Here’s a quick little trade idea for you: sell, short or buy puts on Metro Inc. (TSE: MRU.A). Metro Inc. is the operator of A&P, Food Basics, Metro and Loeb grocery stores in Ontario and Quebec. It’s not that I think being in the consumer staples sector is a bad thing in this environment, but this is a stock that has been a high flyer over the last year and I think it’s time for it to come back down to the market’s miserable reality.

Metro purchased the A&P/Dominion stores in Canada back in 2005 and have spent the last few years integrating them into their Metro brand. 2008 was the year they reaped the rewards, and the stock price soared. In 2008, while the rest of the market was plummeting, MRU.A advanced over 90% making it one of the best performing stocks of the year.

I hate sounding like the perma-bear, but we have another company on the “bankruptcy watch” list: Nova Chemicals (TSE: NCX), Canada’s “premiere” chemical manufacturer… actually, they’re pretty much Canada’s only chemical manufacturer. In the eyes of the equity markets, bond markets, and credit markets (i.e., CDS market) this company may be insolvent within months. But that fate is far from certain. For the gamblers out there, there may be a long-shot trade to be made.

As an introduction, Nova Chemicals (TSE: NCX) is Canada’s major chemicals producer. Basically, they produce a variety of plastic resins and styrenics that go into the manufacturing of stuff like plastic bags, plastic containers, disposable cups, and vehicle dashboards.

Caterpillar Inc. (CAT) posted fourth-quarter earnings, and boy were they negative. Earnings came in at $1.08 per share compared with expectations of $1.31 per share. CAT also said it will be cutting 20,000 jobs (~11% of their workforce).

Sometimes equity investors have a habit of overlooking the bond/credit markets. But in times like these, when credit markets are tight, the states of corporate balance sheets become more important than ever and it becomes imperative for all equity investors to watch and understand the credit markets.

Take Suncor Energy (TSE: SU) for example. SU was Canada’s favourite oil and gas stock from 2004 – 2007. It is one of Canada’s largest oil and gas stock (by market cap), it produces almost 300,000 Boe/d, earns over $2 billion per year, and has probably the most ambitious plans for the Albert Oil Sands – plans that were originally estimated to cost ~$6 billion.

On July 3, I posted the article “HOD ETFs – A Bearish Indicator For Oil?” suggesting that the exponential increase in trading volume that we were seeing in the new Horizon Beta Pro HOD ETF (the one that offers 200% downside exposure to the daily change in crude oil prices) could be evidence that a substantial correction was coming. July 3rd was when oil hit its all-time high of $145. Since then, spot oil prices have declined by roughly 70% and HOD volume has dropped substantially (see chart below).

On November 25th Bank of Montreal (TSE: BMO) reported their Q4 results and the numbers weren’t all that bad, on the surface anyway. They reported EPS of $1.18, slightly ahead of analyst expectations and ahead of last year’s earnings. Revenue was also ahead of expectations, the tier 1 capital ratio was a solid 9.77% and there was no sign of a big write-down. So, low and behold, everything looks pretty good… could this possibly be the bottom?

An integral aspect of fundamental analysis involves performing what many would call “ratio analysis”. This involves calculating a number of different industry standard ratios and comparing them to various benchmarks. The benchmarks can be the ratios of other competitors, industry average ratios, or industry “rules-of-thumb”. There’s no set procedure for performing ratio analysis because it all depends on the type of company you’re analyzing – certain industries have industry specific ratios. Regardless, this article will give you an overview of some of the standard ratios and what they may tell us about a company.

In this article I’ll group ratios into four categories used to evaluate the different facets of a company’s performance and overall condition: liquidity, operating performance, leverage, and equity valuation.