High-Yield(ish) Canadian Buys from Gordon Pape

By Travis Johnson, Stock Gumshoe, September 15, 2010

I often find myself getting stuck in a rut writing about the same folks over and over — the Motley Fool guys, the various Agora offspring (Stansberry, Angel, etc.), Robert Hsu and Louis Navellier and their Investorplace colleagues come up over and over, largely because they’re the ones who push the most aggressive teasers … and therefore, the ones who my readers ask about all the time.

But today we’re going with something a bit more placid — a teaser from a newish Forbes newsletter edited by Gordon Pape, a dean of the Canadian investing punditocracy. The letter is called The Canada Report, and it seems to basically take some of the strategies he’s been talking up for Canadian investors for years and package them for US investors.

First, they pitch the idea of investing in Canada:

“What may astound you are the huge returns U.S. investors have been earning in Canada…not some ’emerging economy’ with loads of political and institutional risk, but a stable and loyal friend to the United States almost since the founding of the Republic–and a country rich in natural resources like oil and gold that with the emergence of countries like China and India, are in more demand today than ever.

“From March 9, 2009 through September 13th, 2010, Americans could have earned 100% on the blue chip stocks (iShares MSCI Canada Index ETF) that trade on the Toronto Stock Exchange when you adjust for currency effects!”

All true, though a bit of that did come from the currency impact of the appreciating Loonie (or depreciating Greenback, if you prefer) — and March 9, 2009 was the absolute low point of the global crash, so everything has done great since then (to be fair, the S&P 500 is up roughly 70% since then, so not quite as good as the Canadian large caps — and Canada has outperformed far more dramatically if you go back five years, thanks in large part to the huge oil runup in 2006-2008).

So let’s assume we’re sold on the idea of investing in Canada, with the backdrop of their relative friendliness and openness and their resource riches. How about more on Pape’s strategies?

“The Canada Report offers investors some of the excitement of emerging markets like Brazil and China. But it allows them to sleep at night, too, knowing that the high-yielding blue chips Gordon Pape and his contributing editors carefully watch are unlikely to implode.

“The way Pape describes it, some of the picks in his newsletter are the stock market’s equivalent of ‘grinders’ in hockey – hard workers that get little credit but produce sound results, year after year, while protecting your hard-earned money. Others are prospective high-flyers, with the potential for large capital gains in a relatively short time when market conditions are right.”

Ah, the hockey reference … so we know he’s a real-deal Canuck, I’m always ready for more blue-line metaphors and fewer baseball metaphors, so that’s one point in his favor. If someone else tells me that we’re in the fourth inning of the recovery I’m going to want to hip check him.

The ad teases that he has some Canadian trust survivors that he likes, too, but he doesn’t actually really hint at which of those are his favorites — we do, however, learn about three recommendations Pape is making for his subscribers. Or at least, we get a few clues … let’s look at ’em one at a time:

So what is Gordon Pape advising his subscribers to do now?