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.