Three more Canadian Edge Portfolio Holdings have reported solid fourth-quarter and full-year 2012 results. Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF) and Parkland Fuel Corp (TSX: PKI, OTC: PKIUF) are buys again.

Not surprisingly, Canadian Apartment Properties REIT (TSX: CAR, OTC: CDPYF) turned higher after registering record performances in the fourth quarter and for 2012.

Operating revenue rose 18.6 percent, reflecting the growth of the company’s portfolio, high occupancy rates and healthy rent growth. Net operating income rose 19.2 percent, as the real estate investment trust boosted margins to 55.9 percent of operating revenue.

Net funds from operations (NFFO) per unit, the key bottom line measure of profitability, moved higher by 14.1 percent. And the payout ratio based on NFFO moved down to 81.3 percent from last year’s 91.7 percent in a quarter that’s usually seasonally weak due to heating costs.

The full-year payout ratio declined to just 76.4 percent from 82.8 percent, auguring more growth in the distribution ahead this year.

The company added CAD791.3 million in new residential properties in 2012 that will boost 2013 results. Same-property profit rose 3 percent, the sixth consecutive year of rising earnings exclusive of acquisitions.

Overall occupancy averaged an extremely robust 97.9 percent, despite the large number of suites bought and sold. Occupancy excluding that action was near perfect at a stable 99.2 percent. And average monthly rents rose by 2.1 percent for the year and 2.8 percent for the quarter.

Management continued to be successful securing low-cost debt financing, both for new property purchases and to cut interest costs on existing mortgages.

Refinancings closed during the year were at an average weighted interest rate of just 2.95 percent for a maturity of 8.8 years. And the company raised CAD361.2 million in equity as well during the year, taking advantage of its premium stock price.

Unfortunately, investors’ current love affair with this secure franchise has pushed the unit price well above my buy target of USD22. I’ll likely raise the target again if management raises the distribution again in March, as many expect. Until then, new buyers should be patient.

Davis + Henderson shares slipped slightly following its earnings announcement, moving the stock price at least temporarily below my target of USD21. That makes now a good time to pick up shares if you don’t already own it.

Davis + Henderson continued to grow its franchise of providing technology-based services to financial services throughout North America. Fourth-quarter revenue ticked up a modest 1.8 percent, as US expansion offset some weakness in Canada.

Cash flow margin remained solid at 22 percent of revenue, despite approximately CAD6.6 million in costs for absorbing acquisitions. Adjusted for these items, cash flow rose 3.5 percent, with margins ticking up to 25.6 percent of revenue from 25.1 percent a year ago.

Net income was lower by 10.8 percent to CAD0.2315 per share, again due in large part to non-cash items that should not repeat. That includes measures taken to reduce costs in the future. But adjusted net income was slightly higher on a per share basis, hitting CAD0.4329.

Importantly, by this measure profits covered the quarterly distribution of CAD0.31 per share by a solid 1.4-to-1 margin, or a payout ratio of 71 percent.

And the company was able to make net repayments of CAD26.2 million on its credit facilities, strengthening the balance sheet and cutting interest costs.

Davis + Henderson has grown successfully over the past several years by completing strategic acquisitions. Growth continues in 2013, with completion of the purchase of Compushare Inc, a California-based cloud computing provider to financial institutions. And management continues to seek out opportunities in other areas, inking its largest student loan servicing contract for a multi-year term last year.

Ultimately, the cornerstone of Davis + Henderson’s financial strength is the health of Canada’s banks. And the good news is, despite some signs of slower growth in markets like real estate, these companies are still quite solid.

Activity will wax and wane in key markets. But as we saw in 2008, the overall business mix is steady, the dividend secure.

The only problem in the past has been price, as investors have built in high expectations in recent months. That’s not the case today, however, and those who don’t already own Davis + Henderson should take advantage to buy below USD21.

Parkland Fuel shares took a vicious hit Tuesday following management’s release of fourth-quarter and full-year 2012 results. Initial selling seemed to feed a panic of sorts, despite the fact that only one research house downgraded the stock to “hold” and another boosted it to “buy.”

As management pointed out in its conference call, actual numbers–though reflecting some headwinds with volumes–were well in line with its previous monthly updates.

Moreover, they were good enough for the fuel distributor to raise its dividend for the first time since converting to a corporation in January 2011.

The boost was a modest 2 percent boost to an annualized rate of CAD1.04 per share. But more important, it reflects management’s desire to return to dividend growth and its confidence in Parkland’s future earnings.

Distributable cash flow for the quarter slumped 20 percent, but mainly due to a one-time “true up” in taxes. The company’s tax rate is expected to average around 27 percent in 2013 versus the fourth quarter’s 33 percent. That should reverse the rise in the fourth-quarter payout ratio, which hit 83 percent. And it should keep full-year figures for this year in the neighborhood of 2012’s 52 percent and 2011’s 48 percent.

Fuel volumes fell 3 percent for the quarter. But this was hardly a surprise, as much was due to the planned closure of certain retail sites. And retail volumes were still 7 percent higher for the year.

Volumes are likely to remain challenged in 2013. Reduced activity in Canada’s natural resources industry, principally energy drilling and shutdowns at Nova Scotia pulp mills, doesn’t directly affect Parkland’s sales. But there is a residual impact on surrounding areas that can affect demand.

The good news is management also reported several signs of improvement, including a pulp mill returning to operations. Consequently, this should be progressively less of a factor in coming quarters.

The real driver of Parkland’s future profitability is how well it executes its “Parkland Penny Plan.” That’s a multi-year strategy to simultaneously boost distribution volumes and margins focused on increased economies of scale. And this quarter’s numbers demonstrate solid progress.

First, Parkland cut operating costs per unit of volume distributed by 7 percent in 2012. For the quarter operating costs were 11 percent lower from year-earlier levels. Marketing, general and administrative costs were trimmed by 3 percent, and finance costs were slashed by 60 percent. That pushed average gross profit for commercial fuels up 21 percent and profit for retail up 6 percent.

In contrast to past years, the added efficiencies went a long way to counter the headwinds that depressed volumes. Full-year cash flow grew 32 percent, and Parkland’s scale will further improve this year now that it’s absorbed its purchase of Elbow River Marketing from AvenEx Energy Corp (TSX: AVF, OTC: AVNDF).

Elbow River increases the company’s energy-by-rail capability. The company also opened a new storage terminal, giving it new flexibility with costs and inventories by adding scale.

As management had promised, Parkland used its surplus cash flows to dramatically cut debt leverage over the past year. The company’s net debt-to-cash flow ratio is now just 1.39-to-1 versus 2.26-to-1 a year ago. Cash flow coverage of debt interest has nearly doubled to a 7.56-to-1 margin.

And the company’s next debt maturity of CAD97.75 million isn’t until Nov. 30, 2014. The total amount is less than 8 percent of Parkland’s market capitalization and is almost certain to be refinanced at a lower cost.

Along with its release of the numbers, management reaffirmed its 2016 targets for growing both volumes and margins. And it reported solid progress replacing supplies from the Suncor Inc (TSX: SU, NYSE: SU) contract that expires in 2014.

These efforts include diversifying relationships, so that the company is never again so dependent on a single source.

So long as oil-price differentials are high, sales in oil drilling areas will likely remain challenged. But Canadian fuel volumes do have a remarkable history of stability that should limit the magnitude of any declines. And Parkland’s increased reach and scale have made it far better able to deal with volatility than it’s ever been.

Before the earnings announcement, Parkland had blasted off well past my buy target of USD18. My feeling was that price was based on unrealistic expectations and not worth chasing. Yesterday’s action started with a disappointment that quickly morphed into panic selling. The result is the stock is back below target entry, despite reporting what were actually quite solid numbers.

Aggressive Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Feb. 28 (confirmed)
• Artis REIT (TSX: AX-U, OTC: ARESF)–Feb. 28 (confirmed)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Feb. 28 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–March 7 (estimate)
• Brookfield Real Estate Services Inc (TSX: BRE, OTC: BREUF)–March 12 (estimate)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPFF)–February Portfolio Update
• Canadian Apartment Properties REIT (TSX: CAR, OTC: CDPYF)–Feb. 27 Flash Alert
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–February Portfolio Update
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Feb. 27 Flash Alert
• Dundee REIT (TSX: D-U, OTC: DRETF)–Feb. 22 Flash Alert
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Feb. 28 (confirmed)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–March 14 (confirmed)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Feb. 15 Flash Alert
• Northern Property REIT (TSX: NPR, OTC: NPRUF)–March 13 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, NYSE: PBA)–March 1 (confirmed)
• RioCan REIT (TSX: REI, OTC: RIOCF)–Feb. 15 Flash Alert
• Shaw Communications Inc (TSX: SJR/A. NYSE: SJR)–February Portfolio Update
• Student Transportation Inc (TSX: STB, NSDQ: STB)–Feb. 13 Flash Alert
• TransForce Inc (TSX: TFI, OTC: TFIFF)–March 1 (confirmed)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN OTC: ACAZF)–Feb. 13 Flash Alert
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–March 14 (confirmed)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–February In Focus
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Feb. 22 Flash Alert
• Colabor Group Inc (TSX: GCL, OTC: COLFF)–March 22 (estimate)
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–March 15 (estimate)
• Extendicare Inc (TSX: EXE, OTC: EXETF)–Feb. 27 (confirmed)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–March 26 (estimate)
• Just Energy Group Inc (TSX: JE, NYSE: JE)–February Best Buy
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Feb. 15 Flash Alert
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–Feb. 13 Flash Alert
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Feb. 27 Flash Alert
• PetroBakken Energy Ltd (TSX: PBN, OTC: PBKEF)–March 7 (estimate)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–March 7 (estimate)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–March 4 (confirmed)
• Wajax Corp (TSX: WJX, OTC: WJXFF)–March 6 (estimate)