A Tour of Countries: Canada
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We live in a global economy today where, as investors, we have a broad choice of investment options in international markets. Whether it be for diversifying away from a purely U.S. based portfolio or for following new growth opportunities, the world abounds with chances to profit. In this series entitled A Tour of Countries, I will provide one example in each country explored of a manufacturer, an airline, and a provider of services to consumers. By no means will the list be a complete description of everything each nation has to offer. But it can be a starting point for entering the world of international investing.
Canada: Neighbor to the north
As the largest trading partner of the United States, many investments in American companies rely on the Canadian market. But many of Canada's best investments remain Canadian controlled. Fortunately, for many American investors, Canada's Toronto Stock Exchange is accessible at many U.S. based brokerage firms giving American investors the chance to trade Canadian stocks on a more liquid exchange than the pink sheets.
Manufacturer: Bombardier (TSX: BBD.B)
This Canadian company used to build snowmobiles but has since expanded into both aerospace and trains. The aerospace component makes defense equipment and is also the owner of Canadair, the maker of the CRJ. This small plane has seen thousands of units sold and has become iconic as a regional jet for airlines around the world.
The train component builds trains and provides rail maintenance to customers worldwide. The company's work has been known to include both high speed rail and urban streetcar projects allowing investors to diversify their transportation investment within a single manufacturer.
Bombardier stockholders have been in for some volatile swings though. The stock traded at nearly CAD$9 per share in 2008 and saw CAD$7 per share again in 2011. Currently sitting at CAD$3.48, Bombardier is trading at the lower end of its range over the past few years. This may be based around concern over the launch of Bombardier's C Series aircraft which has seen production and delivery delays. But with demand for aircraft high, Bombardier is already backordered with the C Series. The question remains how they go about filling those orders.
As Canada's flag carrier and largest passenger airline, Air Canada is the most critical airline to Canadian aviation. The airline is noticing pressure from challenger Westjet that has a lower cost structure and is growing faster. While Westjet does pose a legitimate challenge in Canada, Air Canada continues to hold the dominant position in international air travel for Canada. The airline is expanding its network with a recent code share agreement with South African Airways, an increase in flights to Asian destinations, and the addition of new destinations through Air Canada's new discount subsidiary airline.
The airline is also embarking on a program of fleet modernization calling for the ordering of up to 50 Boeing 787s and 100 narrowbody jets. Air Canada hopes these aircraft can reduce their cost structure and pay off in the long term through reduced fuel expenses and increased maintenance savings.
However, the airline's shares have taken a beating since the recession began falling from $21 to less than a dollar per share. Air Canada shares have seen a strong rally since the summer of 2012 gaining well over 100 percent on news on favorable arbitration rulings and surpassing earnings estimates. Still changing hand for less than $2 per share, these shares could offer significant upside if Air Canada can execute successfully.
Services: Rogers Communications (TSX: RCI.B)
Rogers has three main business segments of cable, wireless, and media. But perhaps the most interesting component to Rogers though its ownership of a series of Toronto sports teams and their arenas.
Rogers owns the Toronto Raptors basketball team, the Toronto Blue Jays baseball club, and 75 percent of the Toronto Maple Leafs NHL team. During a normal season, Maple Leafs games are well known for some of the highest ticket prices in the NHL but this year tickets are not bringing in the normal revenues. The NHL is currently experiencing another lockout, the second in the last decade, and this has forced a loss of $8 million on Rogers for its partial ownership in Maple Leafs Sports and Entertainment, the holding company for the NHL team.
Like many large U.S. based communications companies, Rogers pays a dividend to its shareholders. The current yield is around 3.5 percent making it a solid dividend stock for the income investor. Investors who are interested in getting into the communications industry while diversifying beyond American borders should take a look to see if Rogers Communications fits their overall investment strategy.
Just to the north lies a foreign nation that offers a unique set of investment opportunities. American investors may find it easier to purchase Canadian securities and trade them on the Toronto Stock Exchange than to trade less liquid securities from other nations. Additionally, many Canadian companies have a footprint in the U.S. as well with the Bombardier CRJ being one of the most popular regional jets in the U.S. and Air Canada is working with American partners to provide code share flights. In this way, Canada can offer a nearby international markets opportunity to better diversify your portfolio.
TulipSpeculator1 owns shares of Air Canada. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!