A day like today, when fear about the durability of the economic recovery rules, is an opportunity for US-based investors to establish exposure to the Great White North and the most vigorous developed economy on the planet.

The quick-and-dirty exchange-traded fund (ETF) CurrencyShares Canadian Dollar Trust (NYSE: FXC) shed nearly 2 percent as investors fled to the perceived safety of US Treasuries; the US dollar and the Japanese yen each rose against most currencies because they’re still considered relatively safe. The S&P/Toronto Stock Exchange Income Trust Index was off by 2.5 percent, still more evidence of rising concerns about the durability of the recovery.

But this fear, too, shall pass, and long-term forces will lift Canada’s loonie to parity again and beyond as demand from emerging economies, led by China and India, pushes prices for oil and other industrial commodities that Canada holds in abundance ever higher.

The currency ETF is one viable way to capture in a broad way the Canadian story. According to the Bloomberg Correlation-Weighted Currency Indices, the loonie is up 7.2 percent to date in 2010, trailing the yen (13.6 percent) and the buck (7.5 percent), which have appreciated in recent weeks as fears of a double-dip recession have driven investors into perceived safe havens. But the loonie has come back in recent weeks; it’s descended by 3.7 percent since March 31 and is set to post its first quarterly decline in more than a year. It’s time to pick it up cheap.

Although it’s perceived as a barometer of global growth, Canada was the last of the old-school G-7 to enter recession and the first to emerge. This implies a level of stability. One major difference between it and the perceived safe havens–Japan and the US–is that Canada’s balance sheet is, in reality, strong. It entered the global crisis after a decade’s worth of balanced budgets. It boasts the lowest debt-to-GDP ratio among the G-7, and the World Economic Forum says its financial system is the world’s soundest.

Not only is it blessed with the second-largest estimated oil reserves on the planet. Its leaders have steered the ship of state in a way that will allow Canadians to enjoy the benefits of that wealth. Ottawa’s path out of the extraordinary measures it employed in concert with its G-20 peers is much cleaner than that of the US. A national health care system is already in place, mitigating the impact of an aging population, and there is flexibility within the budget to address concerns related to care for the elderly in the long term because its commitments abroad are, obviously, much less burdensome than their American neighbors’.

Another way is to establish a base of high-yielding equities backed by solid, growing businesses. That’s what we hold in the Canadian Edge Portfolio, and we spotlight two in each monthly issue for new entrants to get on the path to long-term wealth-building. Because you’re long equities denominated in Canadian dollars, you’re long the loonie. And because we focus on businesses that can support regular, generous payouts, you collect a healthy stream of dividends while you ride out worries about global growth.

Signs that Canada will be a major player over the next decade abound here in the early days of summer 2010. Over the last seven days the increasingly critical Sino-Canadian trade relationship was furthered by major energy-focused deals, President Hu Jintao visited Prime Minister Stephen Harper for the first time in Ottawa, and Toronto hosted a critical G-20 Summit that ended with a new collective commitment to deficit and debt reduction.

Almost lost amid the hoopla surrounding the G-20 Summit over the weekend was President Hu’s first visit to Ottawa, Canada’s capital, for meetings with Prime Minister Harper. The two leaders agreed to a goal of doubling bilateral trade between their respective countries from USD29 billion in 2009 to USD60 billion by 2015.

Canada still ships more than 70 percent of its exports, primarily oil, south. Although this share of outbound trade is declining, Canada remains focused on reducing its dependence on the US even further. China emerged as Canada’s second-largest trading partner in 2009; bilateral trade hit USD10.2 billion in the first four quarters of 2010, a 19 percent increase over the same period last year. China will also grant Canada approved destination status, which could have the immediate effect of boosting Canada’s tourist industry by USD100 million a year. Beijing and Ottawa also signed several energy cooperative agreements.

In addition to high-level geopolitical goings on Canadian companies were at the center of two significant energy-focused deals in recent days.

Cameco Corp (TSX: CCO, NYSE: CCJ) has signed a non-binding agreement that commits it and China Guangdong Nuclear Power Holding Company Ltd (CGNPC), China’s largest clean-energy outfit, to supply uranium fuel for CGNPC’s growing fleet of nuclear power plants. CGNPC says it about 20,000 megawatts of nuclear capacity under construction and plans to reach more than 50,000 megawatts by 2020.

China hopes to increase its nuclear capacity from 9 gigawatts to at least 70 gigawatts by 2020 and to as much as 160 gigawatts by 2030. Cameco’s relationship with CGNPC is a step toward securing a piece of the larger Chinese nuclear pie and will go a long way toward supporting its aim to double uranium production in the near term.

And EnCana (TSX: ECA, NYSE: ECA) has inked a memorandum of understanding with China National Petroleum Corp (CNPC) that sets the stage for negotiations on a joint venture to develop EnCana’s natural gas assets in the Horn River, Greater Sierra and Cutbank Ridge areas of British Columbia. Once again, Chinese investment will support ambitious Canadian growth plans; EnCana’s aim to double natural gas production over the next five years will be significantly bolstered by CNPC’s involvement with its unconventional portfolio.

According to EnCana CEO Randy Eresman, “With this potential CNPC joint venture, we would expect, upon successful completion of a transaction, to lower costs, reduce risks, increase our capital efficiencies, improve project returns, optimize production techniques and tap natural gas opportunities that would otherwise remain dormant for some time.”
What happened in Canada last week says a lot about the powerful trends that have already allowed the country to ride out the global downturn and emerge stronger than its developed peers.

The Roundup

These are quiet days heading into the final days of the second quarter, with a long holiday weekend just ahead. One Oil and Gas trust has announced conversion plans that include streamlining its asset base and maintaining a double-digit yield, while two Food and Hospitality names under How They Rate coverage have revealed numbers for their most recent fiscal quarters.

Here are projected earnings announcement dates for CE Aggressive Holdings, followed by news from Conservative Holdings and the How They Rate universe.

Aggressive Holdings

• Ag Growth International (TSX: AFN, OTC: AGGZF)–August 12
• ARC Energy Trust (TSX: AET-U, OTC: AETUF)–August 4 (confirmed)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–July 28
• Daylight Energy (TSX: DAY, OTC: DAYYF)–August 5
• Enerplus Resources Fund (TSX: ERF-U, NYSE: ERF)–August 10
• Newalta Income Fund (TSX: NAL, OTC: NWLTF)–August 6
• Paramount Energy Trust (TSX: PMT-U, OTC: PMGYF)–August 6
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)–August 12
• Peyto Energy Trust (TSX: PEY-U, OTC: PEYUF)–August 12
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)–August 13
• Trinidad Drilling (TSX: TDG, OTC: TDGCF)–August 11
• Vermilion Energy Trust (TSX: VET-U, OTC: VETMF)–August 6

Conservative Holdings

Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF) has completed a private placement transaction totaling CAD150 million of medium- and long-term unsecured notes to a group of Canada- and US-based institutions. Keyera will use proceeds to pay down CAD52.5 million of short-term bank debt due in August and to fund organic growth as well as acquisitions.

The notes are structured in four tranches: USD103 million at 5.14 percent due Sept. 8, 2020; CAD2 million at 5.68 percent due Sept. 8, 2020; USD15 million at 3.91 percent due Sept. 8, 2015; and CAD30 million at 4.66 percent due Sept. 8, 2015. Keyera Facilities Income Fund is a buy up to USD24.

Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF) is buying a 20 megawatt solar photovoltaic power project from SunPower Corp (NSDQ: SPWRA); SunPower will design, build and operate the plant at Amherstburg, Ontario. Macquarie will fund the CAD130 million project with a CAD97 million loan from a syndicate of international lenders and a CAD33 million equity contribution when the plant goes operational.

Amherstburg will produce 37,600 megawatt hours of electricity per year, enough to power 4,000 homes. It’ll be one of the largest solar plants in Canada. Construction will begin immediately; the plant is expected to become operational in June 2011. Output will be sold under Ontario’s Renewable Energy Standard Offer Program to the Ontario Power Authority at a guaranteed price of CAD420 per megawatt hour for the next 20 years. Macquarie Power & Infrastructure Income Fund is a buy up to USD8.

• AltaGas Income Trust (TSX: ALA-U, OTC: ATGFF)–July 29 (confirmed)
• Artis REIT (TSX: AX-U, OTC: ARESF)–August 12
• Atlantic Power Corp (TSX: ATP, OTC: ATLIF)–August 11
• Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF)–July 28 (confirmed)
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)–August 11
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)–July 28
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–August 11
• Cineplex Galaxy Income Fund (TSX: CGX-U, OTC: CPXGF)–August 13
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)–August 12
• Colabor Group (TSX: GCL, OTC: COLFF)–July 14
• Davis + Henderson Income Fund (TSX: DHF-U, OTC: DHIFF)–July 28
• IBI Income Fund (TSX: IBG-U, OTC: IBIBF)–August 5
• Innergex Renewable Energy (TSX: INE, OTC: INGXF)–August 13
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)–August 6
• Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF)–August 4 (confirmed)
• Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF)–August 5
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–August 6
• Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF)–July 29
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–July 29 (confirmed)
• TransForce (TSX: TFI, OTC: TFIFF)–July 29 (confirmed)
• Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF)–August 6

Oil and Gas

Advantage Oil & Gas’s (TSX: AAV, NYSE: AAV) CAD525 million in available credit was affirmed by its lenders after a review of the company’s borrowing base, which includes two collateralized floating-rate credit facilities, one of CAD20 million with a single bank, another of CAD505 million with a syndicate. The lines are secured by a CAD1 billion floating charge demand debenture covering all of Advantage’s assets. Interest is based on the “Canadian prime rate, US base rate, LIBOR rate or bankers’ acceptance rate plus between 1.25 percent and 3.75 percent depending on the type of borrowing and the Corporation’s debt to cash flow ratio.”

The only financial covenant is a requirement for Advantage to maintain a minimum cash flow to interest expense ratio of 3.5-to-1, determined on a rolling four-quarter basis. Advantage Oil & Gas is a buy up to USD7.

Avenir Diversified Income Trust (TSX: AVF-U, OTC: AVNDF) announced last week that it “intends to convert to a corporate entity on or before the end of 2010.” Following conversion to a corporation Avenir plans to pay a monthly distribution of CAD0.045 per share, or CAD0.54 on an annualized basis; this represents a cut from the current CAD0.06 monthly payout (CAD0.72 annualized).

Management will also move to sell its real estate and other financial assets to focus the business on its core energy assets. These divestitures will take place over the course of 2010. Avenir Diversified Income Trust is a buy up to USD6.

Crescent Point Energy (TSX: CPG, OTC: CSCTF) is buying its working interest partners in the Flat Lake Bakken play in southeast Saskatchewan, Ryland Oil Corp (CVE: RYD, OTC: RYDOF) for approximately CAD121.8 in stock and assumed debt. The deal adds 50 net sections on the US side of the Bakken play in North Dakota.

Crescent Point has drilled six successful wells in the Flat Lake area and plans to drill eight more by the end of 2010. Crescent Point Energy is a buy up to USD40.

Electric Power

Boralex Power Income Fund’s (TSX: BPT-U, OTC: BLXJF) takeover by its parent, Boralex Inc (TSX: BLX, OTC: BRLXF) has met its first major hurdle, as O’Leary Funds Management LP has announced that it won’t tender its units, which represent 8.87 percent of the total outstanding, in response to the parent’s offer.

In a press release announcing its opposition, O’Leary noted that the “the offer made by Boralex is not in the best interests of the Fund’s investors, an open process to sell the Fund would generate greater value than the current offer, Boralex could likely improve its offer, and the status quo is better than the proposed offer.”

Yesterday Boralex Inc extended its offer until July 12. US investors should unload Boralex Power Income Fund as close as possible to the CAD5 per share value of the offer.

Gas/Propane

Superior Plus Corp’s (TSX: SPB, OTC: SUUIF) CAD450 million secured revolving credit facility, through a syndicate of 10 lenders, has been extended to June 28, 2013; the total borrowing base can be expanded to CAD750 million under the new arrangement. Superior Plus Corp is a buy up to USD14.

Food and Hospitality

Imvescor Restaurant Group (TSX: IRG, OTC: IRGIF) reported results for the 13 weeks ended May 2, its fiscal second quarter, and the six months ended the same date.

Imvescor’s board approved a CAD0.075 per share dividend, payable August 31 to shareholders of record on August 13. This is the third straight quarterly dividend paid by Imvescor after it suspended its monthly distribution following the September 2009 payment.

Imvescor opened four new restaurants and completed renovations at 12 others. Total sales across Imvescor’s four full-service restaurant chains increased by 1.8 percent to CAD206.6 million during the six months ended May 2. Sales for the second quarter were $99.8 million, down 1.6 from the year-ago quarter. Same-store sales declined 2.9 percent during the second quarter, though one chain, Scores, delivered and 8.4 percent drop on its own. Gross profit was CAD1.4 million for the second quarter, CAD2.9 million for the 27 weeks ended May 2.

Net earnings for the second quarter were CAD533,000 (CAD0.056 per share, down from CAD3.1 million (CAD0.366 per fund unit) for the same period last year. Total long-term debt at May 2 declined to CAD45.5 million from CAD47 million at Oct. 25, 2009.

The condition of the economy continues to be the greatest challenge to Imvescor’s ability to maintain a dividend. At the same time, competitive pressures mean it has to pump a lot of cash into renovating and updating existing locations to woo customers. If you own it, hold onto Imvescor Restaurant Group until conditions in its primary markets rebound with vigor.

North West Company Fund (TSX: NWF-U, OTC: NWTUF) reported net earnings of CAD17.3 million (CAD0.36 per unit) for its fiscal first quarter (ended April 30), a 6.9 percent year-over-year increase. Although reported sales were down 1.6 percent to CAD340.1 million, excluding the impact of a rising Canadian dollar sales were up 5.6 percent. Same-store sales were up 4.4 percent.

Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased 2.3 percent to CAD28.2 million from CAD27.5 million a year ago. Excluding the currency impacts EBITDA increased 7.8 percent. Management reported strong demand in northern Canada and Alaska as consumers began to replace durable goods after several quarters of weak spending. Weakness persists in tourism-focused markets in the Caribbean and the Pacific.

Management also announced a quarterly distribution of CAD0.34 per unit to unitholders of record on June 30, payable by July 15. North West Company Fund, which will convert to a corporation without trimming its payout, is a buy up to USD18.

Transports

Jazz Air Income Fund (TSX: JAZ-U, OTC: JAARF) has been spared the potential aggravation of pilots walkout, as the Air Line Pilots Association International (ALPA) has inked a memorandum of settlement with management. Jazz Air’s 1,500 pilots will vote on the tentative settlement in early July. Details of the new contract will be released following ratification, if it happens. Jazz Air Income Fund is a hold.