Thursday Update Including Preferred Shares

Hot Flash…Jim Cramer of CNBC last night spent the first 6 minutes of his show “highly recommending” Potash (POT) owing to an expected massive increase in demand for 2010, excellent cash flow and net income. While he expects that the stock could go down in the short term, he recommends buying it in increments of 10% of the total desired position (“scaling in”). He also emphasized that he prefers it over Agrium (AGU), CF Industries (CF), Mosaic (MOS), SQM (a Chilean producer listed on NYSE), and his usual favourite Terra Nitrogen (TNH). He noted that the recent overselling of commodity stocks was based on a fear of China not buying because analysts were worried that copper inventories in London increased in the past two weeks…

Mr. Cramer then spent the next ten minutes interviewing the CEO of Agnico Eagle (AEM). He commended the CEO for an excellent quarter of earnings and expects a stellar second half. His last comment to the viewers was: “Great Quarter. Buy the Stock !”

As mentioned in previous update, please review the following information on high quality Canadian Preferred Shares. Note the approximate “overall” current yield of the following companies’ shares:

Premier Banks: BMO (5.8%), BNS (5.7%), RY (5.7%), TD (5.6%)

Other Financial Institutions: CM (6.1%), GWO (6.1%), IAG (6.4%), LB (6.3%), MFC (5.9%), NA (6.0%), PWF (6.1%), SLF (6.25%)

Of the top tier banks, I would recommend BMO or RY shares, in particular: (1) BMO B series 15 (BMO.PR.L) closing yesterday @ $24.95, yielding 5.8116%, a perpetual preferred (no redemption date) with a reset date of May 2013; (2) RY series AD (RY.PR.D) closing yesterday @ $19.68 yielding 5.7165%, a perpetual with a rate reset date of Feb 2012; and (3) RY series AV (RY.PR.X) closing yesterday @ $27.68 yielding 5.6449% with a rate reset date of Aug 2014.

Of the other institutions, I like SLF.PR.A & SLF.PR.B, both perpetuals yielding 6.25%, the B shares resetting Sep 2010. I’m not certain about the A shares.

Goldman Sachs announced yesterday that they expect the price of crude oil to reach $85 US before the end of this year. I’ll continue to recommend accumulating Nexen (NXY), Talisman (TLM), Canadian Natural (CNQ), Encana (ECA), Suncor (SU), Potash (POT), Agrium (AGU), CNR and RIM on weakness. I purchased more Nexen this past week @ $21.40, $21.41, $21.44, & $21.49; and Talisman @ $16.61 & $16.67. Watch carefully and stay cautious. Warren.

Weekend Update including Analytical Statistics

BNN’s Market Call & Market Call Tonight. Since June 1^st, there have been 19 shows each (38 total) focusing primarily on guests’ opinions of Large Cap Canadian Stocks. The following stocks received the most “top three guest picks”:

• TRI; 5 occasions
• AGU, BCE: 4 occasions
• CNQ, ECA, TLM, PWF: 3 occasions
• ENB, HSE, IMO, PWF, TCK.B, VT, X: 2 occasions

Since July 1st, there have been 9 shows each. The following received the most picks

• AGU (Agrium): 4 occasions
• TLM (Talisman): 2 occasions

Investor’s Business Daily, a California business paper, has a Monday special edition which provides for more detailed analysis of 2,500 stocks. The following are their overall ratings of Canadian Large Cap Stocks divided by category:

1. Oil & Gas:

• TLM (92)
• PCA (85)
• CNQ (73)
• ECA (65)
• IMO (58)
• SU (50)
• NXY (49)

2. Mining:

• IMG (94)
• CCO (91)
• YRI (85)
• TCK.B (84)
• K (83)
• AEM (67)
• G (66)
• ABX (51)

3. Financials:

• RY (92)
• TD (92)
• BNS (88)
• CM (86)
• SLF (73)
• BMO (72)
• MFC (36)
• FFH (24)

4. Agriculture:

• AGU(60)
• POT (40)

5. Miscellaneous:

• RIM (93)
• Biovail (83)
• Magna (72)
• ENB (70)
• T (67)
• CNR (66)
• TRP (58)
• Gildan (56)
• BAM (40)
• BCE (39)
• CP (38)

Some Trades I made this week include:

• Agrium (AGU) purchased @ $44.78 sold @ $46.07 – holding period 3 trading days.
• Nexen (NXY) purchased in Cash and RSP accounts (July 21 & 22) @ $22.08, $22.13 & $22.14.
• Talisman (TLM) purchased in RSP accounts (July 21 & 22) @ $16.83 & $16.97.

Assuming a positive week on the markets, I continue to recommend Nexen (NXY), Talisman (TLM), and suggest readers look carefully at Agrium (AGU), Potash (POT), Petro Canada (PCA), Canadian natural Resources (CNQ), Encana (ECA), CNR and RIM.

I’ll follow up later in the week with a review of these picks along with some analysis of Corporate Bonds and Preferred Shares that I like. Good luck and be prepared to move quickly in and take profits out. The traditional summer slump hasn’t happened yet. Regards, Warren.

Sunday's Briefing

A quick review of recent trades:

• Manulife (MFC) purchased @ $20.64 sold @ $21.81 – holding period 12 trading days.
• Petro Canada (PCA) purchased @ 42.54 sold @ $43.12 – holding period 11 trading days.
• Talisman (TLM) purchased @ $15.12 sold @ $16.89 – holding period 8 trading days.
• Canadian Natural Resources (CNQ) purchased @ $59.32 sold @ $62.59 – holding period 14 trading days.

A quick review of most recent recommendations: Price changes from July 7^th lows through Friday July 17^th close.

• Canadian Natural (CNQ): $54.77 - $63.01
• Nexen (NXY): $23.02 - $22.10
• Petro Canada (PCA): $38.51 - $43.27
• Suncor (SU): $30.30 - $33.95
• Talisman (TLM): $14.96 - $16.93

Recommendations for Monday:

I continue to recommend Nexen (NXY) which I did purchase on Friday for $21.94 & $21.95. I was watching BNN’s Market Call last night which featured famed veteran financial manager Veronika Hirsch of Bluemont Capital (from the Friday show). She had purchased Nexen on weakness the day prior. Watch for any weaknesses in Oil and Agriculture stocks for potential trades. Continue with “summer caution” and good luck, Warren.

Friday 10:30 AM Briefing

I’m back from vacation and wanted to update you on a few stock picks:

I had recently (past one to two weeks) purchased on weakness:

• Manulife (MFC) @ $21.17 & $21.23 for RSP’s - $20.64 for trading account.
• Currently trading @ $21.89.

• Talisman (TLM) @ $15.12 RSP’s.
• Currently trading @ $16.70.

• Canadian Natural Resources (CNQ) @ $59.33 for my M-in-Law’s RSP’s.
• Currently trading @ $62.91.

My current purchase on weakness recommendation is:

• Nexen (NXY) @ $21.92

The stock posted weak quarterly results this week and got hammered.

Assuming Oil stocks improve in the very near future, the stock should pop back up.

Will follow up by this weekend. Continue with caution. Regards, Warren.

Thursday update

You’ll note that this blog mostly covers Large Cap Canadian Resource Stocks. This owing to the “reasonable” security of their long term earnings. Wednesday’s Globe and Mail (Page B10) highlighted the famous strategy of Hedge Fund manager Joel Greenblatt (http://www.theglobeandmail.com/blogs/number-cruncher/a-canadianized-greenblatt-portfolio/article1210604/) adapted for Canadian stocks screening based upon two specific components:

1. Earnings Yield
2. Return on Capital %

The stocks that made this screen, not including any Income Trust Units are in order and as follows:

• Encana (ECA)
• Agrium (AGU)
• Canadian Natural Resources (CNQ)
• Thompson Creek Metals (TCM) (not a large cap)
• Potash (POT)
• Husky Energy (HSE)
• Russel Metals (RUS) (not a large cap)
• Fairfax Financial (FFH)
• Bombardier (BBD.B)

This corresponds closely with the stocks listed in most recent blogs. While caution is the overall recommended sentiment and strategy, on weaker days, one should consider picking away at the stocks that have been recommended in past blogs. For a review of them, scroll down.

Will be out of town Saturday – Wednesday so I will not be blogging (after tomorrow) for a few days. Lots of luck, Warren.

Tuesday Update

It appears that Large Cap Oil Producer Stocks have bottomed earlier this morning and are bouncing back. This of course could be a very temporary move and these stocks should be watched carefully. Many analysts seem to think that US stocks are due for a correction from the rapid rise since the March lows. Still I do recommend considering small purchases of the Large Cap Oil Producers. Note the lows they attained this morning:

• Canadian Natural Resources (CNQ) $54.77
• Nexen (NXY) $23.02
• Petro Canada (PCA) $38.51
• Suncor (SU) $30.30
• Talisman (TLM) $14.96

I purchased a small amount of Talisman today for my wife’s RSPs @ $15.12.

Keep watching carefully and good luck ! Warren.

Monday Morning Release

As stated in yesterday’s Blog, assuming the market performs well this week, certain stocks look ripe for purchase but with a certain amount of caution. This owing to US corporate earnings beginning this week along with traditional summer stock weakness. As of this morning, it appears that the markets have opened on substantial weakness, particularly in the resource sectors.

This will provide for some good potential purchase on weakness opportunities. Using caution, I recommend looking at (and purchasing small amounts of) the large Canadian oil and gas producers, including:

• Canadian Natural Resources (CNQ)
• Encana (ECA)
• Nexen (NXY)
• Petro Canada (PCA)
• Suncor (SU)
• Talisman (TLM)

I’ll follow up shortly on these picks, Warren.

Sunday's Forecast

The Week Ahead:

With July 1^st and US July 3^rd closings, market action of the previous week didn’t give much to go on. Note that the traditional saying of: “Go away in May (June) and come back in September” is quite valid so I recommend CAUTION. Don’t take large positions. Opportunities for the week ahead are based on a reasonably positive market. With US corporate quarterly profits/losses beginning this week, there could be some rough waters ahead.

Best Opportunities based upon price weakness from this past week are:

• Canadian Natural Resources (CNQ) @ $58.28** (I purchased this stock in my M-in-Law's RRSP account this week.)
• Petro Canada (PCA) @ $41.58* (I purchased this stock in my trading account this week.)
• Suncor (SU) @ $32.85
• Talisman (TLM) @ $15.65
• Manulife (MFC) @ $19.98* (I purchased this stock in my trading account this week.)

Second Best Opportunities are:

• Canadian National Rail (CNR) @ $48.20
• Encana (ECA) @ $55.36
• Nexen (NXY) @ $24.50

Best Opportunities based upon price strength are:

• Potash (POT) @ $113.30
• Teck.B (TCK.B) @ $19.99

Should gold move up this week, keep your eye on Agnico Eagle (AEM). Agrium (AGU) will probably go in the same direction as Potash (POT). Canadian Banks seem to have got too close to their 52 week averages even though price momentum looks terrific.

Good luck, Warren.

Weekend Preview

The Target Scenario is primarily Large Cap Canadian Stocks.
The Goal is to identify short term price trends and therefore “Opportunities”.
This past week, I purchased:

• Manulife (MFC) @ $20.64
• Petro Canada (PCA) @ $42.54

Mid-term I really like Canadian Natural Resources.

The blog will be updated minimum weekly (on the weekend for the week ahead). As this is my first active day on the blog, a revised update will follow by Sunday. Hope you enjoy, Warren.