Auto parts and systems designer and manufacturer Magna International Inc (TSX: MG, NYSE: MGA) is new to How They Rate coverage this month, under Business Trusts. We have more on Magna in this month’s In Focus feature. Buy under USD80.

Poseidon Concepts Corp has de-listed from the TSX. Management has entered an agreement to sell its assets to Rockwater Energy Solutions. Poseidon is now operating under bankruptcy protection in the US and Canada.

There are a number of shareholder suits ongoing against the company. One US law firm participating is Howard G. Smith of Bensalem, Pennsylvania (888-638-4847).

Given how fast this one imploded, no one should get their hopes up for much restitution. But by the same token shareholders have little to lose, either.

Advice Changes

Barrick Gold Corp (TSX: ABX, NYSE: ABX)–To SELL from Buy @ 45. Gold’s fundamentals have completely broken down, and gold miners are suffering with high production costs that in many cases can’t be met at current commodity prices.

Barrick announced that it will take significant impairment charges in the second quarter and will take a hard look at its cost structure. The current dividend rate could be in jeopardy.

Baytex Energy Corp (TSX: BTE, NYSE: BTE)–To Buy @ 42 from Buy @ 55. We’ve reduced our buy-under target to a level that better reflects current market reality. Baytex closed at USD37.87 on the New York Stock Exchange on Friday, July 5.

Boyd Group Income Fund (TSX: BYD-U, OTC: BFGIF)–To Hold from Buy @ 16. The stock is pushing CAD24, or USD23 based on prevailing exchange rates, on the Toronto Stock Exchange, well above our prior buy-under target.

Management will likely announce a dividend increase in November, if prior practice is maintained. But the increase won’t be sufficient to justify the run-up in the share price. It’s a solid company with a solid growth plan, but it’s expensive at these levels.

Lightstream Resources Ltd (TSX: LTS, OTC: LSTMF)–To Buy @ 10 from Buy @ 15. We’ve reduced our buy-under target on the stock to better reflect market reality. Lightstream closed at CAD7.70 on the TSX on July 5.

Liquor Stores NA Ltd (TSX: LIQ, OTC: LQSIF)–To Buy @18 from Hold. A selloff presents an opportunity to pick up a solid company with a stable dividend, with cash flow supported by Canada-focused growth augmented by US exposure.

MEG Energy Corp (TSX: MEG, OTC: MEGEF)–To Buy @ 32 from Buy @ 40. We’ve reduced our buy-under target on the stock to better reflect market reality. MEG close at CAD30.58 on the TSX on July 5.

Primary Energy Recycling Inc (TSX: PRI, OTC: PENGF)–To Buy @ 4.80 from Hold. The company could be a takeover target after hitting a 52-week low. First-quarter numbers were solid. This is for aggressive speculators only.

Suncor Energy Inc (TSX: SU, NYSE: SU)–To Buy @ 33 from Hold. The energy producer with significant oil sands operations earns a re-basing based on its decision to boost its dividend from CAD0.13 per share per quarter to CAD0.20.

The Keg Royalties Income Fund (TSX: KEG-U, OTC: KRIUF)–To Buy @ 14 from Hold. The chain is adding new restaurants at a solid clip, demonstrating the attractiveness of its brand. Same-store growth is better in the US than in Canada, a unique factor its domestic competitors can’t match. The selloff in the shares represents an opportunity to pick up a solid, sustainable dividend.

Ratings Changes

Canadian Natural Resources Ltd (TSX: CNQ, NYSE: CNQ)–To 4 from 3. The company earns an additional point because it has low overall debt compared to other Oil and Gas companies, two-year maturities are more than manageable and the payout ratio is relatively low and likely to remain so for the foreseeable future.

The core of my selection process is the six-point CE Safety Rating System, which awards one point for each of the following. A rating of “6” is the safest:

• Payout Ratio–A ratio below our proprietary industry baseline.
• Earnings Visibility–Earnings are predictable enough to forecast a payout ratio below our proprietary industry baseline.
• Debt-to-Assets Ratio–A ratio below our proprietary industry baseline.
• Short-Term Debt Ratio–Debt due in next two years is less than 10 percent of market capitalization.
• Business Stability–Companies that can sustain revenues during recessions are favored over more cyclical ones.
• Dividend History–No dividend cuts over the preceding five years.