When building our portfolio we are told to diversify geographically. After all, Canada comprises only 3% of the global market. However, Canada is rich in resources and they are now in high demand worldwide and our companies are leaders in their fields.
Oil and Gas
The Alberta oil sands have experienced a lot of bad press recently with the references to “dirty oil” but it remains one of the best sources of oil production given our stable (and peaceful) economy. Syncrude is one the largest producers of crude oil. Canadian Oil Sands Trust had a recent increase in profits of 25%. Current price is $21.43 with an attractive yield of 5.7%.
Also worth looking at are Suncor Energy ($31.16), TransCanada Corp ($42.78/yield 3.9%), and Pengrowth Energy ($10.70/yield 7.9%)
We have an abundance of natural gas beneath us. It’s a clean source of fuel and reserves are plentiful. Check out EnCana Corp ($20.76/yield 3.9%). Enbridge is one of the largest natural gas distribution companies. They also have interests in renewable energy such as wind, solar and hybrid fuel cell.
As the world population increases, there is more stress placed on agricultural lands depleting the soil of essential nutrients. The demand for fertilizer to supplement the soil will only increase.
Potash Corp of Saskatchewan ($43.55) produces nitrogen, phosphate and potash used in agricultural fertilizer. Agrium ($70.98) is a retail supplier and wholesale producer of specialty fertilizers.
Canada is a major coal producer and consumer. Although not a primary consumer heating source it is used extensively for power generation. One half of our coal is exported, especially to India and China as metallurgical coal, which is essential for steelmaking mills.
Teck Resources ($38.53) has interests in coal and other mining.
Gold is the standard purchase when markets are in turmoil and investors are uneasy. The current price of over $1,700 per ounce is high but opinions are that the price will still increase considerably. I just wish I had bought it in the 70’s, when the fixed price was US$35 per ounce, instead of my gold jewelry. You can buy gold directly in bars, wafers, coins and certificates. You can also invest in gold mining companies, the most common being Barrick Gold Corp ($51.20), a standard in mutual fund holdings.
From diamonds, precious metals, copper, zinc, nickel, uranium and offbeat metals I’ve never heard of before that are used in manufacturing, computers and superconductors, there are hundreds of mining companies in Canada. Unless your risk tolerance is high, stay away from penny mining stocks and stick to larger companies.
Resource companies are growing in demand and Canada has an abundance. The companies mentioned are just examples, not suggestions. You should do your own due diligence when purchasing any stock, resource mutual fund or ETF.