Coverage Changes

Please note that Enervest Energy & Oil Sands Total Return Trust has been merged into Canoe Energy Income Class, an open-ended mutual fund managed by Canoe Financial LP.

Enervest Energy & Oil Sands unitholders resident in Canada should have received 0.76 Series A shares Canoe Energy Income Class in exchange for each unit held.

Non-resident unitholders may have received cash in lieu of shares of the successor fund, as “unitholder accounts which are deemed to be non-resident of Canada may not be allowed to hold shares” of Canoe Energy Income “where the holding of such shares could be detrimental to” it. Enervest Energy & Oil Sands has been de-listed from the Toronto Stock Exchange and has been removed from How They Rate.

We’re in the process of evaluating members of the coverage universe based on a combination of low market capitalization, low daily trading volume on the Toronto Stock Exchange and in the US and, most importantly, for those that aren’t paying a dividend at present, whether there’s a reasonable likelihood of ever doing so in the near future.

This is part of an effort to streamline our focus on companies with a realistic opportunity to build wealth for investors for the long term, keeping in mind too that part of the rationale for building a coverage universe is to provide context and comparison.

With all this in mind, barring any objections from readers, which you can express via our “Stock Talk” feature at www.CanadianEdge.com, we will begin paring the ranks next month.

In the November 2013 issue we removed Tuckamore Capital Management Inc (TSX: TX, OTC: NWPIF), Lanesborough REIT (TSX: LRT-U, OTC: LRTEF) and Tree Island Steel Ltd (TSX: TSL, OTC: TWIRF) from the coverage universe.

We’re still considering our coverage of Armtec Infrastructure Inc (TSX: ARF, OTC: AIIFF), which pays no dividend and has a market capitalization of CAD36.3 million, and Imvescor Restaurant Group Inc (TSX: IRG, OTC: IRGIF), which discontinued its dividend in March 2011 and has a market capitalization of CAD90.8 million.

We’re also reviewing our coverage of Royal Host Inc (TSX: RYL, OTC: ROYHF), which hasn’t paid a dividend since December 2010 and is currently valued at just CAD20.5 million, and Data Group Inc (TSX: DGI, OTC: DGPIF), which last month suspended its dividend and now has a market cap of just CAD11.7 million.

Advice Changes

Fortis Inc (TSX: FTS, OTC: FRTSF)–From Hold to Buy < 31. The Canada-based gas and electric distribution company continues to expand its presence south of the border, as it announced an agreement to buy Arizona-based UNS Energy Corp (NYSE: UNS) for USD2.5 billion, or USD60.25 per share.

Management also boosted the quarterly dividend rate by 3.2 percent to CAD0.32 per share, or CAD1.28 annualized, as a solid record of yearly dividend increases continues.

New Flyer Industries Inc (TSX: NFI, OTC: NFYIF)–From Hold to Buy < 10. The largest designer and manufacturer of heavy-duty transit buses in North America holds a dominant position in bus manufacturing and the aftermarket segment. New Flyer is well positioned for a cyclical rebound in North America. Strong revenue and earnings growth over the next couple years will be driven by acquisitions as well as higher production rates.

A robust order pipeline, improving fundamentals and strong growth opportunities should result in further share price appreciation, on top of an attractive 5.6 percent yield.

Progressive Waste Solutions Inc (TSX: BIN, NYSE: BIN)–From Hold to Buy < 26. With nearly 60 percent of revenue coming from the US, this solid waste management company is poised for earnings growth based on rising volumes amid an accelerating US economy. Management has also announced two dividend increases over the past 24 months, with another likely to come in 2014.

Russel Metals Inc (TSX: RUS, OTC: RUSMF)–From Hold to Buy < 30. Another Canadian industrial leveraged to rising economic activity south of the border, Russel survived the Great Financial Crisis with a disciplined approach and is set to reap the benefits of oil and gas drilling activity in North America drives demand. Nearly a third of its 2012 revenue was generated in the US.

Rating Changes