Friday, August 11, 2006

Turning around -- slowly

I've been a diligent little saver this summer (still a ways off my ambitious net-worth-of-$20,000-by-September pledge, but that's largely due to my existing investments tanking so impressively. But I digress. I'll formally update my progress soon.)

As such, I've amassed a tidy little sum that I've earmarked for an RRSP contribution. I had planned on throwing some cash into a stock I've had my eye on for the better part of a year now -- the horrendously battered publisher Quebecor World Inc.

I pegged it as a potential turnaround story a while back, based on some of the industry's fundamentals. It lost more than 50% of its value last year, yet still pays a dividend (albeit a slashed one) so those two factors attracted me. But something still isn't quite right to justify me jumping in.

I still think the stock has potential, but everything I've been reading and hearing about that industry lead me to believe that it hasn't quite hit bottom yet. Overcapacity is eating into revenues at a time when costs are escalating due to staffing. That's a bad mix. Not exactly a big neon "VALUE STOCK" hanging outside.

I still like the stock long term, but since I'm expecting it to drop a little more before eventually beginning its turnaround hopefully some time in late 2007, there's no rush to buy in just now.

As such, I've decided to park my money in the iShares REIT ETF, ticker symbol XRE on the TSX instead. I've wanted to get into the REIT game for a while, and since I'm not getting the "full speed ahead" sign about any given REIT over any other, I think I'm going to go with the whole bundle and play it safe.

After my initial research, Dundee and Boardwalk REITs looked appealing to me due to their focus on grabbing assets in Western Canada's burgeoning office market. But right now, I'm leaning away from putting my eggs in one basket, so I'll be putting an order in for $3000 worth of XRE early next week.

If you happen to be selling at the time, thanks for the units. Unless of course they tank, in which case I'll probably be calling you in six months, saying "hey buddy, wanna switch back?"

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