Top Stock Picks and Market Outlook : Market Call, March 7, 2014

Michael Sprung comments on Cenovus Energy, CVE, Fortis, FTS, and Enercare, ECI

The Canadian market has had a relatively good start to the year buoyed by stronger energy and precious metal prices and advances in the Health Care and Information Technology sectors. Weakness in the emerging markets and Asia reflect investor concerns as to the sustainability of the recovery despite evidence of continued improvement in the US and greater stability in the Eurozone. As evidenced earlier this week, geopolitical events have an immediate impact on investor sentiment. We anticipate that more disruptions are likely in the coming months and that investors should be prepared to seize opportunities during these periods.

Cenovus Energy Inc. (TSE:CVE, Mkt cap 22.22B, P/E 33.63, Div/yield 0.27/3.62, EPS 0.87, Shares 756.12M) is an integrated oil and gas company focused on the development of bitumen assets in Alberta with significant joint venture operations at Foster Creek and Christina Lake. Production should ramp up strongly over the next few years resulting in increasing earnings, cash flow and potential dividend increases.

Fortis Inc. (TSE:FTS, Mkt cap 6.54B, P/E 18.82, Div/yield 0.32/4.17, EPS 1.63, Shares 213.16M) is the largest investor owned gas and electric distribution utility in Canada with operations in the US and Belize. Over the next few years, Fortis is expected to significantly increase its rate base.

Enercare Inc. (TSE:ECI, Mkt cap 607.93M, P/E 347.01, Div/yield 0.06/6.69, EPS 0.03, Shares 58.46M) is focused on the securitizing and renting of water heaters and sub-meters (primarily in multi-residential buildings). Results have been improving as attrition in rentals has been dramatically reduced. Sub-metering is growing and debt has been reduced.


Categories: Investments

Tags: Cenovus Energy, CVE, ECI, Enercare, Fortis, fts


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Robert D. Champion
Sprung Investment Management Inc.
Sprung Investment Management Inc.
25 Adelaide Street East, Suite 1914
Toronto, ON
M5C 3A1
Canada