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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Detour Gold Corp., $12.99, symbol DGC on Toronto (Shares outstanding: 157.8 million; Market cap: $2.1 billion; www.detourgold.com), finished building its Detour Lake mine in northeastern Ontario in February 2013. It’s now operating at close to full production. The mine produced 232,287 ounces of gold in 2013. This year, with the project at full capacity, its output will likely rise to between 450,000 and 480,000 ounces. That should generate cash flow of $0.80 a share in 2014, and that could rise as high as $1.46 in 2015. Over the mine’s 21.5-year life, the company expects its production to average 600,000 ounces annually....
Fluor Corp., $73.80, symbol FLR on New York (Shares outstanding: 159.1 million; Market cap: $11.6 billion; www.fluor.com), is a global provider of engineering, procurement, construction, maintenance and project management services. The company operates in five segments: Oil & Gas (42% of revenues), Industrial & Infrastructure (41%), Government (10%), Global Services (2%) and Power (5%). The Power segment operates through a 49%-owned partnership with Mexico’s Grupo ICA. In the three months ended June 30, 2014, Fluor’s revenue fell 27.0%, to $5.3 billion from $7.2 billion a year earlier. The drop was mainly due to a weak performance from the Industrial & Infrastructure segment’s mining and metals unit. Excluding one-time items, earnings per share rose 4.0%, to $1.03 from $0.99....
Argonaut Gold, $4.32, symbol AR on Toronto (Shares outstanding: 154.1 million; Market cap: $665.9 million; www.argonautgoldinc.com), owns 100% of the El Castillo gold mine in Durango, Mexico, and 100% of the La Colorada project in Sonora, Mexico. The company also owns the advanced-stage San Antonio project in Baja California Sur, Mexico, and the Magino project in Ontario. In late 2013, Argonaut bought the San Agustin exploration property, located 10 kilometres from El Castillo. In the three months ended June 30, 2014, the company produced 30,310 gold equivalent ounces (including gold by-products such as silver), down 12.3% from 34,572 ounces a year earlier....
Keyera Corp. $97.75, symbol KEY on Toronto (Shares outstanding: 83.9 million; Market cap: $8.2 billion; www.keyera.com), provides a number of services to the oil and gas industry, including gathering, processing, storage and transportation. In the three months ended June 30, 2014, the company reported cash flow of $1.04 a share, up 3.0% from $1.01 a year earlier. Keyera raised its monthly dividend by 7.5%, to $0.215 a share from $0.20, beginning with the June 2014 payment. The stock now yields 2.6%....
Paramount Resources, $59.85, symbol POU on Toronto (Shares outstanding: 104.6 million; Market cap: $6.3 billion; www.paramountres.com), produces oil and natural gas in Alberta and B.C. Its output is 20% oil and 80% gas. In the three months ended June 30, 2014, Paramount produced 20,585 barrels of oil equivalent a day, down 1.0% from 20,790 barrels a year earlier. However, cash flow per share rose 25.0%, to $0.30 from $0.24, along with natural gas prices, which increased 24.9%, to $4.96 per thousand cubic feet from $3.97. Paramount’s long-term debt of $1.2 billion is a low 19.4% of its market cap. The company also has a stock portfolio of other firms valued at $757.0 million as of June 30, 2014. Those investments include 19.1 million shares of Trilogy Energy (Toronto symbol TET) worth $546 million at today’s price....
From time to time a novel investment idea comes along. It may or may not have any lasting value. But it may still attract a following and gradually rise to its height of popularity. Often, it seems to hit that popularity peak just when it can do the most harm to its believers. One recent example: peak oil theory. This theory, which got its start in the 1950s, is based on observations of the cycle of production and depletion of existing oilfields. It says that global oil production will inevitably hit a peak (if it hasn’t already), then head relentlessly downward. Peak oil theory became widely known and commonplace in the first decade of this millennium, along with rising acceptance of predictions that the world was running out of oil. Best-selling authors trumpeted the idea that we were headed for oil prices of $250 a barrel or higher. This was supposed to have all sorts of terrible repercussions, from the collapse of the intercontinental air travel industry, to the end of New Zealand’s exports of frozen lamb....
Ingersoll-Rand plc, $61.83, symbol IR on New York (Shares outstanding: 267.5 million; Market cap: $16.5 billion; company.ingersollrand.com), has two main segments: Climate Control and Industrial Technologies. The company is based in Ireland. In the three months ended June 30, 2014, Ingersoll’s revenue rose 4.3%, to $3.54 billion from $3.40 billion a year earlier. Excluding one-time items, earnings per share gained 21.5%, to $1.13 from $0.93. Ingersoll’s climate control division (78% of total sales) saw its revenue rise 4.3%. This business makes heating, ventilation and air conditioning systems for residential and commercial markets. Its well-known brands include Trane air conditioners, Thermo King refrigeration units for trucks and trailers and American Standard heating and air conditioning equipment....
Gilead Sciences Inc., $107.45, symbol GILD on Nasdaq (Shares outstanding: 1.5 billion; Market cap: $162.4 billion; www.gilead.com), discovers, develops and markets treatments for viruses. The company has a number of drugs on the market, including AmBisome (an antifungal agent), Emtriva (for HIV), Tamiflu (influenza), Vistide (for cytomegalovirus retinitis—or an inflammation of the retina—in AIDS patients) and Hepsera (for hepatitis B). Hepatitis refers to inflammation of the liver, as well as a group of viral infections that also affect the liver. The most common types are hepatitis A, hepatitis B and hepatitis C. Viral hepatitis is the leading cause of liver cancer and the most common reason why patients need liver transplants....
Dundee Corp., $18.94, symbol DC.A on Toronto, has sold 4.5 million units of Dream Office REIT, $29.10, symbol D.UN on Toronto, and 8.6 million units of Dream Global REIT, $9.52, symbol DRG.UN on Toronto. The sales came after the company named David Goodman as its new CEO, replacing his father, Ned Goodman. Dundee likely made the sales to raise funds for David Goodman’s plans as CEO. These initiatives could include expanding its wealth management business and shifting into risky alternative investments, such as land for development and other privately held assets....
BlackPearl Resources Inc., $2.30, symbol PXX on Toronto (Shares outstanding: 335.6 million; Market cap: $772.0 million; www.blackpearlresources.ca), produces and explores for oil, mainly in Alberta and Saskatchewan. The company operates oil properties, but it aims to expand into oil sands production. BlackPearl’s main properties are Onion Lake, Mooney and Blackrod. Blackrod is a planned steam-assisted gravity drainage (SAGD) oil sands development in northern Alberta’s Athabasca region. Extracting the tar-like bitumen from oil sands is much more expensive than conventional oil wells, but new technologies like SAGD have lowered costs in the industry....