I've just returned from the World Money Show in Orlando where more than 10,000 investors gathered to learn about global investing. I had a chance to meet with many of the U.S. and foreign financial experts featured at the show, and over the next week I will share some of their top investment ideas. To view all of the stocks featured in this special global report, click here.
Any investor who owned Canadian income trusts prior to the change in tax law that caused the sector to plummet can well understand the sentiments expressed by Canadian investment expert Gordon Pape who -- after speaking to investors at the World Money Show -- commented, "The Americans are angry. Very angry indeed!"
In an update on the trust situation, the editor The Internet Wealth Builder notes, "The recent Parliamentary Committee hearings into the income trust tax proposal were interesting but, in the end, nothing has changed. The government is going ahead with the plan and the legislation will pass."
"So it you were holding any faint hope that the bill might somehow be defeated, it is time to put those dreams aside and move on. That's what the financial professionals are doing."
In that light, the advisor has been looking at selected income trusts that despite the tax rulings remain buy recommendations. He explains, "We have been recommending that investors start to weed out the weaker trusts from their portfolios, retaining only the cream of the crop.
"I regard Yellow Pages Income Fund (Other OTC:YLWPF) as one of the strongest income trusts. It controls a powerful franchise and, as a result of the acquisition of Super Pages a couple of years ago, has a virtual monopoly position in Canada.
"More recently, it has been expanding the scope of its business through acquisitions like Trader Corporation, which brought popular publications like Auto Trader into the fold.
"In November, the organization issued a statement saying it did not expect the proposed tax to have any significant impact on Yellow Pages Group and that no structural changes are contemplated. At the same time, the trust announced a 6% distribution increase.
"At recent prices, the trust's monthly distribution of 9.083 cents per unit ($1.09 a year) is projected to yield 8.4% over the next 12 months. Yellow Pages is a buy.
"Student Transportation of America (Other OTC:SUDRF) is the fifth-largest provider of school bus transportation services in North America. The company -- referred to as STA -- operates a fleet of more than 4,000 vehicles operating in ten U.S. states and Ontario.
"This is an income participating security, not an income trust, so therefore does not appear to be subject to the proposed new government tax (although the Department of Finance has not confirmed that).
"Why do we like it? For starters, the excellent cash flow. STA units are currently yielding 10.4% on monthly distributions of 9.125 cents per unit ($1.095 annually). The company is also showing good growth. In the two years since it went public, it has doubled the size of its business and is continuing to expand.
"This security is suitable for aggressive investors who are prepared to accept above-average risk in return for a good yield and strong growth prospects.
"Although there is no guarantee that IPS structures will escape the new tax, those whose assets are mainly in the U.S. have the option of leaving Canada if need be. That plus the high yield makes STA an attractive choice at this time."
Steven Halpern's TheStockAdvisors.com provides a free, daily overview of the latest stock ideas from the nation's leading financial newsletters.
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