Michael Sprung: Top Stock Picks on BNN Market Call, Friday Apr 26, 2013
The Bank of Nova Scotia (TSE:BNS) Market capital 67.70B, P/E 10.78, dividend/yield 0.60/4.23%, EPS 5.27, shares outstanding 1.19B, owned by clients, last purchase Oct 29, 2012 at $53.76.
The Bank of Nova Scotia is a diversified financial institution. BNS has four business lines: Canadian Banking, International Banking, Scotia Capital and Global Wealth Management. In January 2012, the Company closed its acquisition of 51% of Banco Colpatria, based in Bogota, Colombia. In April 2012, through Scotia Capital Inc., BNS acquired Howard Weil Incorporated, an energy investment boutique that provides equity research, institutional sales and trading, and investment banking services. In April 2013, Scotia acquired a 50% interest in Colombian pension fund manager Administradora de Fondos de Pensiones Horizonte SA.
A consistent performer, BNS is well managed, well capitalized and is judiciously employing a well-balanced diversified strategy. The recent acquisition of ING is already contributing beyond expectations. International diversification provides some exposure away from potential slower growth prospects in Canada and the US.
Encana Corporation (TSE:ECA) Market capital 14.06B, P/E – , dividend/yield 0.21/4.30, EPS -3.89, shares outstanding 736.30M, owned by clients, last purchase Dec 19, 2012 at $19.99.
Encana Corporation is the third largest natural gas producer in North America. ECA’s operations include the transportation and marketing of natural gas, oil and natural gas liquids (NGLs). It operates in two divisions: Canadian Division and USA Division. The Canadian Division includes the exploration for, development of, and production of natural gas, oil and NGLs and other related activities within Canada. USA Division carries out the same activities within the United States. During 2011, the Company sold its North Texas natural gas producing assets. During 2011, the Company acquired a 30% interest in the Kitimat liquefied natural gas (LNG) export terminal in British Columbia.
At current natural gas price levels, Encana is selling at a severe discount to peers yet it holds enviable positions in key emerging plays such as Montney, Horn River and Duvernay in Canada and Tuscaloosa, Eaglebine, San Juan, and Uticaa in the US. Management has focused lately on more oil and liquids plays and with current gas prices the balance sheet is improving.
Barrick Gold Corp. (TSE:ABX) Market capital 19.41B, P/E – , Div/yield 0.21/4.23, EPS -0.68, shares outstanding 1.00B, owned by clients, last purchase March 4, 2013 at $29.77.
Barrick is the largest gold mining company in the world. It has four regional business units located in Australia, Africa, North America and South America. Barrick also holds interests in oil and gas properties located in Canada. Its copper business unit contains producing copper mines located in Chile and Zambia and a mine under construction located in Saudi Arabia.
A recent ruling from a Chilean court to halt work on Pascua-Lama gold and silver project marks a growing backlash against the industry in one of the world’s most mining-friendly areas. The Pascua-Lama mine straddles the Andes mountain range between Chile and Argentina and was slated to go into production in 2014.
Barrick has been severely impacted by the recent decline in gold prices along with the well-publicized problems at Pascua-Lama and in the Dominican Republic. Today, Barrick’s share price appears to reflect more than a total write down of Pascua-Lama. Management is now focused on prudent capital allocation. When conditions stabilize, the stock has significant upside potential from current levels.
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