Once in a while when I fill up the car at the gas station and go in to pay the clerk, I grab a chocolate bar and a $2 scratch ticket. To rack up some points for a trip, or maybe a new flat-screen TV, I put the whole works on my credit card.
I know the odds don’t justify spending the money on the ticket. For that matter, the chocolate bar isn’t necessary either. In fact, I could probably get by without the car, and then I wouldn’t even be tempted to buy the chocolate bar or the lottery ticket because I wouldn’t have to visit the gas station.
Anyway, like most, I’m willing to pay for the convenience of having a vehicle and don’t mind splurging on a snack here and there. Every so often, somebody does win $25,000 on the scratch tickets and someday, that might even be you or me.
Here are the four stocks I would buy if I won $25,000.
1. Suncor Energy
As Canada’s largest integrated oil company, Suncor (TSX: SU)(NYSE: SU) rakes it in every time someone stops at one of its Petro-Canada gas stations. The company produces and refines the oil and retails the final product as diesel or gasoline. Suncor also gets a cut from the lottery ticket and the chocolate bar via franchise arrangements with the convenience stores.
Suncor continues to report record earnings. Oil prices are high, the Canadian dollar is low, crude-by-rail shipping allows Suncor to supply its refinery with cheap oil, and people like me keep buying lots of gas.
Suncor trades at about $45 per share.
2. Toronto Dominion Bank
Toronto Dominion Bank (TSX: TD)(NYSE: TD) is a cash machine. The company has strong retail operations in Canada, and the economic rebound south of the border is boosting profits at its extensive U.S. branch network.
Like all the Canadian banks, its bottom line gets a nice pop from its credit card operations. The banks can borrow cash for almost nothing and turn around and charge customers as much as 19% interest on the outstanding balances. Of course, they have to allow for the odd loss here and there, but all the recent deals to buy credit card operations from retailers such as Target and Canadian Tire suggest that the profits in the credit card game are as sweet as the chocolate bar I bought.
Toronto Dominion Bank trades at about $56 per share.
3. Agrium
Most people go on vacation to see famous landmarks or sit in the sun. I’m more like Anthony Bourdain: I go to eat. To grow this food, farmers buy Agrium’s (TSX: AGU)(NYSE: AGU) products. Like Suncor, Agrium has an integrated business model. It produces and sells potash, nitrogen, and phosphate on both the wholesale market and through its extensive retail chains. In fact, Agrium not only makes money on the crop nutrients, it also makes some money on the other products it sells to farmers, such as seed.
With a big expansion at its main potash plant coming online at the end of 2014 and the likelihood of reduced natural gas costs for its nitrogen production, Agrium is well positioned to reward investors with higher dividends in the coming year.
Agrium’s shares trade at about $99 per share.
4. BCE
I might decide to use those points I have built up on the credit card to pay for a new flat-screen TV. When that happens, I’ll probably want to order some specialty channels, and BCE (BCE: TSX)(NYSE: BCE) has a lot of them to offer.
BCE has gone from being the boring old telephone company that every grandma owned for the dividend payments to a diversified multimedia behemoth offering its customers content across any platform they care to use, including satellite, mobile, high-speed fibre connection, and broadband internet. I can even buy the flat-screen TV at The Source, which is also owned by BCE.
The best part is that Grandma still gets her juicy 5% dividend and shareholders continue to enjoy a rising share price. BCE trades at about $50 per share.
Altogether, 100 shares in each company would add up to a nice $25,000 investment.
