlier this year that it has tested certain samples of “high-energy-density ceramic ultra capacitors” made by EEStor but has not yet been able to demonstrate that the technology stores a significant amount of energy....
Diamond Offshore Drilling Inc., $34.60, symbol DO on New York (Shares outstanding: 137.1 million; Market cap: $4.7 billion; www.diamondoffshore.com); SeaDrill, $25.65, symbol SDRL on New York (Shares outstanding: 493.1 million; Market cap: $12.6 billion; www.seadrill.com); and Transocean Ltd., $31.72, symbol RIG on New York (Shares outstanding: 362.2 million; Market cap: $12.5 billion; www.deepwater.com), all continue to fall in price. That’s because producers are shifting toward drilling onshore shale wells after a lack of significant deepwater discoveries in 2013. In fact, last year was the first time in 20 years that the oil and gas industry failed to discover a field with the potential to recover one billion barrels of oil over its lifetime. Hiring deepwater rigs can cost $500,000 a day or more, so most explorers have, at least temporarily, cut their deepwater budgets. As well, the price of crude has moved down over the last few years, and this, combined with a rapid rise in deepwater rig construction, has resulted in overcapacity and falling drilling rates. Ultra-deepwater day rates have declined to $375,000 to $500,000 so far this year, compared to $650,000 in 2013. They will likely keep falling....
We continue to recommend that all investors aim to own two or more of Canada’s big five banks, including Bank of Nova Scotia, our #1 safety-conscious pick for 2014. But we also feel that conservative investors should diversify their Finance-sector holdings with stocks like Great-West Lifeco. GREAT-WEST LIFECO $31.90 (Toronto symbol GWO; Shares outstanding: 998.9 million; Market cap: $32.2 billion; TSINetwork Rating: Above Average; Yield: 3.9%; www.greatwestlifeco.com) is Canada’s largest insurance company. It also offers mutual funds and wealth management. Power Financial owns 67.0% of Great-West. Great-West’s earnings per share rose 12.7% in the three months ended June 30, 2014, to $0.62 from $0.55 a year earlier. The company ended the quarter with $804.6 billion of assets under administration....
VERESEN $17.25 (Toronto symbol VSN; Shares outstanding: 220.6 million; Market cap: $3.8 billion; TSINetwork Rating: Average; Dividend yield: 5.8%) has agreed to pay $1.43 billion for Global Infrastructure Partners’ 50% interest in the Ruby pipeline system. Ruby is a newly built natural gas line that runs 680 miles from Wyoming to Oregon. Right now, it can pump 1.5 billion cubic feet a day, but that could be increased to 2.0 billion. Partner Kinder Morgan will operate the system. The Ruby pipeline will benefit Veresen in two main ways: First, the company is buying its interest through preferred shares that it can convert into common shares whenever it chooses. That means it will receive steady preferred dividends that will immediately add to its cash flow per share....
Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. The group administers over $2 trillion U.S. in 170 mutual funds. Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds aren’t available in all provinces. Canadians can, however, buy Vanguard exchange traded funds (ETFs) that trade on stock exchanges. We don’t recommend all of Vanguard’s ETFs, but here are two we do see as low-fee buys....
ENCANA CORP. $23.88 (Toronto symbol ECA; Shares outstanding: 741.0 million; Market cap: $17.8 billion; TSINetwork Rating: Average; Dividend yield: 1.3%; www.encana.com) has agreed to buy Athlon Energy (New York symbol ATHL) for $7.1 billion U.S. Athlon produces 30,000 barrels of oil equivalent (80% oil and 20% natural gas) a day from 1,138 wells in Texas’s Midland Basin. To put that in context, Encana produces 491,700 barrels (86% gas, 14% oil) a day. Encana recently completed the sale of its remaining 54% stake in PrairieSky Royalty (Toronto symbol PSK) for $2.6 billion. The cash from this sale will help it pay for Athlon....