Canadian stocks rated by Iain Fraser

Royal Bank - more

With the booming 1st quarter results the estimated earnings for 2005 have been revised from $5.20 per share to $5.80 per share.

Royal Bank - home run

On Feb. 18, 2005 we wrote: "Royal Bank ($66.25) is at a new 12 month high. Going through $64.50 was an upside breakout and the technical expectation is for a move to the $70-$72 range. Also on our analysis it still maintains its No.1 rating."

One week later the stock closed at $73.10! Whoopee!

Much of the time when a stock goes to a new high it keeps on going. Also we showed a chart for RY with a clear and distinct breakout suggesting to this observer that RY had seen the worst of its troubles in the U.S. Especially when there had been little indication that Mr. Dixon (CEO) was in any difficulty.

Copper breaking out

Despite already doubling in price the copper price has broken out again going through $1.48.

The technical expectation is for a move to the $1.60 to $1.65.

Nortel-undervalued?

Nortel ($2.95US) during many days over the past year was the most heavily traded stock  in the world.

The stock has come along way from Arlington Avenue in Westmount where our neighbour, Dick Harkness, was the President of Northern Electric and invited my parents and me to see a movie in their private theater; a great treat because in those days one had to be 14 to get in to regular movies and this observer had never seen a movie.

Looking at Nortel stock today the first impression is a good one because the debt equity ratio is so favourabe. But that is about the only good news.

The stock is selling at 20 to 25 times earnings with an estimated growth rate of only 9%; the book value is 85 to 90 cents so the price to book is over 3 times (we like it under 2); the cash flow is difficult to ascertain but the stock is likely selling at roughly 8 times cash flow and we prefer 5 times. There is no dividend. Our view remains that Nortel is overvalued.

Royal Bank at 12 month high

Royal Bank ($66.25) is at new 12 month high.

On a technical basis this is good, not bad. Going through $64.50 was an upside breakout and the technical expectation is for a move to the $70-$72 range.

Also, on our analysis it still maintains its No.1 rating.

Canada leads the way!

We use five indices to determine the primary trend; DJIA; DJTA; S&P 500; Nasdaq Composite; and the S&P/TSX Composite. We rate each of these indices in terms of the Dow Theory, the Elliott Wave Theory, and on the long term moving averages. We award one point for each rating for a total of 15 points; today 14 of the 15 points go to the bulls and one is undecided. When an indice goes to a new high for the current bull market the bull trend is re-affirmed; so far Toronto is the first to do this and we expect that the others will play follow the leader!

Price of Oil

The world price of oil is in the $45 to $47 per barrel range. But not if you are Saudi Arabia; for them it is only $31.50 to $32.90!
It seems to this observer that you have to take into account the devaluation of the U.S. dollar.  Most of what the Saudis' buy or spend abroad they do so in Euros. If the current oil price is $42.50;  for the Saudis the price is under $30.00!

Bravo, Manufacturers Life!

Manulife came out with their 4th quarter earnings yesterday and the stock has moved up over $2.00. MFC remains undervalued - as it has since we first featured it on April 2/03 when it was $36.19.

So far so good with John Hancock and congratulations to MFC for doing their homework.

In our Report next week we will feature our first top pick for this year. Our first top pick was in Novenber of '03 and all 40 have worked out favourably. To get a free copy of this Report please email us at fraserratings@yahoo.ca or phone us at 905-927-0585.

Algoma Steel - as advertised

Algoma Steel reported today that their 2004 earnings were $8.83 per share.

The stock went up $3.30 to $32.55; bravo Algoma.

In our Report of Aug.12,2004, we said "Algoma Steel ($13.00) has some truly exceptional numbers. The earnings per share for this year are estimated at an astonishing $7.00 per share and we cannot remember seeing a stock sell at less than two times earnings." Most people did not believe us at that time. Most people don't believe us at this time that we are 39 for 39 in our top picks!

Up 300 Points from here!

We expect the Toronto Market to move up 300 points or more in the coming weeks.

For both the XIU and the XFN (Composite and Financial Indices) there are accumulation patterns and upside breakouts. These two will now join the fabulous XEG's (energy) in the good advances that are taking place in the Toronto market. Who needs New York?