Friday, September 30, 2011

ARC Resources Ltd 2

I usually have 4 to 5% of my portfolio in cash. What I like to have is enough cash and expected dividends to cover withdrawals over the next 5 years. I currently cover 4 year. Why I need the cash is that I am living off my portfolio and I need to have cash in my RRSP accounts to take money from them. I have been a bit short since the 2008 recession, but hopefully will catch up if the market pulls up as usual in December this year and January to May next year.

I do not own this stock (TSX-ARX.A). Yesterday, I talked about the dividends from this company and the fact that shareholders make good money from dividend income. Today, I want to look at the price of the stock and what analysts say about it.

For this stock, the insider trading report shows that there is both insider buying and insider selling, with a net of insider buying just under $1M. This is very minor. What is nice is insiders own more shares than stock options. Although insider own shares worth in the millions, they are a very small percentage of outstanding shares as company is worth around $6B. For example, the CEO has stock with some $8M, but this is a fraction of 1% (.13%) of the company.

There is some 179 institutions that own around 52% of this company, They have bought and sold this stock over the past 3 months and currently own 1.3% more than they did 3 months ago.

I get a 5 year median low Price/Earnings Ratio of 8.8 and a 5 year median high P/E of 13.6. The current P/E of 16 is higher than both of these. However, the P/E ratios have been higher over the past two years, ranging from a low of 12.2 to a high of 26.2. A P/E of 15.96 is a moderate P/E Ratio.

I get a Graham Price of $13.81and the current stock price of $21.07 is 13% higher. The median difference between the Graham Price and stock price is 9% and the high median difference is 37%. So this points to a reasonable price.

I get a 10 year median Price/Book Value Ratio of 2.12 and a current P/B Ratio of 1.87. This also points to a reasonable stock price. (The P/B Ratio would have to be 80% of the 10 year median or 1.70 to show a great current price.)

The last thing to look at is the dividend yield which is currently at 5.7%. The 5 year median dividend yield is higher at 9.5%. However, this stock’s dividend fluctuates and 5.7% is, indeed, a good yield. So from all this, we get a mixed picture. Because earnings and dividend fluctuate, you might want to look more closely at the Graham Price and Price/Book Value Ratios. You could interpret the stock price as reasonable.

So, what do the analysts say? What I find is Strong Buy, Buy and Hold recommendations, with most in the Buy and Hold categories. The consensus would be a Buy recommendation. The buy recommendation comes with a 12 month stock price of $27.00 to $29.00.

One analyst called this stock a defensive stock, because of low debt and safe dividend and considering the market, thought this was a good stock to buy. Of course, this is an oil and gas company and therefore is consider a high risk. Another analyst talks about the good management of this company. This company is fairly balanced between oil and gas. One analyst gives a sell price of $27 and another at $29.

This is an admired company. Although the earnings and cash flow do fluctuate, they do have positive earnings and cash flow. But, as I said above, this is a resource company (oil and gas) and therefore a rather risky investment. Personally, I do not have much in oil and gas because earnings and dividend fluctuations. But, in the long term, this sort of company does provide great income, just not consistent income.

ARC Resources Ltd. is one of Canada's leading conventional oil and gas companies. Its focus is on acquiring and developing long-life oil and gas properties across western Canada. Its web site is here ARC Resources. See my spreadsheet at arx.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Thursday, September 29, 2011

ARC Resources Ltd

Markets are historically weak at this time of the year. I would not expect to see any improvement until at least mid-December. If the weakness and volatility of the market bothers you as an investor, you could do what I do and seldom look to see what is happening. The thing is there is nothing you can do about it.

I do not own this stock (TSX-ARX.A). This company was formed in 1996 as an income trust company (TSX-AET.UN). It converted to a corporation in 2011.

The dividends have come down since the conversion to a corporation. But this has more to do with the type of company it is (it is an oil and gas company). If these companies pay a decent dividend, it will fluctuate with the price of oil and gas. If you want a steady dividend from such a company, the dividend yield has to be very low.

The thing is, you can make a lot of income from such a company, but you have to be able to live with the dividend changing. It will also tend to go lower with a recession, as oil and gas prices tend to go lower with recession. On this particular company, the part of the total return attributable to dividends over the past 5 and 10 years is around 8% and 13% per year, respectively. The capital gain portion of the total return for this company over the past 5 and 10 years is 0% and 8%.

Personally, I have very little invested in oil and gas companies at something like 3% of my portfolio. I follow a number of these companies, because the TSX is full of them, but I have not invested much in them. The best growth number on this company is for total return. The problem again is earnings, cash flow, revenue, etc. depends on the price of oil and gas.

On this company, the second best growth figures are for Book Value. Book Value has grown over the past 5 and 10 years at 4.5% and 5.4% per year, respectively. Revenues, earnings, cash flow and dividends have fluctuated and they are currently at or lower than they were 5 and 10 years ago.

Return on Equity also fluctuates and was ok at 8.2% for the financial year ending in 2010. For the past twelve months the ROE is quite good at 12.3%. The 5 year median ROE is very good at 24.4%.

As far as debt ratios go, the only one that is low is for Liquidity which is currently at 0.57. This ratio has a 5 year median of 0.74. The Asset/Liability Ratio has always been good and it is currently at 2.74 and has a 5 year median of 2.37. Both the Leverage Ratio and Debt/Equity Ratio are good. The current Leverage Ratio 1.57 and the 5 year median is 1.69. The current Debt/Equity Ratio is 0.57 and the 5 year median is 0.69.

It all depends on your goals and risk tolerance whether or not this is a suitable stock for you. Some other bloggers have or mentioned this stock. See Wealthy Canadian.

ARC Resources Ltd. is one of Canada's leading conventional oil and gas companies. Its focus is on acquiring and developing long-life oil and gas properties across western Canada. Its web site is here ARC Resources. See my spreadsheet at arx.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Wednesday, September 28, 2011

Andrew Peller Ltd 2

I do not own this stock (TSX-ADW.A). ). I owned it as Andres Wines from 1996 to 2000, and made a total return of 5.4% per year. All my return on this stock was dividends. If I had continued to hold it until today I would have made an annual return close to 15%. At the time I did not see it going anywhere and dividends were rather flat. Over the past few years they have been raising the dividend often, but not yearly.

When I look at insider trading, I find little insider buying and little insider seller. Although there is net insider buying, it is small at less than .1% of market cap. Some 41% of outstanding Class A stock is owned by insiders and some 78% of Class B stock is owned by insiders.

Both Class A and Class B stock is traded on the TSX. Class B stock has a slightly lower dividend than the Class A stock. I am following Class A stock. Class A stock is non-voting shares, and Class B stock is voting. A very small amount of Class A stock (.54%) is owned by 3 institutions and they increased their holdings by 2% over the past 3 months.

I get a 5 year low median Price/Earnings Ratio of 10.46 and a 5 year median high P/E Ratio of 13.62. The current one of 11.78 is close to the median P/E Ratio and therefore reasonable. The current P/E ratio is based on 12 months’ earnings to June 30, 2011.

I get a Graham Price of $11.81, based on last 12 months earnings and the current stock price of $9.85 is 24% below this. The median difference between the Graham Price and stock price is the stock price is 19% lower. By this measure, the current price is reasonable.

I get a 10 year median Price/Book Value Ratio of 1.25 and a currently one of 1.10. The current one is 88% of the 10 year median ratio and points to a current reasonable price. The current dividend yield is 3.94% and the 5 year median is 3.58%. By this measure the stock price is also reasonable. The 10 year median high dividend yield is 4%, so this makes the current stock price reasonable rather than great.

Few analysts follow this thinly traded stock. Last year one thought that its top price should be $10. That is if it reaches $10, sell. Another analyst thought that the stock was underpriced when the Price/Book Value ratio was 1.15. That is price was only 15% book value. Currently the Price/Book Value is lower at 1.10. Also, he thought that return in the future would be 5% capital gain, plus dividend. Another analyst commented that the company had a high level of debt compared to cash flow and that this was negative.

This blog, which talks about investing in booze stocks, mentions Andrew Peller. This older report from 4 Nov 2010, also mentions Andrew Peller. This article talks about new Ontario tax and Andrew Peller.

I have diversified into retail stocks and I will continue to track this one.

Andrew Peller Limited (the “Company”) is a leading producer and marketer of quality wines in Canada. With wineries in British Columbia, Ontario and Nova Scotia, the Company markets wines produced from grapes grown in Ontario’s Niagara Peninsula, British Columbia’s Okanagan and Similkameen Valleys and vineyards around the world. They also market craft beer under the Granville Island brand. The Company produces and markets consumer-made wine kit products through Winexpert and Vineco International Products. The Company’s products are sold predominantly in Canada. Class A shares are non-voting. Its web site is here Andrew Peller. See my spreadsheet at adw.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Tuesday, September 27, 2011

Andrew Peller Ltd

We appear to be in a bear market. If you are investing consider large cap dividend paying companies. If they also have low debt ratios this is a plus. The most important thing is not to panic. Selling good stocks in such market changes paper loses into real loses.

I do not currently own this stock (TSX-ADW.A). I owned it as Andres Wines from 1996 to 2000, and made a total return of 5.4% per year. All my return on this stock was dividends. If I had continued to hold it until today I would have made an annual return close to 15%. So my investment would have been fine, but at the time I did not see it going anywhere. Also, dividends were rather flat. Retail investments are always riskier than say utility investments.

The current dividend yield on this stock is 4% and this is a good yield. In the last few years this company has been raising their dividends more than in the past. The 5 and 10 year increase in dividend is at 9% and 4.4% per year, respectively.

Their Dividend Payout Ratio is generally at a good level with the 5 year median for earnings 41% and for cash flow at 36% respectively. However, the payout ratios for earnings exclude 2009, where the company suffered an earnings loss.

The total returns over the past 5 and 10 years are at 4% and 15% per year respectively. The portion of these total returns attributable to dividends is 3.4% and 4.8% per year, respectively. So you would not have made much more than dividend income over the past 5 years, but would have done very well over 10 years. This is a good showing considering we are, maybe, moving out of the recession of 2008.

The worst growth for this company is in book value and revenues. The revenue per share growth over the past 5 and 10 years are 5.5% and 7% per year, respectively. The book value growth over the past 5 and 10 years is at 6% and 5.6% per year respectively. This is rather mediocre growth.

Earnings and cash flow growth is better with earnings growth over the past 5 and 10 years at 12.8% and 11.5%. Growth in cash flow is a bit lower with 5 and 10 year growth at 11% and 8% per year, respectively. Return on Equity is fine at 9.9% at the end of 2010 and with a 5 year median of 9.9%.

The debt ratios are fine, with the current Liquidity Ratio a little low at 1.34 and the current Asset/Liability Ratio much better at 1.77. The current Leverage Ratio is fine at 2.30 and the current Debt/Equity Ratio at 1.30.

Tomorrow, I will discuss what analysts say about this stock and also what my spreadsheet says about its current price.

Andrew Peller Limited (the “Company”) is a leading producer and marketer of quality wines in Canada. With wineries in British Columbia, Ontario and Nova Scotia, the Company markets wines produced from grapes grown in Ontario’s Niagara Peninsula, British Columbia’s Okanagan and Similkameen Valleys and vineyards around the world. They also market craft beer under the Granville Island brand. The Company produces and markets consumer-made wine kit products through Winexpert and Vineco International Products. The Company’s products are sold predominantly in Canada. Class A shares are non-voting. Its web site is here Andrew Peller. See my spreadsheet at adw.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Monday, September 26, 2011

Alliance Grain Traders Inc 2

I do not own this stock (TSX-AGT). I started following this stock a few years ago as it seemed like a promising stock. It was touted in the Money Show I attended in 2009.

Both the insider selling and insider buying on this stock are modest, with a net insider selling. So, the insider trading report does not tell us anything. Both the CEO and two members of the Arslan family own almost 25% of the outstanding shares. This has not changed since the last time I looked at this stock.

There are 43 institutions that own some 60% of this company currently. Over the past 3 months they have increased their position in this company by around 4%.

I get a 5 year median low Price/Earnings Ratio of 5.27. This is a very low ratio and it is so low because 2008 and 2009 has above normal earnings. The 5 year median high P/E Ratio is also low at 11.54. That makes the current one of 11.95 on a relative high side, but this is a rather low P/E Ratios, although low P/E Ratios are usually 10 and under, so this is just on the low side.

I get a Graham Price of $23.82. The current stock price of $20.43 is some 14% lower than this. The median difference between the Graham Price and stock price is the stock price being 24% lower and the high difference is the stock price 3% higher than the Graham price. By this measure, the stock price is reasonable.

I get a 6 year median Price/Book Value Ratio of 1.47 and a current one of 1.39. The current one is 95% of the 6 year median. The 5 year median P/B Ratio is higher at 1.83 and the current one is only 75% of the 5 year median. This shows a reasonable current stock price.

The current dividend yield is just 2.94% and the 5 year median is higher at 4.40%. Normally, this would show a rather high current stock price, but the dividend yield on all income trusts converted to corporations are coming down. This stock did well to maintain their dividends during conversion and to raise it after being flat for 3 years.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. Recommendations are rather evenly split over this three types and the consensus recommendation would be a Buy. A number of analysts like the fact that this is a global company and they feel it have good management.

Crops were apparently poor last year because of weather, but one analyst feels that the earnings will shortly be back to a more normal $2.50 next year. A couple of analysts remarked on the good balance sheet. (This company has little debt.)

It still looks like a good company and I will continue to track it.

Alliance Grain Traders Inc. through its subsidiaries, Alliance Pulse Processors Inc. ("Alliance") and Arbel Group ("Arbel"), is engaged in the business of sourcing and processing (cleaning, splitting, sorting and bagging) specialty crops, primarily for export markets. Alliance and its subsidiaries in Canada, U.S., Australia and Turkey handle the full range of pulses and specialty crops including lentils, peas, chickpeas, beans and canary seed through six processing plants. The company recent bought the Arbel Group of Mersin, Turkey. Its web site is here Alliance Grain Traders. See my spreadsheet at agt.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Friday, September 23, 2011

Alliance Grain Traders Inc

I do not own this stock (TSX-AGT). I started following this stock a few years ago as it seemed like a promising stock. It was touted in the Money Show I attended in 2009.

Their dividend yield is currently good at 2.9%, however, stocks are currently depressed and the most likely dividend yield in the future for this company would be between 2 to 2.5%. So it will probably pay a decent dividend. They kept the dividend level in the change to a corporation in 2009. However, this year, they raised the dividend 11% and this is a healthy increase.

The Dividend Payout Ratios are generally good. The 5 year median for earnings is 56% and for cash flow is 26%. The DPR for earnings is expected to be lower at 34% for 2011. The earnings dipped for in 2010. This company had a loss for the first quarter of this year, but again earned money in the 2nd quarter. Earnings estimates have not changed.

Growth rates are good on this stock and most are in the 30% per year range. However, this growth will probably moderate in the future. For example, the growth in revenues per share is up 32% per year over the past 5 years. Earnings are up 38% per year over the past 5 years.

The total return over the past 5 years is like 50% per year with some 6% per year accountable from dividend payments. This will also moderate over the next few years. The dividend rate is much lower currently at 2.9% and when we pull out of the current bear market will go lower. It has been expected that companies that go from income trust to corporations will have lower dividend yields.

Cash Flow is up by some 37% per year over the past 5 years and the book value is up by 33% per year over the past 5 years. For the 6 months ending 60 June 2011 the book value has dropped 4%. They changed the accounting rules to the new IFRS rules. They also have not made much in earnings for the first 6 months of this year.

Shares outstanding have increased tremendously since this company went public in 2005 (112% median per year). However, for the first 6 months of this year, shares have increases at .1% only. Most of the increases have been because of the issuance of more shares.

In regards to debt ratios, the current Liquidity Ratio is fine at 1.52. However, this ratio has often been lower and has a 5 year median ratio of just 1.39. The Asset/Liability Ratio has always been good and is currently at 2.02. The 5 year median ratio is 1.98. The Leverage Ratio and the Debt/Equity Ratio are both fine. The Leverage Ratio is currently at 1.98, with a 5 year median of 2.09. The Debt/Equity Ratio is fine at 0.98, with a 5 year median of 1.09. The company does not have much debt.

I will look to see what analysts say about his stock on Monday. I will also see what my spreadsheet says about the current stock price.

Alliance Grain Traders Inc. through its subsidiaries, Alliance Pulse Processors Inc. ("Alliance") and Arbel Group ("Arbel"), is engaged in the business of sourcing and processing (cleaning, splitting, sorting and bagging) specialty crops, primarily for export markets. Alliance and its subsidiaries in Canada, U.S., Australia and Turkey handle the full range of pulses and specialty crops including lentils, peas, chickpeas, beans and canary seed through six processing plants. The company recent bought the Arbel Group of Mersin, Turkey. Its web site is here Alliance Grain Traders. See my spreadsheet at agt.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Thursday, September 22, 2011

Genivar Inc. 2

I do own this stock (TSX-GNV) as I bought it yesterday when I sold Stantec (TSX-STN). I started to look at this stock (TSX-GNV) for possible purchase after reading a Globe and Mail article Build your own pension with top dividend stocks. I liked what I saw and so I am trying this stock out.

The Insider Trading report does not tell much as it has been restarted since this company changed to a corporation. Since the beginning of the year, there is net insider selling, but of a very small amount (about .1% of the market cap of this stock). There are 50 institutional shareholders owning some 28% of this stock. Over the past 3 months they have increased their holdings by 6%.

I get a 5 year median low Price/Earnings Ratio of 10.4 and a 5 year median high P/E Ratio of 17.9. The current one of 14.4 on a price of $24.70 is therefore a relatively reasonable one. The median P/E Ratio would be 15.9. I get a current Graham Price of $22.45. The stock price is some 9.4% higher. The median difference between the Graham Price and stock price is 1.4%. The median high difference between the Graham Price and Stock price is 24%. So the difference is higher than the median, but much lower than the high difference. With stock prices everything is relative, and this points to a relatively reasonable price.

I get a 5 year median Price/Book Value Ratio of 1.98 and a currently P/B Ratio of 1.87. The current is 95% of the 5 year median. This current ratio points to a reasonable price but not a great one. A great price is when the current P/B Ratio is just 80% of the median.

The last thing to look at is the dividend yield. The current one is 6.1% and the 5 year median is 5.2%. This yield points to a reasonable price. The 5 year median dividend yield high is 6.9%. What I look for is a reasonable price. It is great to get a really good price, but this is not usually possible.

When I look at analyst’s recommendations, I see Strong Buy, Buy and Hold. The consensus is a Buy. It is surprising how many Hold recommendations that there are. With the Buy recommendation I see a consensus 12 month stock price of $29.87.

This is an infrastructure play and will rebound when the non-residential building market rebounds. This company is exposed to the Ontario and Quebec commercial and industrial markets which some analysts feel is returning to normal. This company is also exposed to the Ontario institutional and government markets.

One analyst has a hold on this stock because it has not done well this year. The consensus revenue, earnings and cash flow consensus estimates do not show good or any growth for 2011, but show much better growth for 2012. A number of analysts feel that the company has good management. Their international exposure is only about 3% to 5% of revenue. Other analysts find that the current dividend yield particularly attractive.

This stock has a reasonable price and a very good dividend yield currently.

Genivar Inc. is an engineering services firm providing private and public-sector clients with a complete range of professional consulting services throughout all project phases, including planning, design, construction and maintenance. Its web site is here Genivar. See my spreadsheet at gnv.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Wednesday, September 21, 2011

Genivar Inc.

I started to look at this stock (TSX-GNV) for possible purchase after reading an Globe and Mail article Build your own pension with top dividend stocks.

One of the problems about this stock is lack of long term data. It was initially started as an Income Trust in 2006, so I really only have 4 years of data to review and then two years of analysts’ estimates. However, since analysts’ estimates have often been wrong, you cannot put too much faith in them.

The company has kept the dividend at the same level when it changed to a corporation effective January 2011. The four year increase in dividends is 30% per year; however, the increases came in the first few years. The dividends have been at $1.50 since 2009, although they paid special dividends in 2009 and 2011.

The 5 year median Dividend Payout Ratios at 75% for earning and 44% for cash flow are fine. The DPRs is expected to be a bit higher for 2011 and 2012, but still fine. The current dividend yield is good at 6.1%.

This company has ranked up good growth in all measurements I follow since share where issued in 2006. Revenue per share has grown by 34% per year. Analysts do not expect much growth in revenues this year, but we still have not come out of a recession or we have had slow growth since 2008, so this is not unexpected.

Earnings growth has also been in the 30% range per year over the past 4 year. Again, analysts do not expect any growth in earnings for 2011, but feel that 2012 will be a better year for this company. People who have held this stock since 2006 have done well with a 33% growth per year. The dividend portion of this total return was around 8% per year.

Growth in Cash Flow has also been around 30% per year with this year not expected to see any growth, but growth again next year. The book value growth has been 10.7% per year over the past 4 years and this is also good. However Book Value has declined since the end of 2010 by 12%.

There has been two changed, one is the issuance of more share in connection with the change in the company from an Income Trust to a Corporation and accounting rule changes from Canadian GAAP to IFRS. The number of shares went up by 43%. Genivar Income Trust unit holders got shares in the new company as well as shareholders of the old Genivar company who held an interest in the Income Trust company

The debt ratios are very good for this company. The current Liquidity Ratio is 2.16 and this ratio has a 5 year median value of 1.80. The Asset/Liability Ratio is 2.31 and this ratio has a 5 year median value of 4.14. The Leverage Ratio is currently at 1.76 and this ratio has a 5 year median value of 2.26. The Debt/Equity Ratio is currently at 0.76 and this ratio has a 5 year median value of 0.55. As you can see these are all great values.

The Return on Equity has a 5 year median value of 11.4%. The ROE covering the 12 months to the 2nd quarter of 2011 is lower and is a bit low at 7.8%.

I think that this stock shows promise. I have today sold my Stantec stock to buy this stock. Stantec was always going to be sold at some point as it has no dividends. This stock is in the same industry as Stantec and has dividends.

Genivar Inc. is an engineering services firm providing private and public-sector clients with a complete range of professional consulting services throughout all project phases, including planning, design, construction and maintenance. Its web site is here Genivar. See my spreadsheet at gnv.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Tuesday, September 20, 2011

AGF Management Ltd 2

I was asked if there was a theme at the Money Show I recently attended. Yes there was, as many mentioned that they were worried that we will have another financial crisis and this will come from Europe. They are worried that EU is just postponing what they must do to handle EU debt. They were worried about a messy Greek default and French banks crashing because of it.

Now back to the stock I was reviewing, AGF Management Ltd (TSX-AGF.B), which is a stock I currently do not own. I bought it over several months in 2001 and sold some in 2006 and the rest in 2008. I made a return of 2% per year on this stock. I sold because I did not think that it was going anywhere.

When I look at the insider trading report, I find a bit of insider selling and a bit of insider buying with a net of insider selling. However, there is no significant insider buying or selling. There are some 61 institutions that hold some 36% of the shares of this company. In the last 4 months they have sold 4% of their holdings. The other complication is that there are “A” multiple voting shares and “B” single voting shares. The Goldring Family owns the multiple “A” shares and therefore control the company.

I get a 5 year median low Price/Earnings Ratio of 13.0 and a 5 year high P/E Ratio of 20.2. The current P/E Ratio of 10.8 would show a good current stock price. I get a Graham Price of $21.08 and this is some 24% higher than the current stock price of $15.97. The 10 year median difference is 0, so this also shows a good current stock price.

I get a 10 year median Price/Book Value Ratio of 1.75 and a current one of 1.20. The current one is around 68% of the 10 year median P/B Ratio and points to a good stock price. The last thing to look at is the dividend yield and at 6.64%, it is higher than the 5 year median dividend yield of 4.83%. All the above, of course, point to a good current stock price.

When I look at what the analysts’ recommendations are, I see Buy, Hold and Underperform. The consensus recommendation would be a Hold. Analysts that say “Don’t Buy” this company admit it is cheap, but they do not see that it is a good buy.

Some analysts comments on its good dividend and the fact is it one of the largest Mutual Fund companies in North America, while others are worried about it lack of growth revenue wise. I think that it is interesting that here are no sell recommendations. I must admit that it was recovering just before the recent 2008 crisis.

My main objection to this stock is that it increases it dividend at the expense of the Dividend Payout Ratios and I do not like this in a dividend paying company. I only found one analyst that mentioned this.

AGF is a Mutual Fund company. It owns AGF Trust Company. The company has a diversified group of products designed to meet a variety of investment objectives including GICs, term deposits, real estate secured loans, investment loans and home equity lines of credits. They sell their products in Canada. Its web site is here AGF. See my spreadsheet at agf.htm.

I have taken some steps to rationalize my portfolio to have fewer stocks with bigger holdings. I sold all my shares in IGM Financial (TSX-IGM) and Canadian Pacific (TSX-CP) and bought more shares in Power Financial (TSX-PWF) and Canadian National Railway (TSX-CNR).

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Monday, September 19, 2011

AGF Management Ltd

I do not own this stock (TSX-AGF.B). I used to own this company. I bought it over several months in 2001 and sold some in 2006 and the rest in 2008. I made a return of 2% per year on this stock. I sold because I did not think that it was going anywhere.

It was probably a good idea as I sold at an average price of $22.83 a share in 2006/8 and currently the stock is worth $15.97 a share. However, it is still quite liked by a number of analysts. It is true that the dividend has been rising every year, but this is at the expense of the Dividend Payout Ratios. I do not think that this stock has recovered from the 2000 bear market, let alone the most recent one of 2008.

The DPR for earnings used to be around 20% and the one for cash flow around 8%. The current DPR is 79% for earnings and 51% for cash flow. The 5 year average DRP is 67% for earnings and 28% for cash flow. The dividend increases have really been slowing lately. The 5 year median increase is 13%, but the last 2 years of increases before the end of 2010 was 3% and 2.9%. The most recent increase for 2011 was 2.9%. The other thing that is noticeable is that the yield has been increasing. It used to be around 1% and it is currently at 6.6%.

The only items that have been really increasing over the past 5 and 10 years are the earnings and book value. Earnings have increased over the past 5 and 10 years at 5.2% and 2% per year, respectively. Book value over the past 5 and 10 years has increased at 4.8% and 8.4% per year respectively.

Revenues have only marginally been increasing at around 1% per year. Over the 5 and 10 years prior to 2010 no one would have made any money or only a marginal amount on this stock even though the dividend portion of total return has been 4.5% and 3% per year, respectively. Cash flow has not grown over the past 5 and 10 years.

However, analysts expect growth in both earnings and revenues this year and maybe some growth in cash flow. However, analysts’ consensus estimates for such things are notorious for being wrong.

Return on Equity for this stock has been fine. The currently 5 year median ROE is 13.8% and the ROE for the financial year ending in 2010 was 20.3%. The ROE for the last 12 months ending in May 2011 was also good at 18.7%.

On the debt ratio side, the Liquidity and Asset/Liability Ratios have always been low, especially the Liquidity Ratio. At the end of 2010, the Liquidity Ratio was 0.72 and the Asset/Liability Ratio was 1.28. Nothing much has changed at the end of the 2nd quarter of May 2011. The Liquidity Ratio was 0.70 and the Asset/Liability Ratio was 1.32.

For my other debt ratios, they are a bit high with the current Asset/Book Value Ratio at 4.11 and the Debt/Equity Ratio at 3.57. These are a bit better than the ones for the end of 2010 which were 4.57 and 3.57, respectively. (See my site for further information on Debt Ratios.)

Personally, I still think that this stock is going nowhere, however, tomorrow I will review what analysts say about the stock and my spreadsheet says about its current price.

AGF is a Mutual Fund company. It owns AGF Trust Company. The company has a diversified group of products designed to meet a variety of investment objectives including GICs, term deposits, real estate secured loans, investment loans and home equity lines of credits. They sell their products in Canada. Its web site is here AGF. See my spreadsheet at agf.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Friday, September 16, 2011

Money Show, Ryan Irvine

First of all, I would like to say that this is the last blog entry on the Money Show. On Monday, I will again start to review individual stocks, starting with AGF Management Ltd.

Ryan Irvine is from KeyStone Financial Publishing Corp. His talk was on “How to Construct a Small-Cap Growth Stock Portfolio – Top Small-Cap Stocks for the Fall of 2011”.

Ryan says he has 5 stocks to share today. The first is a cash rich software company, the 2nd is a cash rich junior gold stock, the third is an Auto Engineering firm, the fourth is a high growth IP company and the last a junior gold producer.

If you want to beat the market, you cannot be the market. That is you should not have too many stocks in your portfolio. 20 stocks should be the limit. At the 20th stock, you come as close to general market risk as you will ever come. You should go for a Focused diversification. Although Warren Buffet generally has around 33 stocks, 5 of his stocks make up 75% of his portfolio.

For a small cap portfolio, you should have 8 to 12 stocks, spending around $10,000 on each stock. Diversify them by area, such as manufacturing, gold and precious metals, oil, gas, healthcare, finance, tech and retail. Also you should diversity your portfolio by geographical area such as Canada, US, China, India and other BRIC countries.

Buy companies with solid cash flow, strong Balance Sheet and no or little debt. Such companies can not only weather storms, but they can take advantage of bad times. You should layer into positions. That is break up your investments into several purchases. Enter stock positions gradually. Buy KeyStone recommendations over time. Do not buy them all at once.

The first company is Enghouse Systems (TSX-ESL). This company has a pristine balance sheet. $3.50 of their share value is in cash. The dividend rate is 2.2%. They are a cash cow. They expect 2011 EPS to be $.59, which is a P/E of 15.5. However, if you strip out the $3.50 cash per share, P/E is at 9.59. They have raised their dividends each year for the past 3 years.

The next company is Monument Mining Limited (TSX.V-MMY). This is a cash rich junior gold producer. Their stock price is $.63. The company has no debt and is a low cost producer (around $317 per ounce). In Q3 2011 they made $.04 per share. For 2011 KeyStone expects EPS of $.16 with a P/E of 6.8. In 2012 they expect EPS to be $.12. At that time cash per share would be in the $.30 to $.35 range.

The next company is Exco Technologies Limited (TSX-XTC). It is a strong yield and growing auto engineering company selling at around $2.90. 2011 EPS is expected to be $.43 with a P/E of 7.1. It has around $.28 in cash per share and no debt. They have gradually raised their dividends over the years and currently has a 4% yield. We are going through an auto refresh cycle. So this makes this stock attractive.

The next company is WiLan Inc (TSX-WIN), a cash rich high growth IP Company. This company has lots of patents. He does not think that WiLan and Mosaid will come together. This company has $1.68 cash per share. 2011 revenues are expected to be $110 to $115M. EPS is expected at $.64 with a P/E of 10.82 (less cash P/E is 8.19). At the end of 2011 the company should have $2.00 in cash. Dividend yield is 1.4%.

The last company is Endeavour Mining Corp (TSX-EDV). It is a cash rich junior gold producer with a merger pending. It has $1.70 per share in cash and this is some 70% of its market cap. This company is in merger talks with Adamus Nzema to form MergCo. Its technical chart has been flat for the past year and this makes now a good entry point.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, Andrew Mystic

Andrew Mystic is from Scotia iTrade. His talk was on The Bond Market: The Reality and the Road Ahead.

There is a big spread between government bonds and corporate bonds. We should be buying corporate bonds. However in Canada 65% of corporate bonds are bank bonds. Bonds yields are at historical lows. Bond yields can only go up. This will occur in 1 or 2 years’ time and then bonds prices will fall. The only place to be today is in short term (2 year) bonds. In recent times, interest rates rose more rapidly than today.

There are many concerns. First is a Greece default, and then perhaps Spain, Ireland and Portugal will default? The second worry is the US debt ceiling debates. The third worry is US credit rate cut to AA+ from AAA. Because of these concerns you would have expected bond to go down and interest rates to go up. However, this did not happen because in the crisis people turned to US bonds.

There are other concerns, such as US growth and their unemployment data, the continuing disaster in Japan, talks of QE3, the Federal commitment to put interest rates on hold until mid-2013 and German and French credit ratings.

As investors we should be underweight in fixed income products. We should only buy fixed income products with short terms and avoid all long term bonds. We should be overweight in corporate bonds. We should add to our allocations for high yield using Mutual Funds and ETFs.

If you on in 5 or 10 year bond ladders, you should take profits and then only go for short term bonds. You can again go to long term bonds when yields go up. High yields bonds are only for anyone who can stand the risk. They should only be a maximum of 5% or your portfolio. Bond ETFs can give you diversification. The Canadian dollar will continue to outperform the US dollar. If you build a bond ladder you need at least $100,000. If you have less or a small amount, like $10,000, you would buy bonds ETFs instead.

Outstanding Bank Capital Trust/Tier 1 and preferred shares will no longer be Tier 1 capital and then will have less security in their covenants. This will start to occur in 2013 and continue to 2022. (I have always found preferred shares features confusing and you really have to look into a company’s financial statements to find out what the features are for each of their preferred share issues.)

If you buy bonds, stay in Canadian Banks. Do not buy US or European Banks and do not buy government bonds. US corporation bonds are also fine.

If the US goes into a double dip recession, US treasuries will probably rally. This is counter-intuitive, but it is what will happen.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, Jeff Garland

Jeff Garland is from Stockhouse Publishing Ltd and his talk was on Social Media in Investing.

He first asked what Social Media is? The answer is that it is word of mouth on a global scale. Social median connects people who share common interest. It is user generated content, blogs, group forums. Machine intelligence in SEO produces A-lists and top 100 lists.

Facebook has 750M users. Each user has an average of 130 friends. 50% of active users log in every day. Twitters have 1B tweets per day. YouTube shows 3B video view each day. On YouTube 65% of users are between 35 and 65 years old. 67% are male. Most are college or university graduates. Bloggers create expert networks on specific subjects.

Stockhouse assemble experts in such things as tech, gold, small cap investing. They have articles, videos, forums, blogs, and financial newsletters. At Stockhouse, experts are ranked. How Stockhouse makes money is small cap companies pay them to start a buzz about their company.

See their site at Stockhouse.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Thursday, September 15, 2011

Money Show, Alfred Lee

Alfred Lee is from BMO Financial Group. His talk was called Core Satellite Investing Using Exchange Traded Funds.

They suggested using index ETFs and Index Funds as the Core investments and Mutual Funds and Hedge Funds as the Satellite investments.

He asked if the volatility will dispensate. No, because uncertainty will continue and there is lots of uncertainty. There was global equity panic in 2008, exuberance in 2009, flux in 2010 and flux continuing in 2011. He says we should get out of cyclicals and go into higher dividend paying stock. He says in the short term volatility will be accentuated. Because of this volatility it can trigger program selling.

June to September is usually not good markets, but this year our problem in the market is more than just seasonality. We need to diversify over assets classes and not just within asset class. We should be moving into more bonds. Future portfolio return will depend on diversification.

A core – satellite portfolio is one way to go. You would have the core in ETFs and this should be 60% of your portfolio. The other 40% should be in Mutual Funds (and if you really want to go that way, individual stocks.) He says in moderate volatility only 39% of Mutual Funds beat the market, but in high volatility 68% of Mutual Funds beat the market.

He says there are a number of market cycles. The longest term cycle is the secular cycle. The next one is the cyclical cycles (or business cycle) and the shortest term one is the trading cycle. Currently the trading cycle is driving the market.

It may not be a bad idea to hold high yield emerging market bonds in our satellite portion of our portfolio. We can use covered calls on any Canadian bank we hold to lower volatility of our portfolio. We should be shifting from REITs to utility stock.

We should have commodities, especially gold. Gold is in the 11th straight winner year. The gold market is not co-related to the equity markets. We should buy junior gold stock ETFs. The junior gold stocks have not yet gone up with the price of gold.

We can go to BMO ETFs site and subscribe to BMO’s monthly Strategy Report.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, John Stephenson

He works for First Asset Investment Management Inc. The title of his talk is “Hot Commodities”.

He first talks about the Euro. The name itself was a compromise as they did not want to name it after any other currency. Next the pictures on the bills are bridges. But they did not put on any particular bridge, but a stylized version of European bridge types. The Europeans could not agree on any real European thing to put on the bills. He feels that we are facing a crisis and it will start in Europe. Europe is only growing marginally.

He feels that commodities have held up well. This applies to both the commodities themselves and the commodity producers. China is number one user of all commodities except oil and in this they are number 2. Commodities are difficult on the supply side. This will go on for a long time. There is just tons of demand.

It takes 10 years from discovery to production for a mine. The average copper mine costs $5B to start. Lots of mines cost $1B. Mining is very complicated work and as an investor you should be cautious.

He is cautious himself. First he has 50% in cash. He is playing it safe with dividend paying stock and he is staying with boring government regulated stocks like TransCanada (TSX-TRP) and Enbridge (TSX-ENB). He is staying away from Canadian Banks. They do have limited exposure to Greece but all banks are connected so we should be cautious. The good thing about corporate bonds is that if the company goes bankrupt, you will get something back. This does not happen for stocks.

He says that commodities go in 20 year cycles. The current cycle is being pushed by Asia because Asia is changing. He does not feel that gold is in a bubble. People are looking at it as currency. People do not trust paper currency. (He sees as a real problem that the Europeans could not agree on a currency name or any currency pictures.) However, he feels that the world will eventually stabilize.

He likes silver and feels it will go up. He recommends Silver Wheaton (TSX-SLW). Diamonds are one of the best performing commodities. They have real tangible value.

He likes oil. Most oil companies are owned by countries. We have the Canadian Oil Sands and our companies are cheap. Oil service companies will also do well. Oil companies that are owned by countries will partner with or call in an oil service company, but not another oil company.

He likes HudBay Minerals (TSX-HBM). They have copper and zinc. There is a demand for copper but not currently for zinc. This company has lots of cash and it is defensive. It should do well after we are past the European crisis.

He is bearish on gas at the moment. He thinks that the coal industry is great and specially coking coal. Canada and Australia has coking coal. US have lots of coal, but little coking coal. Agricultural companies will do well (corn, wheat soybean). US have 65% of the export corn and there is a problem with weather this year (too little rain). He thinks fertilizer companies are good. Farming is a very technical business and it will only continue to more and more technical.

Someone asked him about rare earths. He says it is a tiny market worth only about $2B worldwide, with 97% of rare earths coming from China. He says it is strategic, but not investable. You will probably not make any money from it.

He thinks copper mines are good. He also likes gold equities and feels that they will now grow faster than the price of gold. These companies are throwing off a lot of cash.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, Benj Gallander

Benj Gallander is from Contra the Heard Investment Letter. His speech is entitled “How to Guarantee (Almost) Stock Market Losses. This is an interest approach to talking about investing in the market.

He says one of best ways of not making money or not making much is to over diversify. You over diversified if you have more than 25 stocks. He says the problem with mutual funds is that they are in too many areas and too many stocks. Stocks go into indexes because of their trading volumes.

He thinks that by the time a stock is in the TSX60, all it best days are probably behind it. It gets into the index because it is doing unusually well. If something does unusually well, then it will tend to go back to the average (or the mean). He thinks the more interesting stocks are the ones that get kicked out of an index.

Mutual Funds may not lose much, but neither do they make much. Part of this has to do with their high MERs. The average MER in Canada is 2.2%. The problem for investors is win or lose, the Mutual Fund takes their fees. Most Mutual Funds do not match stock market averages.

Another problem he sees is group think. That is people just following the herd. This is a problem also with mutual funds.

Is gold a mania now? He is selling.

You should hold stocks for at least 7 years. One of the reasons is because of taxes. Is it better to pay taxes every year or every 7 years? After you pay taxes, you have less to invest. If you pay taxes every year, you will have less to invest every year. That is, active trading, costs you money.

He does not buy any company that has not been around for 10 years. And, they certainly do not buy IPOs. Most IPOs are down after a year. He likes companies with at least 10 years of history. He also likes ones that are lower now than they have been in the past and hopefully, they will regress to the norm.

He feels that you should be patient with stocks. There is no time frame when he buys a stock. He waits patiently for a stock to hit his target price. The only exception is when a stock’s fundamentals get worse.

We do not have efficient markets. This is a fallacy. Part of the reason is they everyone looks at the same information in different ways.

You can lose money in the stock market by having advisors. They take money for their advice. You can make mistakes in the money and still make more money by investing yourself.

Another way to lose money is not read financial statements and to ignore financial ratios. (He is currently reading a book called The Great Short, by Michael Lewis and he highly recommends this book.)

He looks at technical charts. If the charts say that a stock generally bottoms out in October, 9 times out of 10 times, he will buy it in October. He tends to buy in November and December. He never sells in December. If he wants to sell a stock, he usually sells in January. In January, stock market usually goes up ½% and he will get to delay taxes for an extra year.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Wednesday, September 14, 2011

Money Show, Gavin Graham

Gavin Graham is from Graham Investments Strategy Limited. His talk was entitled “For my Next Trick, What Happens now QE2 is over?”

He said that there was no double dip recession last year because of QE2. More tricks from the Federal Reserve is that their rate will remain unchanged for the next 2 years. Will there be a QE3?

2008 was the 3rd worse year in history for the last 100 years. The worse years were 1931 and 1937. With Bernanke printing money he stopped another great depression. Monetary policy does work. From August 2000 to August 2010 have been 10 lost years for the S&P 500. For 2 years now we have had no interest return and this will continue for the next 3 to 5 years.

Rate will be 0% in US and 1% in Canada. If a double dip recession now occurs in the US, they have shot all their bullets. In Canada, we still have some leeway. Banks are not lending. They can borrow 0% and make money on treasuries. This is the problem with low rates. Japan also has this problem. US growth has almost stalled.

Take the car market. In the US it is lower than at any time in the 60’s to 90’s. It will not improve. With high fuel costs, people cannot afford cars. The biggest car market in the last 3 years is China.

In Canada the Canadian consumer has both debt and savings. Our consumers can fund their debt. In the US debt is coming down because people are defaulting on their mortgages. The US cannot spend their way out of this recession. So far spending is 22% of their GDP. This is the end of Keynesian economics.

The Greeks cannot cut to get healthy growth. Most people feel that they will default and leave the Euro. The problems can spread to Spain and Italy, and then it will spread to France and Germany. Their main problem is that have a monetary union, but not a fiscal union. (In other words they need a federated state like US and Canada.)

The Euro area could break up in the next 3 months, staring with Greece and then maybe Spain, Portugal, Ireland and possibly Italy. Only the core of Germany, France, Netherland and Finland will be left. You should not own Euro banks. Apple is worth currently more than the 32 European banks.

Canada is a good place to be. We can supply emerging markets with resources. Some 37% of the GDP is in exports and 80% of that is dependent on the US.

China has a different problem. For the Government, if they do not produce growth they will not stay in power. So, China will have GDP growth. Does it have bubbles? Yes, but the Chinese can fund them for another 10 to 15 years. China’s urban population is growing and it will continue to growth. By 2030 they will have 1B people living in urban areas.

Nuclear power will grow in both China and India. It will stop growing in Germany.

In the last 5 years, money has been made in emerging markets and in Canada and Australia. Our currency will continue at parity and may be at 1.10 or 1.15 in the next 5 years. He feels that there is a few years of growth left in emerging markets and oil. We should also be buying gold and silver mines. The difference between gold and gold mines has never been greater than it is now. Gold will continue to rise.

Our baby boomers will also need yield. Our people are growing older faster than the population growth (and a lot of western countries have no population growth at all).

Graham said that if you send him an email at graham investment strategy he will send you an electronic copy of this speech.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, Hot Stocks and Sectors for 2012

This session involved Lunch with a Panel consisting of Howard God, Editor at Large for Money Show as the moderator and Howard Atkinson, President of Horizons ETFs Inc., Roger Conrad, editor of Utility Forecaster and Canadian Edge, Ryan Irvine, President and CEO of KeyStone Financial Publishing Corp. and John Stephenson, Senior VP and Portfolio Manager of First Asset Investment Management, Inc. as the panelists.

All these panelist had a list of investments for 2012 for us.

Howard Atkinson:
Howard Atkinson said first of all that investors need to do their homework before investing. We have been in a secular bear market since 2000. Canada has done better, but the secular bear market is not going to get much better anytime soon. This is why his company has launched inverse ETFs.

He says that Europe is in trouble and they will have bank amalgamations. US are still in problems with jobs. A home market bias is not bad for Canadians as we have done better than others. However, out problem is that 80% of our exports go to the US. Harper is exploring lots of trade agreements.

Fixed income for investors is difficult because of low yields. If you are getting higher yields on fixed income, you are getting paid more because of greater risk. There is a problem with low interest rates and that is that it encourages people to borrow.

Where Howard feels we should invest, is first in the precious metal stock sector. He commented on the fact that until recently gold was ahead of gold stocks, but now things have changed and gold stocks are breaking out. We can invest in precious metal using ETFs. Suggestions are BMO Junior Gold Index ETF (TSX-ZJG), Goldex Resources (TSX-GDX) and iShares S&P/TSX Global Gold (TSX-XGD). You can also buy options under Horizons Enhanced Income, Gold ETF (TSX-HEP).

There is another type of ETF to buy and they are inverse EFTs. Some are HBP S&P 500 Inverse ETF (TSX-HIU) and HBP S&P/TSX 60 Inverse ETF (TSX-HIX). He feels that the US market is very ugly at this moment.

There is also currency marketing investing. Cash is not paying much. So why not buy Australian current with an interest rate of 4 ½% (Horizons Australian $ E.T.F. (TSX-ASD). There is also a US-China fund Wisdom Tree Dreyfus Chinese Yuan Fund (CYB).

In the Canadian Financial Sector, you should only buy Canadian banks after the European banks have crashed. Canadian Banks will not crash as much, but will go down in sympathy. See iShares S&P/TSX Capped Financials (TSX-XFN) as a possible investment. Also see Horizons Enhan. Incm. Fin. ETF (TSX-HEF) as an inverse ETF.

He thinks that another good play is the Emerging Markets Consumer Sector. Emerging markets have low government debt. Their consumers are alive and well and will soon start to buy. There are currently around 300M of them and by 2020 there will be 4B of them in the middle and upper classes in Asia. In emerging markets the average age is 10 years younger than in the developed markets.

Roger Conrad:
Roger has a newsletter than gives people something to buy. He believes that we should buy good business at good prices. He feels that the economy is where it was in March 2009. There is slow growth, with some parts doing well and other parts not doing well. What is doing well is resources. We also have major pipelines that will unlock our Canadian Oil Sands.

However, he feels we are in for some slow jagged growth. We have low corporate interest rates and therefore a better capital rising climate. 2011 is a rather mixed bag in Canada with good dividend growth. There are emerging markets we can sell to. Our companies are sharing their profits with their shareholders.

He said there will be jagged growth and weak growth in US stocks for Canadian Investors. He says we should look for growth in essential services. There will be new nuclear plants in the US and some plants will have their licenses extended. An example investment would be Entergy Corp. (NYSE-ETR).

He says that wireless phones are taking over all over the world and this is also trues in the US. An example investment would be Verizon (NYSE-VZ). Another good investment might be US water utilities. Water companies are growing and amalgamating as the small ones cannot meet new water standards. An example investment would be Aqua America (NYSE-WTR).

Another place to invest is Pipeline MLPs. An example would be Genesis Energy LP (NYSE-GEL). The last suggestion is in oil-weighted energy producers. An example would be Crescent Point Energy (TSX-GPG). This company did not change their distributions when it converted from an income trust. The stock price was therefore boosted and they used that to growth capital. It is disciplined distribution payer.

Ryan Irvine:
Ryan said that his company is a stock picker. They like companies with dividends and good return on capital. They also like companies with cash and that can buy acquisitions with cash. For example they bought a company in 2008 that had 80% of its market cap in cash.

He said that there is a disconnect with gold and junior gold companies. They like companies with assets that are producing gold. He said they like tech companies with solid cash positions and they like oil servicing companies as a near play. They like mine servicing companies also.

He thinks that we should build our own growing dividend fund by owing 8 to 10 stocks in the category. His choices are Enghouse Systems Limited (TSX:ESL), Monument Mining Limited (TSX-V:MMY), Exco Technologies Limited (TSX:XTC), WiLan Inc (TSX:WIN) and Endeavour Mining Corp (YSX:EDV). I will deal with all these stocks in a later blog entry when I review another talk by Ryan Irvine.

John Stephenson:
John says that on a macho level, he does not who is more screwed up, US or Europe. He does like US better, but the US has real challenges with their entitlement problems. He thinks that they have about 10 years to fix their problem and he can only see slow growth in the future.

He thinks that Europe is the real worry as the risk is with the governments. Everyone is on strike in Greece and there is a 92% probability it will default. He thinks that France, Spain, and Italy may also default as they owe too much to be bailed out. No one in Europe followed the rules. He thinks that in 6 months to 1 year we will have another crisis and it will be led by Europe. Banks there are selling off. Germany does not want to bail everyone out.

The problems with banks are that no one knows which banks are connected. The European bank problem will spread internationally and Canadian banks will be hit.

Are we in a gold bubble? He feels the answer is no. This is because everyone is printing money. He thinks that the Euro will fall apart. The Swiss Franc stopped rising when the Swiss said they will print enough money to keep it lower.

He thinks that people are going to be worried about the return of capital, not yield on capital. He likes oil servicing companies as they are used by all oil companies. Most oil companies are owned by countries not shareholders. He thinks that we should avoid government bonds, because it is the governments that are the problems.

His stock picks are as follows, 1) Cash, 2) Precious Metals (particularly gold), 3) Large capitalized dividend paying stocks (like TransCanada, and Enbridge) and avoid banks, 4) Energy (like Suncor (TSX-SU), Canadian Natural Resources (TSX-CNQ), Halliburton (NYSE-HAL) and Schlumberger (NYSE-SLB)) and 5) Corporate Bonds (as government bonds are to be avoided like the plague).

He says we need to be concerned with return of capital not return on capital.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, A. J. Monte

A. J. Monte talk was called “Maximizing Profits in a Volatile Market”. He is from Scotia iTrades.

AJ says that volatility will continue and it will rise. He is a trader and he buys on strength and sells on weakness. Strength is when the market is going up and weakness is when it is going down. We should buy high and sell higher. We need to put money when the money is going. Charts give you a snap shot of where the money is going.

He goes say that when there are gaps in charts, 80% of the time the gap will be filled in. Says a stock gaps down because it opens at a lower price that it closed the previous trading day. Future stock prices will fill in between the prices of the 1st and 2nd trading days. So if a stock gaps down, wait until the stock is starting to rise and then buy.

AJ is from the Market Guys and they have a site at The Market Guys. On this site they have weekly and educations videos that anyone can view. The above information on market gaps is included in their educational videos.

Someone asked if you sell a stock that gaps down in price. He said to do so only if the stock goes below its support level. He also said we should have price targets on our stocks. Lots of analysts show price targets. If the stock hits the price target, we should sell, unless the price target has been moved up.

AJ says that people tend to accumulate stocks that have good fundamentals, but are moving down. We should be better off to buy stocks that have bad fundamentals, but are moving up. He also says that we should all have a watch list of stock to buy. We need these we when sell a stock that we currently hold.

He says if a stock is moving up, but trade volumes are moving down it means that buyer’s motivations are dropping. The stock will probably fall back to its support level. He thinks that trade volumes are critical. We should only buy stocks that have at least 50,000 shares that trade daily. If a stock does not, it does not have enough liquidity.

One of the things that he thinks will happen is that we will have hyper-inflation just like the 1970’s. What will save us is Corn ETFs. What is driving inflation in foods is our growing population.

He feels that new traders could benefit from paper trading. What this will do is give you education on the mechanics of trading and you need this. This will not help with the emotions of trading, which always makes real trading more complex. However, if you cannot make money in paper trading, you will certainly not make money in real trading.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Tuesday, September 13, 2011

Money Show, Don Vialoux

Don Vialoux is founder of Tech Talk. His speech title was “Investing in Equity Markets Using a combination of Technical, Fundamental and Seasonal Analysis”.

The sites he mentioned were Equity Clock and Timing the Market. He talks first about the market moving in 16 year cycles. The latest two before our current one was of 1966 to 1982 which had volatility but the market did not progress any higher. The second period was 1983 to 1999 which was characterized by an up cycle movement of 1,000%. He said that our current cycle started in 2000, should last until to 2015. We will have volatility, but no up movement.

He says we should use fundamentals to decide on what to buy and what to sell. We should use Technical Analysis to decide on when to buy and when to sell. There are also seasonal trades.

September is generally bad because analysts are reducing earnings estimates, we have hurricanes, consumer sales are low and we have the anniversary of 9/11. Analysts reduced earnings estimates in September because of 2nd quarter results and this will happen this year. We are having hurricanes this year. Consumer sales are slow because we are over back to school sales of August and Christmas sales come later. Also, new electronics come out in October, so people wait for this. This year the 10th anniversary of 9/11, so it is also important. This all tells us that September will not be a good one.

Generally speaking for the S&P 500, you should buy October 28th and sell May 5th. These dates do very every year by 2 to 3 weeks, but I these are the average dates. The TSX has the same dates. For technical stocks, the up period is from October to the end of January. There are lots of new products this year, so this cycle should be good. For Financial stocks, there are two up periods. One is from the end of October to the end of December. The other period is from the end of February to the end of May.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, Louis James

Louis James is of Casey Research. His talk was on Resource Investing 101: What, Why and How. He is Senior Editor, Metals Division, Casey Research.

Most oil companies are government owned and have other agendas then making money. Mexico’s oil company is in problems as they have not invested in the company.

He says the US is like a family that is making $20,000 a year, is spending $40,000 a year, has $140,000 in debt and agrees to cut $400 in spending. Things are not going to get fixed this way. They will not be fixed without some pain.

In the US Real Estate is on a long slow bottoming. You should not buy Real Estate until everyone has lost hope that it will recover.

Gold is peaking when everyone is buying gold coins. This hasn’t happened yet. We are not even close to a peak. You should own gold for safety reasons. Gold stock stocks are for speculation and this is especially true of Junior Gold Stocks. Gold is moved by fear and we have a solid run up in fear going on.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, Derek Burleton

Derek Burleton is Vice-President and Deputy Chief Economist for TD Bank Group. The title of his talk was Economic and Financial Outlook.

He says that Europe is in trouble and this is not going to go away anytime soon. We will continue to have stock market volatility. The last recession was a Balance Sheet recession and these types of recessions always have along recovery time. In this sort of recession, economies can stall in times of recovery. This is probably what is happening in the US. Volatility damages people’s confidence. Companies are worried and they are lowering their debt levels.

Europe remains the largest risk and it is really a wild card as no one knows what will happen. The prominent question is when Greece will default. The main risk is political. Europe is without a federal government and it needs one. But, how will get there? European banks a vulnerable. There is very little growth in Europe.

Things are slightly better in the US, but it is politically divided on its fiscal challenge. It needs massive fiscal restraint for a long time to come. The US economy is very fragile and it is weaker than was originally thought. There is pend up demand, but the problem is to get it to materialize. They have a liquidity trap. Banks currently will not lend money. They also will not solve their Real Estate crisis and they would have to write-off a lot of mortgages.

Basically, the US has structural problems. 2013 is not going to get better. The velocity of money is low and it will stay low. Interest rates are going to be low for a long time. There is similarity with Japan, but the US has better demographics.

Our Canadian economy is tied to the US economy. We will not be able to export our way to a recovery this time. Our commodity orientations will help us. Resources producers are making investments. China is not as strong as it used to be and there is some vulnerability there, but it should be ok.

We also have long term vulnerability because our consumer debt loads. We also have heavy government debt, especially in Ontario. He does not expect any adjustment to Canadian Real Estate until 2013. He feels that Canada will outperform the US, but not by much. If the US has a technical recession, we will too. (A technical recession is two quarters of negative growth.)

There is an inflation risk in the developed nations. The recovery in advance nations is very fragile. The solving of European problems will not be pretty. Going forward, cash will returns will be low. Bond yields will also remain low. Equity markets will be supported by rising earnings. Commodities will be supported by emerging markets. The Canadian dollar will remain strong and the US dollar will remain weak. Volatility will continue and we should focus on the long term. Equity long term markets will give us a return of around 7.5%.

What has happened is that private debt has become public debt and we now have to deal with this. Greece will have to default and this will be a problem for Europe’s banks. No one knows how this will play out.

We have major fiscal problems with Toronto and Ontario. Ontario will have to drastically change how they deliver services. We should have a slow recovery over the next 3 to 5 years.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Monday, September 12, 2011

Money Show, Gordon Pape

Gordon Page is the Editor and Publisher of “The Canada Report” by Gordon Pape Enterprises. His talk was titled “Where to put your money in 2012”.

Gordon starts by saying that we are in for a couple of tough years, but the sky is not falling. We do have problems, the US credit rating is down, Sovereign debt is high, there are record gold prices and stock markets are volatile. We also have very low interest rates with a recession looming. He thinks that we are heading into a recession that will last until 2013.

He feels that knowing the past will help to tell us the future. The US down grade was not a non-event. It was a shock to the Bond Market. The US has gridlock in politics and nothing will happen until the next election in 2012.

He thinks that the Euro zone is a house of cards. If the German people are not willing to support Greece, Italy etc. there is going to be problems. The gold market will continue to go up and volatility will continue. Interest rate will continue to be low and we have a 50/50 chance of having another recession.

He thinks that the TSX will probably break even in 2011, although it is currently down about 6%. He sees a high demand for high yield securities and these will also be the winners in 2011. (One main reason for demand for high yield securities is demographics.)

This year bonds have done better than stocks as they are up about 6.6%. REITs are also doing well as they are up around 8.2%. Telecoms are also up around 11.9%. The TSX aristocrats are up a bit this year. (The TSX aristocrats are large caps that have raised their dividends each year of the past 5 years.

What he sees a winners for 2012 will be gold, dividend stocks, trusts and limited partnerships and bonds. Gold is still moving up as people see it as a store of wealth. (This is a universally accepted view of gold.) He sees the world in disarray with some countries on the verge of default. This will go on for some time and will help gold to rise.

Stocks he suggests are Agnico-Eagle Mines (TSX-AEM), Barrick Gold Corp. (TSXC-ABX); Franco-Nevada Corp. (TSX-FNV); and Silver Wheaton (TSX-SLW). He likes Silver Wheaton, as have a number of other people at this convention. They buy silver royalty streams. They have just reintroduced a dividend. The stock is low, but it is rising. For ETFs and Mutual Funds, he recommends RBC Global Precious Metals (RBF178); BMG Bullion Fund-A (BMG100) and Claymore Gold Bullion ETF (TSX-CGL).

If you want to buy stocks, you should be into dividend paying stocks. You want stocks that offer down market protection even if you do no need the income. Stocks to buy would be Enbridge Inc. (TSX-ENB); BCE Inc. (TSX-BCE); Fortis Inc. (TSX-FTS); Telus Corp (TSX-T) and Emera Inc. (TSCX-EMA).

Other stocks to consider are Trust and Limited Partnerships such as Inter Pipeline Fund (TSX-IPL.UN) and Brookfield Renewable Power (TSX-BRC.UN). You should try to buy IPL below $15. It is currently around $16.09. Brookfield is a green source electricity company. It used to be Great Lake Hydro. It has a 5.6% yield and it is a buy currently at $23.10. He stressed that we should not discount trust and limited partnership companies as investments.

He thinks that it is not a good idea to buy US Limited Partnership companies as you would need to file US taxes. However, Brookfield Infrastructure LP (NYSE-BIP) is fine as it is based in Bermuda. This company has a good yield at 5.3% and they increase the dividends each year around 3 to 5%.

He thinks that the return from bonds in 2012 will be around 3%. He suggested iShares DEX Universe Bond (TSX-XBB); iShares DEX Short Term Bond (TSX-XSB) and Claymore 1-5 year Government Bond E.T.F. (TSX-CLF). He also suggested Beutel Goodman Bond Fund.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, Dennis Gartman

Dennis Gartman is editor and publisher of the Gartman Letter. Dennis was also in the opening ceremonies. His talk was entitled Food, Fuel, and the Fed: Investing in a Post QE2 World.

People want better food as their income risings. We are producing more and more grains and this will continue. We are producing more fertilizer, like potash. However, food will just get tighter. Companies who are shippers of grains have not done well recently, but eventually their stocks will rise.

He also believes that fuel will get tighter. (He does not believe in peak oil.) Some of the oil will be replaced by nuclear power. What people want is high grade oil like that from Brent, Texas and Libya. (He says that Saudi oil is not good, that it is really junk and takes a lot of refining.) He is not bullish on natural gas. The US has a lot of natural gas.

He says the Fed is not going to tighten (i.e. raise interest rates). The same is true with Europe, Canada and Australia. All interest rates are going to go to 0%.

He defines himself as a trader. He buys what is going up and sells what is going down. He says an “investment” is just a trade that has gone wrong. He says gold is going to go up until it stops. He also said that gold is not a safe harbor. Safe harbor investments do not move 8% in a single day.

He thinks that eventually stocks will go up. However he points out that volatility is a sign of high prices. When you have low prices, the market tends to be quite.

He is also bullish on the US dollar. He feels that it will not lose its reserve status and that the US will remain a dominant power for a very long time. The strong currencies will be dollars that is US, Canadian, Australian and New Zealand dollars.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, Jim Jubak

Jim Jubak is a stock picker and analysts that is often with the Money Show. He is the Editor and Founder of JubakPicks.com. He is also Senior Market Editor for MoneyShow.com. He was a speaker in the Opening Ceremonies. His talk was called 2013 – The Year when the Bills Come Due from Beijing to Washington to Frankfurt.

Jim is very worried about 2013. Currently we have Greek government debt at 53%, the US government debt has been downgraded, Japan debt also has been downgraded, but no one noticed, and we have inflation rearing its head in China and Brazil.

Solutions to problems, especially in US and Europe have not really been solutions, but just delays. There will be another Greek rescue. The US debt ceiling was “fixed’ with cuts back loaded to 2013. Brazil is dreaming that lower inflation will come with a global slowdown.

He feels that Greece will default and with this will come the erosion of the ECB (European Central Bank) and unpredictable bank defaults. He feels that France will be hit hard.

In the US he thinks that reducing the deficit will just become harder. The economy will slow down into a recession. Real Estate is still underwater in the US. Lots of the unemployed have been unemployed for 18 months and may have their skills become obsolete. He thinks that the US risks a 2nd downgrade by another rating organization.

For Brazil, they just have had a big increase in their budget. They are risking runaway inflation and the deficit is just getting higher.

China is postponing their bad loans problems. These bad loans are to local government owned and state-owned companies.

He sees stock market rallies in 2011 and 2012, but they will not be sustainable. He thinks we should be in dividend paying stock and just stick it out through the coming turmoil.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Saturday, September 10, 2011

Money Show, Robert Gorman 2

Robert Gorman, Chief Portfolio Strategist of TD Waterhouse, Canada gave his remarks also in the Opening Ceremonies of the Money Show. However, his was quite a bit longer than anyone else as it was scheduled for one half hour. His talk was, he said of 6 themes. The first three were in part 1 and the last 3 are in part 2 below.

His fourth theme has to do with Bonds. We have had a 30 year bull market in bonds and it is now over. Bond yields in the future will go up and total returns will go down. Probably the best bonds will be corporate bonds.

His 5th theme was to avoid southern European stocks and concentrate on northern European stock. The first one he mentioned would be Nestle S. A. This is the largest food and nutrition company in the world and is Swiss. Next would be Diageo, which is a British Distiller. Another company to hold is British Petroleum (BP). The last is Standard Charter Bank, which is a British bank that is heavily into Asia.

His last theme is about emerging markets. China has done the best this year and most other Asian countries are under water at this point. The Return on Equity is increasing in emerging markets. However, they have a shortage of skilled labor and this will push up wages and compress profit margins going forward. Emerging market growth will go forward in the single digits.

There were a couple of other stocks he recommended and they all have strong dividend growth. They are Suncor Energy (TSX-SU), Canadian Oil Sands (TSX-COS) and Potash Corp. of Saskatchewan (TSX-POT).

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Money Show, Robert Gorman

Robert Gorman, Chief Portfolio Strategist of TD Waterhouse, Canada gave his remarks also in the Opening Ceremonies of the Money Show. However, his was quite a bit longer than anyone else as it was scheduled for one half hour. His talk was, he said of 6 themes. The first three are below and I will continue this later.

First he talk on how the US market affects us, we cannot avoid that. 2008 was the steepest market decline since the Great Depression. There was no double dip recession for US last year, but what happened was slow growth. His says that the signals coming from the US are quite mixed. The biggest issue is that of confidence by consumers and companies. He feels that the odds of a double dip recession have gone up and that this is a concern.

What he thinks what will happen is that slow growth will continue. This can be good if the growth is good enough to increase company profits, but not good enough to cause inflation. What happened since 2008 is that the S&P 500 when from a P/E of 29 to one of 12.5 today. This showed up as no growth in the S&P 500 in 10 years. He feels that the S&P 500 will go up to 15 P/E and it is a reasonable one because we are at the bottom of an inflation cycle.

He also points the difference between the 10 year Treasury bills with a yield of 2% and the Earnings Yield of the S&P 500, which is at 7%. This makes the S&P 500 cheap and the Treasury Bonds expensive. And the last thing he mentions was that US companies have $2T in cash and they can get cheap loans. So they can buy acquisitions rather cheaply.

The second theme Bob talks about is that there has been a recent transition to from small caps to large caps. Going forward, large caps will do better than small caps. The other thing is that large caps have very good dividend yields and they are, in fact, better than interest rates.

His third theme was that consumers are getting more conservative. In the US the biggest debtors were the middle and upper classes, and not as many people thought, the lower classes. These classes do have the earning power to reduce their debt. The US default rates are sharply down. Savings rate has gone from 2% to 6%. The lower debt and higher savings trend will continue and this has a lot to do with demographics. US economy will have a solid foundation but lower growth.

People and companies will be fiscally conservative. In this environment stocks like Johnson & Johnson (NYSE; JNJ) and Pepsico Inc. (NYSE: PEP) will be good investments. They will present lower risks and good upside. Two other good investments would be IBM (NYSE: IBM) and Oracle Corp. (NASDAQ: ORCL).

We will have an unusual period in investment going forward. Interest rates are below dividend yields. Rising dividends will push up stock prices. One good Canadian investment will be Power Corp (TSX: POW). This company has been dead money in the recent past but this is going to change. Other investments would Shaw Communications (TSX: SRJ.B), Royal Bank (TSX: RY) and Bank of Nova Scotia (TSX: BNS).

I will continue on this talk later.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.