February 4, 2000 ARC
Energy Trust (AET.UN on TSE)
Calgary, AB Tel: (403) 292-0680 Price: Feb 4/00: $9.00, 52-week range:
$9.35-6.15. The Trust continues to make significant acquisitions, mainly
oil, adding to reserves, production revenue and to extended reserve
life. Recent additions should permit an increase in cash distributions
of $0.05/unit to $1.46. These
are paid on a monthly basis, producing a current yield of 16%.
Some capital appreciation to the $11 level would reflect the
expanding quality of oil reserves. Agnico-Eagle
Mines Ltd. (AGE on TSE)(AEM
on NYSE) Toronto, ON Tel: (416) 947-1212 Price Feb 4/00: C$10.80, 52-week
range:$14.25-7.20. Company is
expanding its LaRonde gold mine in NW Quebec from a mining rate of 3,600
tons/day to 5,000 tpd. This
means that gold production will increase from an annual rate of 110,000
ounces/year to 220,000 ounces in 2001.
Eventually an annual rate of 275,000 oz could be achieved and
maintained for 15 years. Meanwhile the size of the gold resource appears
to be heading to 8 million ounces from 5 million as a result of more
ore being delineated at depth. Full
production of 275,000 oz of gold when attained in 2002 should produce
a cash flow of US$1.05/sh. Employing
a standard 11 times multiple points to a share price of US11 or $C16. Birim
Goldfields Inc. (BGI on TSE) Montreal,
QC Tel: (514) 393-8611. Price Feb 4/00: $0.26, 52-week range: $0.40-0.12.
Company recently concluded an agreement to sell mineral rights
on a 40 sq.km section in Ghana to Ashanti Goldfields.
Birim will receive advanced royalty payments of about US$5million
over the next 6 months. Beyond that time, it is expected that further
payments will be flowing from Ashanti as other zones within this 40
sq.km. section are addressed. This
flow of funds will allow Birim to explore and develop many of their
other promising gold prospects in their remaining inventory consisting
of 7,200 sq.km. in Ghana. Current
market cap of $5 million does not reflect potential nor level of activity
this junior will be entering into. Canadian
Tire Corp. Ltd. (CTR.A on TSE),
Toronto, ON Tel: (416) 480-3000. Price Feb 4/00: $22.90, 52-week range:$46-19.50. Company recently reported earnings for 1999
of $1.89/sh down from $2.09 a year ago.
4th quarter earnings were $0.16/sh down from $0.56/sh. However, these included allocations for unusual
expenses of $50 million associated with Y2K expenses as well as costs
relating to the set up of an e-commerce business, expected to be in
place later this year. Revenues
for the year of $4.7 billion were 8.8% ahead of last year’s $4.3 billion
and revenues in the fourth quarter were up by 13.1% to $1.3 billion. Another measure was cash flow for the year at $3.95/sh vs. $3.26/sh
and for the important 4th quarter $1.24/sh vs.$0.95/sh. The fall in the price of these shares has provided
the investor with a good buying opportunity. Danier
Leather Inc. (DL on TSE), Toronto,
ON Tel: (416) 762-8175. Price Feb 4/00: $6.70, 52-week range:$8.75-5.00.
The company designs, manufactures and retails in their 70 stores
leather wear. Revenues in the 2nd quarter, ended
Dec 25 increased 36 % to $59.8 million.
Comparable store sales for the 13-week period increased 21.3
% Earnings were $1.17/sh vs. $0.76.
For the 26-week period, revenues were up 29% to $75.5 million,
comparable store sales were up13.2% and earnings were up 53% to $7.3
million, or $1.00/sh on 7.3 million shs.out.
Company is encouraged with results of their recent launching
of their e-commerce sight. It looks like earnings for the year could come
in at $1.15/sh and next year $1.35.
The shares appear to be trading under value according to this
growth rate. Freeport-McMoRan
Copper & Gold Inc. (FCX on NYSE), New Orleans, LA. Tel: (504) 582-4000
Price Feb 4/00: $18.50, 52-week range: $21.50-9.12. The company is one of the world’s largest copper and gold companies
in terms of reserves and production.
Its principal operation in Irian Jaya, Indonesia contains reserves
consisting of 51.3 billion pounds of copper, 64.2 million ounces of
gold and 153.1 million ounces of silver.
Revenues for 1999 were $1.9 billion and net income was $101 million
or $0.61/sh based on 165 million shares out. With a better copper and
gold price outlook for this year, FCX could see earnings of $1/sh and
cash flow of $400 million or $2.50/sh.
If that were to be the case, an 11 times multiple to cash flow
translates itself into a $27 stock. Global
Investment.com Financial Inc. (GIV on CDNX), Vancouver, BC. Tel: (604) 681-7210
Price Feb 4/00: $2.05, 52-week range: $2.12-0.50. The company
features a popular financial website known as investment.com.
Expansion is taking place in Europe and additional personnel
has been hired. There appears to be 22 million shares outstanding
so that the market place is currently assigning a market cap of some
$45 million to the company. Novicourt Inc. (NOV on TSE), Toronto,
ON Tel: (416) 982-7111. Price Feb 4/00: $2.15, 52-week range: $2.75-1.50.
The company (owned 59% by Noranda) in turn owns a 45% interest in the
Louvicourt copper-zinc mine in NW Quebec. NOV has been paying a dividend
of $0.10/sh twice a year, in May and November.
It is their stated intention, however, to pay out most of the
cash flow coming in. With a
better price in copper, cash flows are estimated at $0.60/sh for 1999,
$0.65 for 2000 and $0.85 for 2001.
Thus an extra $0.40/sh could be paid out this March, and possibly
higher ones at the end of each of the next few years.
A total 60 cents/sh represents a current yield of 28%.
Current reserves at the mine appear to support the 4000 tons/day
production through 2005. Saputo
Group Inc. (SAP on TSE), Montreal,
QC Tel: (514) 397-3024. Price Feb 4/00:$35, 52-week range:$41.95-30.50.
The company continues to grow, more recently assisted by acquisitions. Culinar added $315 million to revenues and
the recent purchase of the specialized cheese manufacturer, Cayer-J.C.B.
Group Inc. adds another $55 million to revenues.
Analysts see a growth rate of 15% to 20% for this well-managed
food company, so that fiscal 2000 earnings could now come in at $1.90/sh
and next year at $2.25. That
being the case, a 22 multiple to earnings points to a $50 stock. Topps
Company, Inc. (TOPP on NASDAQ),
New York, NY. Tel: (212) 376-0300.
Price Feb 4/00: $8.35, 52-week range: $13.38-4.12. This well-known manufacturer of Bazooka gum,
sports cards is currently benefiting from the craze for Pokemon trading
cards. Based on the most recent
3rd quarter result of fully diluted earnings of $0.46/sh,
TOPP should clear $1.15/sh this year. It
would seem that a 12 times multiple to earnings would not be out of
hand, hence a $13 share price target. |