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Spinoffs

FRESHII INC. $2.26 is a hold. The company (Toronto symbol FRII; Consumer sector; Shares outstanding: 24.2 million; Market cap: $54.7 million; No dividend paid; Takeover Target Rating: Highest; www.freshii.com) operates fast-food restaurants that offer healthful menu options focused on fresh produce and lean proteins.

The company sold shares to the public and began trading on the Toronto Exchange at $11.50 in late January 2017.

Freshii has now accepted a $2.30-a-share takeover offer from Foodtastic Inc., a Montreal-based, privately held franchisor of multiple restaurant brands in Canada....

2 min read

Pat McKeough

Spinoffs

Spinoffs reward patient investors

Spinoffs tends to take several years to pay off. A good example is Keysight—spun off by parent Agilent in November 2014.

The new stock made little progress in its first five years, but shot up in late 2020 and hit a record high of $208 in late 2021....

2 min read

Pat McKeough

Spinoffs

This spinoff comes with extra risk

ALKERMES PLC $28 is a hold. The company (Nasdaq symbol ALKS; Manufacturing sector; Shares outstanding: 164.3 million; Market cap: $4.6 billion; No dividend paid; Takeover Target Rating: Medium; www.alkermes.com) is a developer of pharmaceutical drugs and is based in Ireland....

1 min read

Pat McKeough

Spinoffs

Benefit from their narrower focus

Spinoffs are a great way for companies to sharpen their focus on the more-profitable segments of their businesses. Here are two recent examples we feel will pay off for investors over the next few years.

BAXTER INTERNATIONAL INC. $44 is a buy. The company (New York symbol BAX; Manufacturing sector; Shares o/s: 504.1 million; Market cap: $22.2 billion; Dividend yield: 2.6%; Takeover Target Rating: Medium; www.baxter.com) makes a variety of medical devices, including intravenous pumps and kidney-dialysis equipment.

Baxter now plans to spin off its Renal Care and Acute Therapies businesses as one separate company....

2 min read

Pat McKeough

Spinoffs

Okta insiders may be ready to sell

OKTA INC. $69 is a hold. The company (Nasdaq symbol OKTA; Manufacturing & Industry sector; Shares outstanding: 160.2 million; Market cap: $11.1 billion; No dividend paid; Takeover Target Rating: Medium; www.okta.com) is a cybersecurity firm that provides companies with workforce identity and customer identity solutions.

Okta first sold shares to the public and began trading on Nasdaq in April 2017 at $17 a share.

In May 2021, it completed the acquisition of Seattle-based Auth0 for $6.5 billion....

1 min read

Pat McKeough

Spinoffs

Activist pressure will get them on track

These two entertainment firms have struggled lately despite the lifting of COVID-19 restrictions and the reopening of their theme parks. Those struggles have prompted activist investors to demand changes at both companies. Still, we believe Disney, with its greater array of businesses and entertainment content, is currently the better pick for your new buying.

WALT DISNEY CO....

2 min read

Pat McKeough

Spinoffs

GE breakup plan holds promise

Conglomerate General Electric is moving ahead with its plan to break itself into three separate companies: Healthcare products (X-ray equipment, MRI and ultrasound scanners); renewable energy and power (turbines and equipment for wind farms); and Aviation equipment (jet engines).

Studies show that spinoffs tend to outperform comparable stocks for several years, and we expect the breakup plan will ultimately pay off for GE investors....

2 min read

Pat McKeough

Spinoffs

Spinoff spotlight: Suncor Energy

SUNCOR ENERGY INC. $44 is a buy. Canada’s largest integrated oil firm (Toronto symbol SU; Resources sector; Shares outstanding: 1.35 billion; Market cap: $59.4 billion; Dividend yield: 4.7%; Takeover Target Rating: Medium; www.suncor.com) recently opted to retain its chain of 1,875 Petro-Canada gas stations after conducting a strategic review....

1 min read

Pat McKeough

Spinoffs

J&J is your #1 Spinoff Buy for 2023

We’ve selected Johnson & Johnson as your #1 Spinoff Buy for 2023.

The pharmaceutical giant is shifting its focus to its prescription drugs and medical device businesses. Under that plan, it will soon spin off its consumer products business as a separate, publicly traded firm called Kenvue.

While pharmaceuticals and medical devices are riskier to develop, they promise faster sales growth and higher returns.

Johnson & Johnson has gained 3% since it announced the split in November 2021, and should go higher as COVID-19’s strain on hospitals further eases....

3 min read

Pat McKeough

How To Invest

Q: Pat, what do you think of the Hamilton Enhanced Canadian Bank ETF (HCAL-TSX). Do you think this is a good way to invest in all the banks rather than try to find the best one(s) to buy individually?

A: Hamilton Enhanced Canadian Bank ETF, $21.63, symbol HCAL on Toronto, (Units outstanding: 18.7 million; Market cap: $404.5 million; hamiltonetfs.com) aims to track the Solactive Canadian Bank Mean Reversion Index.

This index invests in the biggest six Canadian banks—Bank of Nova Scotia, Bank of Montreal, CIBC, Royal Bank, TD and National Bank....

2 min read

Pat McKeough

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Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.