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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Long Run Exploration Ltd., $5.64, symbol LRE on Toronto (Shares outstanding: 149.6 million; Market cap: $860.1 million; www.longrunexploration.com), produces oil and natural gas in Alberta. Its output is 56% oil and 44% gas. In the three months ended March 31, 2014, Long Run produced 25,613 barrels of oil equivalent per day, up 8.5% from 23,611 barrels a year earlier. Cash flow per share jumped 43.6%, to $0.56 from $0.39. Higher production and oil prices were behind the increase. Long Run continues to grow by acquisition—it just announced the purchase of Crocotta Energy (Toronto symbol CTA) for $357 million. That deal will add about 7,500 barrels a day to Long Run’s output....
United Natural Foods, $65.17, symbol UNFI on Nasdaq (Shares outstanding: 49.7 million; Market cap: $3.3 billion; www.unfi.com), distributes over 65,000 natural products, including grocery items, nutritional supplements, bulk goods, personal care products, perishables and frozen foods. The company serves more than 31,000 accounts in the U.S. and internationally. United also owns 13 natural product stores in Florida, Maryland and Massachusetts. In the three months ended May 3, 2014, the company’s revenue rose 13.8%, to $1.8 billion from $1.6 billion a year earlier. Earnings per share gained 14.1%, to $0.73 from $0.64....
Horizon North Logistics, $7.37, symbol HNL on Toronto (Shares outstanding: 110.3 million; Market cap: $832.8 million; www.horizonnorth.ca), provides a range of services to resource companies, including workforce accommodation, camp management and catering. The company mainly operates in remote parts of western and northern Canada, where infrastructure is often inadequate. Horizon continues to see strong demand from the oil sands and increasingly from natural gas developments in northeastern B.C. and northwestern Alberta. Over the longer term, the company could see significant demand for workforce housing at proposed liquefied natural gas (LNG) terminals in B.C., as well as in related natural gas fields and along proposed pipeline routes....
SPDR EURO STOXX 50 ETF, $43.15, symbol FEZ on New York (Units outstanding: 132.5 million; Market cap: $5.7 billion; www.spdrs.com), aims to replicate the performance of the EURO STOXX 50 Index. The ETF’s top holdings include major European corporations like Total SA, Sanofi, Banco Santander S.A., Bayer AF, Siemens AF, BASF AF, Daimler AG, Anheuser-Busch InBev SA and BPD Paribas. SPDR EURO STOXX 50 ETF has 36% of its assets in France, 32% in Germany, 13% in Spain, 8% in Italy, 7% in the Netherlands, 3% in Belgium and 1% in Ireland. The fund has a 0.29% MER....
Aecon Group Inc., $16.82, symbol ARE on Toronto (Shares outstanding: 56.4 million; Market cap: $956.8 million; www.aecon.com), is one of Canada’s largest infrastructure developers. Aecon and its predecessors built Canadian landmarks like the CN Tower, the St. Lawrence Seaway, the Calgary Olympic Oval and the Halifax Shipyards. Aecon has three main divisions: The Energy Group, which accounted for 54% of the company’s revenue in the latest quarter, builds various facilities and components for clients in the power industry, including nuclear reactors....
Rite Aid, $7.40, symbol RAD on New York (Shares outstanding: 975.4 million; Market cap: $7.4 billion; www.riteaid.com), is one of the largest drugstore chains in the U.S., with 4,623 outlets in 31 states and Washington, D.C. The stock has shot up from just $1 at the start of 2013, as the company has returned to profitability. Rite Aid showed its first profit in late 2012 after facing five years of losses—and the prospect of bankruptcy due to its huge debt. Rite Aid’s profits have rebounded as the company has cut its costs. It has also made a number of other moves, such as shifting to generic drugs (which are more profitable for Rite Aid than branded treatments), expanding its customer loyalty programs and linking patients and doctors with its Health Alliance computer system....
Seadrill Ltd., $37.77, symbol SDRL on New York (Shares outstanding: 469.1 million; Market cap: $18.9 billion; www.seadrill.com), is a leading offshore drilling company. The Norway-based firm has a fleet of 53 drilling rigs that can operate in shallow to very deep water. It also has 19 more rigs under construction, most of which will be ready within two years. Seadrill only started up in 2005, so it owns modern, high-quality drilling rigs that are in strong demand. As a result, the company’s utilization rates are high, in the 93% to 97% range. In January 2014, Seadrill sold shares of subsidiary North Atlantic Drilling (New York symbol NADL) to the public. This business operates eight rigs that specialize in deepwater drilling in harsh environments, like the North Sea and Arctic Ocean. Seadrill now owns 70% of North Atlantic Drilling....
As you probably know, several U.S. states have de-criminalized or legalized marijuana use and have begun authorizing legal production and sale of the plant. Other U.S. and Canadian jurisdictions are likely to follow. This change in the law is bound to lead to a shift in current and future marijuana production, from the underground economy to the legal economy, where it can be regulated, taxed and invested in. Tax revenues are already starting to roll in, but we haven’t found any worthwhile investments in this area. So far, all we’ve seen are stock promotions. We advise staying out of stock promotions, of marijuana businesses or anything else. They attract the wrong kind of people. Stock promotion is a take-the-money-and-run type of business. Most successful entrepreneurs value their reputations, and want to build a profitable, sustainable business that can pay off for investors. So they generally go into some other line of work, and stay out of stock promotion....
NRG Energy, $36.17, symbol NRG on New York (Shares outstanding: 337.2 million; Market cap: $12.2 billion; www.nrgenergy.com), primarily owns, develops, builds and operates power plants, and sells its electricity in a number of major U.S markets. The company plans to work with Unilever plc (ADR symbol UL on New York) to provide renewable power at the consumer product maker’s U.S. facilities. However, this is just a small deal for NRG. The company’s major growth is coming from some big acquisitions. For example, it’s now in the process of buying Edison Mission Energy for $2.6 billion, and it just agreed to buy North America’s largest wind farm, the Alta Wind facility, from Terra-Gen Power LLC for $2.5 billion....
Vanguard Financials ETF, $46.65, symbol VFH on New York (Units outstanding: 45.3 million; Market cap: $2.1 billion; www.vanguard.com), holds a number of stocks among its top holdings that we recommend in Wall Street Stock Forecaster, including Wells Fargo, J.P. Morgan Chase and American Express. It also holds some we don’t recommend, including its third-largest holding, Berkshire Hathaway. Unlike many holding companies, Berkshire Hathaway trades at a premium to its net asset value, and we think it is fully valued at today’s share price. What’s more, its chairman and CEO, famous investor Warren Buffett, celebrated his 83rd birthday last August. When he dies or if he becomes incapacitated, the stock is vulnerable to a sudden and severe downturn....