It’s time to be a little greedy where others are fearful.

A couple solid names–one a new Aggressive Holding, the other the lone representative from Canada’s Big Five banks among our Conservative Holdings–have been heavily discounted here in early 2014.

That’s despite good track records of dividend growth, entrenched positions in key markets and realistic prospects for new opportunities to expand business operations.

Energy services outfit ShawCor Ltd (TSX: SCL, OTC: SAWLF), a new addition to the CE Portfolio this month, is down 4 percent on the Toronto Stock Exchange (TSX) since Dec. 31, 2013. Some of that is a function of a flight from risk that’s characterized equity markets thus far in the still-new year.

But ShawCor has underperformed the S&P/TSX Composite Index, which is 1 percent to the positive in local currency terms for the comparable period, because of an overreaction to an operations update provided by management in early January.

Bank of Nova Scotia (TSX: BNS, NYSE: BNS), meanwhile, a Conservative Holding since August 2013, is lagging its Big Five banking peers in Canada because a large portion of its earnings are derived overseas. And “emerging markets” has been a definite pejorative thus far in the 2014 investing vocabulary.

Scotiabank is down by 5.8 percent, including dividend, thus far in 2014. That compares to an average loss for Bank of Montreal (TSX: BMO, NYSE: BMO), Canadian Imperial Bank of Commerce (TSX: CM, NYSE: CM), Royal Bank of Canada (TSX: RY, NYSE: RY) and Toronto-Dominion Bank (TSX: TD, NYSE: TD) of just 2 percent.

As the Canadian dollar weakens Scotiabank’s global presence should provide uplift to earnings. And growth should be supported for the long term by positive demographic trends in its Latin American and Southeast Asian markets.

On Jan. 9, following a preliminary review of fourth-quarter 2013 results, ShawCor announced that it expects to report “significantly lower” earnings compared to the record numbers posted for the third quarter of 2013.

ShawCor is a major provider of pipe-coating technologies to the global oil and gas business, with a particularly strong presence in the deepwater market. The company, which reported 15 percent sequential and 35 percent year-over-year revenue growth for the third quarter and company-record net income of CAD73 million, is also building out its offerings in the composite pipe space.

ShawCor expects to report its fourth quarter and full year results on or about February 27, 2014.

Management’s estimate is that income from operations, before foreign exchange and one-time items, will be approximately 50 percent to 60 percent lower on a sequential basis, due primarily to an approximately 50 percent reduction in Asia-Pacific revenue and delayed start-up of several large projects that have hurt operating margins.

Management had previously guided for lower third-quarter revenue and earnings, but it also had anticipated starting full-volume production in the fourth quarter on the flow-assurance pipeline project for Inpex Corp (Japan: 1605, OTC: IPXHF, ADR: IPXHY) at the Ichthys LNG project in Western Australia and large projects at facilities in Leith, Scotland, and in Brazil.

As a result of delays stemming from pipe delivery holdups for ShawCor and extended final sign-off timing by clients on product testing, these projects aren’t expected to achieve full production volumes until the first quarter of 2014.

Management expects to see improvement in revenue and earnings over fourth-quarter levels, although not to the record levels reported in the third quarter of 2013.

ShawCor also expects to record net one-time after-tax charges of approximately CAD7 million on a loss from the previously announced sale of its interest in the Socotherm joint venture interest in Brazil and a charge for expenses related to job cuts, partially offset by an after-tax gain from the sale of a surplus property in Australia.

The personnel scale-backs have occurred mostly outside of ShawCor’s core pipecoating segment, a positive affirmation of future demand.

It’s important to note that short-term delays in project timing are part of the normal course of business for ShawCor. I would caution conservative investors that this type of announcement is not uncommon, and the concomitant share-price volatility is a not-unusual feature of the investment story.

At the same time, this recent weakness provides aggressive investors a great opportunity to establish positions in a solid pipe services company at a time when demand for its expertise is rising around the world.

Although recent management commentary suggests project backlog will trend lower in early 2014, a number of major projects due to be contracted by mid-year should drive bookings in the second half of the year.

ShawCor has approximately CAD900 million of firm bids outstanding, which means a project has either received a final investment decision (FID) or will receive FID or a similar status soon.

There is another CAD300 million in “budgetary” bids outstanding, which would include a couple of west coast Canadian LNG projects involving transmission-line work. Depending on product specifications and including supply area pipelines, each Canadian LNG project could represent a CAD200 million pipe-coating/composite pipe opportunity for ShawCor.

Beyond the CAD300 million of budgetary bids is another CAD1 billion in next-stage bids, ones that can be expected to enter the first two categories in the next 12 to 18 months. The last category includes plentiful work in the North Sea and initial LNG projects offshore Mozambique.

A common feature of this substantial total bidlog of CAD2.2 billion are large weightings to natural gas and to offshore projects, which require higher-spec, higher-value coatings.

But roughly 75 percent of ShawCor’s pipe-coating revenue never hits its formal backlog due to the ongoing flow of small projects (defined as less than CAD20 million) and short time horizon from the project being contracted and executed.

This underlying business flow is the backbone of its broad revenue model and tends to rise and fall more with broad economic and cyclical trends as opposed to the lumpiness of larger, reported project work.

Approximately 10 percent of its annual North American pipe-coating revenue is tied to the replacement of old pipe.

ShawCor’s Flexpipe/FlexFlow composite pipe businesses now comprise the company’s second-largest revenue segment, with operating margins at or near the top of all divisions.

Management’s goal is to double the size of its composite pipe offering in the next three years, especially on the increasing internationalization of the expanding product line. Specifically, FlexFlow will allow ShawCor to attack the composite market up to eight-inch diameter, which is a major expansion opportunity.

Product testing continues in Canada to get final regulatory approval, on track for some time in the second quarter of 2014, while certain early adopters are selectively using FlexFlow in the US.

Regarding the existing Flexpipe product line (up to four inches in diameter), management recently noted that Saudi Aramco is in the late stages of its formal approval process and that the first shipment of Flexpipe into Saudi Arabia is now in sight. ShawCor is already installing Flexpipe in South America and Australia.

Including management’s estimate of ongoing maintenance CAPEX requirements of approximately CAD30 million to CAD40 million as well as a current total dividend commitment of approximately CAD30 million per year, ShawCor is on track to generate more than CAD200 million of free cash flow in 2014.

That should provide ample flexibility to grow the business organically or via mergers and acquisitions, grow the dividend or buy back shares. It could also fund some combination of these initiatives.

ShawCor has posted long-term growth in net income of 15.6 percent per year. And management has raised the dividend four times in the last five years, never cutting its payout. There are no debt maturities before 2018, and overall debt relative to total assets is modest at just 1.8 percent.

ShawCor, a new Aggressive Holding, is a buy under USD45.

For fiscal 2013 (ended Oct. 31, 2013) Scotiabank posted company-record net income of CAD6.697 billion, up from CAD6.466 billion in 2012. Adjusted earnings per share (EPS) were up 10.2 percent, while underlying earnings grew by 15 percent.

Fourth-quarter net was CAD1.703 billion, up 12 percent from CAD1.519 billion for the same period of fiscal 2012. EPS were CAD1.30, up 10 percent from CAD1.18 for the fourth quarter of fiscal 2012. Return on equity was 15.7 percent, down from 16.4 percent. Scotiabank declared a dividend of CAD0.62 per share.

With net income of CAD593 million, the Canadian Banking unit had a second consecutive quarter of record earnings. A solid contribution from recently acquired ING DIRECT Canada, which will be renamed Tangerine this spring, complemented strong results from existing businesses. Management reported an increased margin, lower loan loss provisions and strong asset growth.

International Banking continued to benefit from its diversification by product and geography, posted net income of CAD420 million. Management reported a rebound in asset growth in Latin America and Asia, which complemented the seasonally higher fee income earned in Latin America.

Growth on these fronts helped mitigate continuing margin pressure from lower interest rates in key markets and increasing competition. Cutting expenses remains a key focus for management.

The Global Wealth & Insurance unit reported net income growth of 8 percent to CAD318 million for the fourth quarter on strong performance in mutual funds and insurance. Assets under management and assets under administration grew by 27 percent and 15 percent, respectively, due to stronger markets, new customers and acquisitions in Colombia and Peru.

Global Banking and Markets reported net income of CAD336 million, down compared to the fourth quarter of fiscal 2012 due to challenging market conditions.

With approximately 30 percent of overall earnings tied to markets outside the country Scotiabank is justified in labeling itself Canada’s most international bank. Strong share price performance as well as successful expansion into key Asian markets puts on good footing for more international growth.

But for now emerging market bond spreads, equity markets and currencies are getting hammered as investors rotate back to the relative safety of the US amid an improving American economy and the rollback by the Federal Reserve of its bond-buying efforts.

Loan growth for Scotiabank’s international operations will likely slow during the first half of 2014 as those markets retrench. Though that should put a small dent in fiscal 2014 net income, second-half growth should be solid. And year-over-year overall growth for the bank should approach double-digits.

And the long term prognosis is positive for a bank that’s posted solid dividend growth since the end of the Great Financial Crisis.

In August 2013 Scotiabank raised its quarterly dividend by 3.3 percent to CAD0.62, or CAD2.48 on an annualized basis, the fifth increase since March 2009.

The most internationally diversified of Canada’s major banks is exposed to attractive long-term growth prospects from emerging markets, with a longstanding banking history in the Caribbean, strength in Mexico and operations in Central America, South America and Asia.

Bank of Nova Scotia is a solid buy for investors of all risk tolerances under USD60.

For more information on ShawCor, go to How They Rate under Energy Services. As of this issue we’ve moved the stock to this segment from the Business Trusts group to better reflect the nature of its operations.

Bank of Nova Scotia is tracked under Financial Serivces. Click on their US symbols to see all previous writeups in Canadian Edge and Maple Leaf Memo.

Click on the Toronto Stock Exchange (TSX) symbol to go to their Google Finance pages for a wealth of information, ranging from news releases to price charts. Click on their names to go directly to company websites.

ShawCor is a decent-sized company with a market capitalization of CAD2.4 billion. Bank of Nova Scotia is the largest CE Portfolio Holding in terms of market capitalization at CAD74.9 billion. Both stocks have plenty of liquidity on both sides of the border, both in TSX and US-listed symbols.

ShawCor trades on the TSX under the symbol SCL and on the US over-the-counter (OTC) market under the symbol SAWLF. Bank of Nova Scotia trades on the TSX and on the New York Stock Exchange (NYSE) under the symbol BNS.

ShawCor is covered by six Bay Street and Wall Street analysts. Three analysts rate the stock a “buy,” while three rate it a “hold.” No analysts rate the stock a “sell” at present.

The average 12-month price target among the five analysts who provide such a figure is CAD47.60, implying upside from a CAD40.78 closing price on Feb. 6, including an annual dividend rate of CAD0.50, of 17.9 percent.

Bank of Nova Scotia is covered by 17 analysts, eight of whom rates the stock a “hold,” eight of whom rate the stock a “hold” and one of whom rates the stock a “sell.”

The average 12-month price target among the 15 analysts who provide such a figure is CAD67.91. Bank of Nova Scotia closed at CAD61.99 on Feb. 6 on the TSX. Including a current annualized dividend rate of CAD2.48, the stock would post a total return of 13.6 percent based on analysts’ consensus forecast.

As is the case with all stocks in the Canadian Edge coverage universe, you get the same ownership whether you buy in the US or Canada. These stocks are priced in and pay dividends in Canadian dollars. Appreciation in the loonie will raise dividends as well as the value of your shares.

Dividends paid by ShawCor and Bank of Nova Scotia are 100 percent qualified for US income tax purposes. Both companies’ dividends are taxed at the now-permanent Bush-era rates of 5 percent to 15 percent for investors’ first USD450,000 a year of income for couples and USD400,000 for single filers. Above that the maximum tax rate is 20 percent.

Canadian investors enjoy favorable tax status for ShawCor and Bank of Nova Scotia. For US investors, dividends paid by both companies into IRAs aren’t subject to 15 percent Canadian withholding tax, though they are withheld at a 15 percent rate if held outside of an IRA.