The Week Ahead

As correctly predicted 3 weeks ago, the stock market was both volatile and negative (see Sep.27^th blog). As incorrectly predicted 2 weeks ago, the market did not suffer more of the same. However, I did recommend (1) taking positions in defensive high yielding stocks; (2) watching the big banks for any price weakness; and (3) take positions in Big Energy stocks owing to the price weakness then.

Stock Recommendations of Last Blog included: CNQ @ $68.42 – now $78.47, ECA @ $59.61 – now $64.95, NXY @ $22.47 – now $26.02, SU @ $35.35 – now $39.98, TLM @ $17.86 – now $20.08, & CPG @ $35.51 – now $37.54.

Stock Trades Completed October 5 - 9 include: Trading Account: Week of Oct. 5 – 9: Purchased more NXY @ $24.16 (lowering average cost to $24.80), and Purchased more TLM @ $18.11 (lowering average cost to $18.73). Sold TLM @ $19.26 (holding period 3 -1 5 trading days). In M-in-Law’s RSP account, I sold NXY $25.63 (cost $24.96), CNQ $76.75 (cost $74.17), ECA $64.27 (cost $62.52).

Stock Trades Completed October 12 – 16 include: Trading Account: I sold  NXY @ $25.77 (cost $24.80). In different RSP accounts, the following stocks were sold:  NXY @ $25.97 (costs $24.60 & $25.05), TLM $19.75 (costs $19.47 & $19.49), CNQ $76.62 (cost $75.00), & ECA $64.38 (cost $63.59). These positions were held for 14 – 19 trading days.

New Defensive Positions Taken Over the Past two Weeks include: For M-in-Law’s RSP I purchased small positions in the following: Canadian Western Bank Preferred “A” @ $26.85 (now at $26.75 paying a 6.78% dividend), Sunlife Preferred “B” @ $19.76 (currently at $19.69 paying 6.095%), Pengrowth Units (PGF.UN) @ $10.46 (closed at the same paying 8.03%), Vermillion Energy Units (VET.UN) @ $30.87 (closed @ 30.64 paying 7.44%) and Yellow Pages Units (YEL.UN) @ $5.61 (currently at $5.70 paying 14.04%). Both Vermillion and Pengrowth had announced new stock offerings to raise money (for purchases) and I took that as a positive sign. Crescent Point Energy (CPG) had done the same this week.

Defensive Stock Recommendations for the Week Ahead include: Vermillion, Pengrowth & Crescent Point as noted above. Epcor Power is issuing a new 5 year rate reset preferred paying 7.0%. Manitoba Tel (MBT) has was hammered two weeks ago on weak guidance ahead but it now pays a reasonably safe 8.23% dividend. Bell Alliant Units (BA.UN) pays a 10.59% dividend. Both Manulife (MFC) and in particular, Sunlife (SLF) look interesting for longer term positions. For preferred shares, Manulife, Sunlife, Industrial Alliance, Great West Life, Power Corp, Power Financial, CIBC (series L & M) and National Bank (P) all pay above 5.9%. Transcontinental’s new preferred (D) is yielding 6.84%.

Momentum Stock Recommendations: I’ve sold most of my positions waiting for which direction the market will take. However, I do note that Big Energy stocks have been on fire, including CNQ, ECA, NXY, SU & TLM. To this can be added Big Agriculture AGU & POT and Mining Giant TCK.B. I would recommend watching these closely for where they appear to be headed. Agriculture stocks look particularly interesting as they have not participated in the recent rally to the degree that the other commodity related stocks have. Good luck and remain cautious. Warren.