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McCain Foods to double size of facility near Lethbridge with $600M investment

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The injection will create 260 new jobs at its facility, bumping its workforce from 225 to 485 people

McCain Foods will spend $600 million to double the size of its potato processing plant near Lethbridge, the company announced Monday.

The Toronto-based french fry giant said the injection will create 260 new jobs at its facility in Coaldale, Alta., boasting the investment is the largest in the company’s history.

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The expansion will create two new production lines at the Coaldale plant. When operational, both hourly and salaried employees will be hired to work on those lines, McCain said, bringing the workforce at the site up to 485 employees from the 225 currently working there.

“This will fuel continued growth for the business, allowing us to serve key markets further by bringing customers high quality potatoes that begin with our dedicated local farming community,” said McCain Foods president and CEO Max Koeune in a news release.

Project boasts several green initiatives

The project will also include wind turbines and solar panels, the company said, providing 100 per cent renewable electricity for the Coaldale site.

McCain added it plans to maximize renewable biogas generated via its wastewater treatment process to transport to steam boilers and offset natural gas use, and said a water recycling system is also planned to produce clean potable water to be used during manufacturing.

The company announced in 2021 its goal to cut reduce its overall carbon emissions by 50 per cent by 2030. That also includes moving to its policy of only sourcing potatoes from farms which practice “regenerative agriculture,” a term used to describe farming practices which activity revitalize soil quality.

The Lethbridge-Coaldale-Taber corridor in southern Alberta is home to several major potato processing operations, making it a key region for the province’s value-added agriculture sector.

Those include include a $350-million Cavendish Farms facility in Lethbridge, and PepsiCo Frito-Lay and Lamb Weston plants in Taber.

— With files from Amanda Stephenson

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Peter Hall: Why companies should invest now, even if a recession is coming – Financial Post

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Canada has underinvested since the financial crisis and is now over-using labour to make up for it

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The first in a three-part series on why now is the time for companies to invest.

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Investing in big, new industrial projects right now might seem asinine to business strategists. Higher interest rates have everyone fixated on recession — not whether there will be one, but when and how deep.

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The prospect of a prolonged banking crisis piles on considerable risk. History suggests that these conditions cause business investment to dry up, remaining arid until it’s clear the economy has legs. At times like these, CFOs are supposed to be closing the vault to all visionary spendthrifts, conserving cash to survive the the big bad.

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But is that really where the economy is at?

Visionaries might counter that demand is where it should be, and that our current problem sits squarely with tight supply. Ergo, we need more industrial capacity to make sure that production can meet demand.

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Even if they’re right, that’s no easy feat — getting a building up usually takes more than a year from start to finish, sometimes several. More machinery is a quicker fix, if you can find a place to put it; but it is more than likely tied up in the supply chain snarls that it would be attempting to rectify. So, how can this possibly be an ‘investment moment’?

Since business investment in physical assets shouldn’t be, and on balance rarely is, a knee-jerk reaction to an instant development, then there must be good structural or longer-term reasons for this being an “investment moment.” It turns out there are not just one or two good reasons. In fact, there are enough that airing them requires more than a stand-alone article, which is why this will be the first of three on the subject. So, where do we start?

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Let’s first consider the possibility that we have underinvested since the global financial crisis (GFC). Most would agree that the global economy has on balance spit out sub-par growth since 2008, not really generating a convincing recovery. Then consider the bubble of activity that preceded the crash back in 2008. There was arguably a lot of pre-GFC investment to support the unsustainable level of production, excess that had to be re-absorbed before a true, new investment cycle could begin. Since that pre-event bubble was so huge, investment didn’t really need to ramp up for years — in fact, long enough that business in general might misinterpret it as a structural change, to a low-investment “new normal.”

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Drag that on for long enough, and when the economy is finally ready to ramp up, business capacity is years behind. There is a good chance that our post-COVID recovery is discovering just that. Suddenly, we need the capacity, but we can’t get there right away. The result? Inflation that’s not a temporary blip, as we were promised, but a nagging problem that in the absence of a supply-side fix, has us artificially suppressing demand. If this is true, monetary policy ought to be seen as a temporary rein, buying time for business to boost capacity. If they can handle the higher borrowing costs, that is.

If that seems like a stretch, consider that in Canada, business investment as a share of gross domestic product has been well below the long-term average for years — and that at a time of suppressed global growth. More importantly for global capacity, U.S. business investment as a share of GDP took a long time to recover post-GFC, and has not yet returned to pre-GFC levels. The case seems compelling: there’s a need for a significant rise in business investment to support the global economy’s present and future demands.

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A second and related point is that we appear to be over-using labour. It makes sense — when caught short, it’s far easier to add workers than to add plants and equipment (assuming the two are reasonably substitutable). Then, when it becomes apparent that labour is getting tight, business panics, and over-hires; better to have a healthy buffer of workers than to run lean and risk losing enough head count that lines or even whole operations get shut down.

This is far more visible than the investment situation. Everyone knows we have record-low unemployment in most OECD nations. In Canada, there is a higher number of employees for each unit of GDP, a feature of the post-GFC period. Compared with the long-term trend, a crude calculation has us employing 700,000 to 800,000 excess workers. Cut that in half, and it’s still huge.

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The flip side of this is labour productivity, which has swooned in recent years. The remedy isn’t to replace all of these workers with robots. But clearly we have a critical labour shortage, and business is generally desperate for remedies. Higher business investment would relieve this pressure, and free up workers for those other parts of the economy where tight labour supply is severely constraining output.

Labour constraints aren’t likely to improve. A third argument for higher investment is our structurally skinny demographic situation. Many are hailing Canada’s outsized immigration influx in 2022 as a cure to this chronic ill. Not so fast; immigration numbers were boosted last year by 607,782 non-permanent residents (we typically receive about 26,000), abetted by Ukrainians fleeing the war. We can’t (nor should we) count on similar future surges, unless we can be assured that it is possible to boost Canada’s regular immigrant intakes.

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There are plans to increase immigration to 500,000 per year; we’ve struggled in the past to get that number much above 300,000. I have argued elsewhere that as attractive as Canada is, there is increased competition from other population-constrained high-income countries; and increased competition from faster growth and the attendant opportunities in the home country.

  1. Sales of existing dwellings in Canada fell 38 per cent last year, according to the Canadian Real Estate Association.

    Housing’s hard stop spells trouble ahead for economy

  2. Canada’s unemployment rate is at a half-century low, while labour force participation is at a record high.

    This is how Canada can fix chronic labour shortages

  3. The Bank of Canada building in Ottawa.

    Bank of Canada’s awful medicine is what economy needs

A key means of securing our future is increasing capital’s contribution to output — which as a bonus, generally improves productivity. This is just a start — there are at least six more key reasons to hail this point in time as an investment moment. If the CFOs were twitchy after reading the first paragraph, they will now be in a full-blown sweat. This article’s three factors are reason enough to begin thinking about keeping the coffers open, and the dust off the blueprints. To be continued.

Peter Hall is chief executive of Econosphere Inc. and a former chief economist at Export Development Canada.

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Billionaire Barry Sternlicht Is Heavily Invested in This 15%-Yielding Dividend Stock for Steady Income Growth – Yahoo Finance

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Following multiple recent bank collapses, some on Wall Street estimated the Fed would step back from its by-now customary rate hikes when it convened to discuss its monetary policy last week. That did not happen, however, and Fed chair Jerome Powell announced another 0.25 percentage point rate increase.

One prominent investor thinks that was unnecessary and counterproductive.

“Obviously he (Fed Chair Jerome Powell) didn’t need to do what he did,” billionaire Barry Sternlicht said, likening the act to “using a steamroller to get the price of milk down two cents, to kill a small fly.”

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With regional banks already under severe pressure, Sternlicht, the co-founder and CEO of Starwood Capital, a hedge fund that oversees over $100 billion, believes the latest rate hike could potentially cause more damage to banks.

While Sternlicht is worried about the latest increase’s impact on the economy, going by one of his picks, he appears well-prepared to withstand any more rate hikes.

Sternlicht is invested heavily in MFA Financial (MFA), a dividend stock yielding a monster 15%.

MFA is structured as a REIT, a class of company’s long known for their high-yielding dividends. MFA’s portfolio is composed mainly of residential whole loans, residential and commercial real estate securities, and MSR-related assets.

As of the end of last year, MFA’s investment portfolio totaled $8 billion, although that declined from $8.3 billion at the end of 4Q21. Elsewhere in Q4, net interest income dropped by 20.7% from $70.15 million in the same period a year ago to $55.65 million. That said, at $0.48, adj. EP increased meaningfully from the $0.08 generated in 4Q21, and came in well ahead of the $0.30 forecast.

Of course, the most appealing aspect here is that sky-high yield. The quarterly dividend payout currently stands at $0.35, generating a yield of 15.3%.

That is no doubt attractive to Sternlicht, which has allocated 68% of his portfolio to his MFA holdings; he currently owns 10,638,539 shares worth $97.13 million.

Sternlicht is not the only one showing confidence in this name. Stephen Laws, an analyst at Raymond James, holds a positive outlook for MFA. His optimism is based on “selective new investments, conservative leverage, strong portfolio returns, and shares trading at ~80% of economic book value.”

“Given our outlook for attractive portfolio returns, an increased focus on business purpose loans, and the current valuation relative to our target, we believe the risk-reward is compelling,” the 5-star analyst further added.

As such, Laws rates MFA shares an Outperform (i.e. Buy) along with a $12.5 price target. This suggests the shares will climb 37% higher over the coming months. (To watch Laws’ track record, click here)

The Street’s average target is a little under Laws’ objective; at $12.33, the figure makes room for one-year returns of 35%. Rating wise, based on 2 Buys and 1 Hold, the analyst consensus rates the stock a Moderate Buy. (See MFA stock forecast)

To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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First Republic Bank Stock: Why I Am Sticking To My Investment (NYSE:FRC)

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Anne Czichos

A couple of things have happened to First Republic Bank (NYSE:FRC) since I submitted a contrarian call to buy the community bank’s shares about two weeks ago. FRC stock has whiplashed ever since and the bank

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Source: JP Morgan

Source: JP Morgan

Source: First Republic Bank

Source: First Republic Bank

Source: First Republic Bank

Source: First Republic Bank

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Data by YCharts
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Data by YCharts
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