Fortis To Shed Its Properties Arm

Fortis Inc (TSE:FTS, Mkt cap 10.74B, P/E 28.65, Div/yield 0.34/3.49, EPS 1.36, Shares 276.00M) has announced it is to sell off its properties division as it looks to shift focus towards its utility strategy in North America.

Fortis sell Properties ArmCBC News reports that the company, which owns 23 hotels in eight provinces, is getting out of the property business as an "exit strategy", and selling off all of its buildings.

Nora Duke, president and CEO of Fortis Properties, was quick to downplay the decision, stressing that it only represents around 3% of the overall company.

"It's really a question about strategy and strategic fit," she said, adding that Fortis is "principally a utility company", therefore the property business was always playing second fiddle to its overarching utility strategy.

"The properties company has been a successful business and really continues to be — it's a strong operating company, but really for Fortis, our parent company, it's really a question about fit and focusing on the utilities strategy," Duke explained.

Duke was non-committal on what she foresees for the various business entities operating at the properties – nor was she prepared to estimate how the decision will effect jobs.

She said that the outcome on those fronts depends on who buys the properties and what they envisage for the buildings.

However, Duke was keen to point out that the operating entities would still need to carry on and service customers and tenants, which she believes will guarantee the security of many of the jobs in the properties.

Duke revealed that there has already been some interest in a number of the properties, but she was not willing to divulge any further information on the initial discussions.

Fortis increased its quarterly dividend by 6.3%, to $0.34 a share from $0.32. The new annual rate of $1.36 yields 3.6%. Fortis has raised its payout every year for the past 42 years.

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

Stockwatch – Michael Sprung on BNN Market Call Tonight

Stockwatch – Top Picks

Stockwatch – Cenovus Energy Inc., CVE-T, Owned by clients, Last Purchase May 12, 2014, $31.25

Cenovus is an integrated oil and gas company focused on the development of bitumen assets in Alberta with significant joint venture operations at Foster Creek and Christina Lake.  Production should ramp up strongly over the next few years resulting in increasing earnings, cash flow and potential dividend increases.  The stock has lagged the energy sector over the past year and appears attractive at current levels.

Stockwatch – Fortis Inc., FTS-T, Owned by clients, Last Purchase March 4, 2014, $30.55

Fortis is the largest investor owned gas and electric distribution utility in Canada with operations in the US and Belize.  Over the next few years, Fortis is expected to significantly increase its rate base.   The acquisition of UNS in Arizona is closed on August 15, well ahead of schedule.  The addition of UNS is a major step for the Company.  During this period of transition, the yield will support the stock and given the longer term anticipated earning growth, the investment should do well.

Stockwatch – Stuart Olson Inc., SOX-T, Owned by clients, Last Purchase March 20, 2014, $9.00

Stockwatch - Michael Sprung BNN Market Call Top Stock Pick Stuart Olson Inc formerly The Churchill Corporation

Stockwatch – Michael Sprung on BNN Market Call. Top Stock Pick: Stuart Olson Inc., formerly The Churchill Corporation

Stuart Olson Inc, formerly The Churchill Corporation, is one of Canada’s largest construction firms providing general contracting and electrical building systems contracting in the institutional and commercial construction markets as well as electrical, mechanical and specialty services in the industrial construction markets.  The Company is recovering from an acquisition in 2010 that resulted in losses from poorly priced contracts.  With a record high backlog of projects at better margins, profitability should increase going forward.  The dividend currently yields 4.8%.

Stockwatch – Outlook:

Investors have been the beneficiaries of surging markets in North America over the past few years as the economies have recovered from the financial crisis.  Valuations have been stretched as multiples have expanded.  In this environment, taking some profits where securities have had large appreciation may be prudent.  A larger weighting in cash can provide a good option to be deployed should any market setback occur.

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

    Stock Pick – US Federal Energy Watchdog Clears Fortis’ Purchase of UNS Energy

    Fortis  to inject $200 million into UNS to reduce greenhouse gases

    The US Federal Energy Regulatory Commission (FERC) has given the go-ahead to stock pick Fortis Inc’s (TSE:FTS, Mkt cap 6.81B, P/E 19.60, Div/yield 0.32/4.01, EPS 1.63, Shares 213.20M) pending acquisition of local sector player UNS Energy Corp.

    The federal energy watchdog believes that the deal, which is valued at $4.3 billion, is “consistent with the public interest.” The transaction is expected to close by the end of the year after gaining certain regulatory and government approvals, including Hart-Scott-Rodino clearance and greenlight from the Arizona Corporation Commission (ACC) and the Committee on Foreign Investment in the United States.

    Stock Pick Fortis Inc FERC acquisition UNS Energy Corp

    Stock Pick – Fortis Inc – FERC has given the go-ahead to pending acquisition of local sector player UNS Energy Corp

    Shareholders of the Arizona-based utility backed the takeover on 26 March after Fortis agreed to buy its US peer in December, saying it would pay $60.25 in cash for each UNS Energy share and assume $1.8 billion of debt. After the deal closes, Fortis expects to see its assets expand by 33.5% to some $23.5 billion, with regulated utility assets representing around 92% of the total. Following the transaction, Fortis’ customer base will expand to over three million after gaining 650,000 customers in Arizona and around a third of its assets will be located in the US.

    Fortis also pledged to inject $200 million into the US company to help it proceed with a planned gas asset purchase as it seeks to lower its dependence on coal-fired energy.

    Fortis operates power and gas utilities in several Canadian provinces and US states. The company is hopeful that this purchase will support the geographic diversification of its business while improving its earnings per common share from 2015 onwards.

    Free Portfolio Review – Markets were up in 2013. Are you at risk in 2014? Sprung Investment Management Is Pleased To Offer Qualified Investors A Free Portfolio Review—Without Cost or Obligation. Learn more here>>

    The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

    Top Stock Picks and Market Outlook – BNN Market Call, Friday March 7

    Top Stock Picks and Market Outlook – Michael Sprung Interviewed by Mark Bunting on BNN Market Call

    Top Stock Picks

    Cenovus to improve Foster Creek's SOR ratio in 2014

    Cenovus has taken steps to improve Foster Creek’s SOR ratio.

    Michael’s top stock picks for Friday March 7 are:

    Cenovus Energy Inc. (TSE:CVE, Mkt cap 22.22B, P/E 33.63, Div/yield 0.27/3.62, EPS 0.87, Shares 756.12M) Owned by clients, last purchase March 6, 2014 $29.08.
    Cenovus is an integrated oil and gas company focused on the development of bitumen assets in Alberta with significant joint venture operations at Foster Creek and Christina Lake.  Production should ramp up strongly over the next few years resulting in increasing earnings, cash flow and potential dividend increases.

    Fortis Inc. (TSE:FTS, Mkt cap 6.54B, P/E 18.82, Div/yield 0.32/4.17, EPS 1.63, Shares 213.16M) Owned by clients, Last purchase March 4, 2014 $30.55.

    Fortis Inc. owns 51% of the Waneta Dam in BC. Expansion will add a second powerhouse located immediately downstream of existing dam.

    Fortis Inc. owns 51% of the Waneta Dam in BC.

    Fortis is the largest investor owned gas and electric distribution utility in Canada with operations in the US and Belize.  Over the next few years, Fortis is expected to significantly increase its rate base.  Approval for the acquisition of UNS in Arizona is expected later this year.  During this period of transition, the yield will support the stock and given the longer term anticipated earnings growth, the investment should do well.n the longer term anticipated earnings growth, the investment should do well.

     

    Enercare is focused on the securitizing and renting of water heaters and sub-meters.

    Enercare is focused on the securitizing and renting of water heaters and sub-meters.

    Enercare Inc. (TSE:ECI, Mkt cap 607.93M, P/E 347.01, Div/yield 0.06/6.69, EPS 0.03, Shares 58.46M) Owned by clients, Last purchase March 5, 2014 $10.19

    Enercare is focused on the securitizing and renting of water heaters and sub-meters (primarily in multi-residential buildings).  Results have been improving as attrition in rentals has been dramatically reduced.  Sub-metering is growing and debt has been reduced.  We anticipate that the stock will continue to reflect the ongoing improvements in Enercare’s operations.

     

    Market Outlook

    The Canadian market has had a relatively good start to the year buoyed by stronger energy and precious metal prices and advances in the Health Care and Information Technology sectors.  Weakness in the emerging markets and Asia reflect investor concerns as to the sustainability of the recovery despite evidence of continued improvement in the US and greater stability in the Eurozone.  As evidenced earlier this  week, geopolitical events have an immediate impact on investor sentiment.  We anticipate that more disruptions are likely in the coming months and that investors should be prepared to seize opportunities during these periods.

    See Michael on BNN Market Call here>>

    Free Portfolio Review – Markets were up in 2013. Are you at risk in 2014? Sprung Investment Management Is Pleased To Offer Qualified Investors A Free Portfolio Review—Without Cost or Obligation. Learn more here>>

    The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.