The Canadian dollar isn’t headed for a crash landing; the loonie’s third-quarter flight path only makes it seem so. A 4.7% decline for the currency aggravated a difficult three months for Canadian stocks.

The benchmark Standard & Poor’s/Toronto Stock Exchange Composite Index was off 0.6% in local terms, including dividends. But with the loonie drop, for U.S. investors the S&P/TSX Composite was off 5.4%, including dividends. The S&P 500 index was up 1.1%.

The S&P/TSX Composite was resting near breakeven in mid-September. But a quarter-long decline in oil prices—highly correlated with the Canadian index and the currency—has accelerated since then, driven by concerns about growth and the impact of a rising global oil supply.

That drop is reflected in the quarterly performance of the CE Portfolios.

Our resource-heavy Aggressive Holdings, including seven oil and gas producers, lost 10.6% in U.S. dollar terms. Our Conservative Holdings, comprising essential-service businesses and infrastructure companies with fee-generating assets, posted an average loss, including dividends, of 2.2%.

But as we note in this month’s In Brief, there’s substantial long-term support for the Canadian dollar. And we address short-, medium- and long-term issues of oil and gas prices in this month’s In Focus feature, with particular emphasis on the energy producers among our Aggressive Holdings.

Energy Infrastructure Update

Pembina Pipeline and Keyera, two Canada-based companies with deep and growing ties to the North American energy-production boom, have enjoyed great runs on the Toronto Stock Exchange in 2014. Pembina hit a 2014 high on September 11, up 42% for the year. Keyera, meanwhile, surged 56% as of September 3.

Both have suffered in September, underperforming the S&P/TSX Composite by more than 1%. Overall returns remain healthy, robust even. But recent action begs the question: Is there something deeper, something fundamental, signaling the end of good times for Pembina and Keyera?

The short answer: No. We still like both stocks and are raising their buy limits, though some interesting factors are at play.

Pembina has been hurt by Statoil ASA’s announcement that it will delay construction of its Corner oil sands project in Alberta for at least three years due to rising costs. Pembina’s $31.4 million engineering-support agreement with Statoil for the related Cornerstone pipeline expired at the end of September, and no additional money will be spent on the project.

Pembina will, however, keep the right to use the engineering for Cornerstone, which would have run from northern Alberta to Pembina’s Nexus terminal in Edmonton, and it will be reimbursed for most of its investment.

It’s never a good thing to lose potential work. But Pembina has about $5.4 billion of committed projects under way and another $1.52 billion of projects under bid. That’s enough to keep the share price rising and support dividend growth in coming years.

And Statoil had yet to make a final investment decision on Corner, so future business from Cornerstone hasn’t been included in analysts’ forecasts.

Statoil’s concerns about cost inflation, market access and the direction of crude prices are broader concerns with implications for the midstream segment at large, in which both Pembina and Keyera operate, but the sector is still growing.

For example, Pembina also announced that its first natural gas liquids (NGL) extraction has occurred at its Resthaven processing facility, and delivery to the company’s Peace pipeline is expected in the next few weeks. Management also expects its Musreau II shallow cut gas plant (100 million cubic feet per day) to be in service in December, ahead of its original in-service date in the first quarter of 2015.

When Musreau II enters service, Pembina will have 1 billion cubic feet per day of field gas processing capacity, making it one of the largest gas processing companies in the Western Canadian Sedimentary Basin.

In the conventional pipeline segment, Pembina announced an additional 18,000 barrels per day (bbl/d) of long-term contracts for its Phase III pipeline expansion, bringing total capacity under contract to 307,000 bbl/d. Pembina has now contracted about 650,000 bbl/d of crude oil, condensate and NGLs capacity through its re-contracting efforts and its Phase I, II and III conventional pipeline expansions.

Meanwhile, recent drilling success from Keyera suggests that the need for NGL infrastructure will continue to grow despite a number of projects getting the go-ahead in recent weeks.

Without expansions currently under way, the industry could have been short of capacity in the next 18 months, and continued producer activity suggests it’s just a matter of time before more infrastructure construction begins.

Success in drilling for liquids-rich production in the Montney has exceeded expectations, with more eventually expected from the Duvernay. Without appropriate NGL infrastructure, netbacks will suffer, so there’s plenty of producer incentive to support new projects beyond those already in the works.

Pembina and Keyera are model stories, with expanding fee-for-service business in key producing basins.

We’ve raised our price limit on Pembina Pipeline, and it’s now a buy under $50.

Keyera, well positioned for growth in the Montney and the Duvernay, is now a buy up to $80, up from $65.

Conservative Update

Notwithstanding one of its buses dropping a first grader off at the wrong location, Student Transportation is still chugging along.

The mistake happened in Pennsylvania at Student Transportation’s (TSX: STB, NSDQ: STB) U.S. subsidiary, Student Transportation of America (STA), and executives from the company almost outnumbered the six community members at the school board meeting where the incident was discussed.

Bottom line: STA training exceeds state requirements, and the bus driver in question was relieved of his duties. This overwhelming response to a sensitive situation is characteristic of a high-quality business that appreciates its responsibility for elementary-age children.

At a time when school districts are cutting budgets and eliminating busing services, Student Transportation is not only stepping into the breach, it’s doing so in a way that should satisfy parents.

Management reported solid fiscal 2014 fourth-quarter and full-year results on September 16, with revenue for the three- and 12-month periods ended June 30 up 16.6% and 15.5%, respectively.

Adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) grew by 9.2% and 10.1%.

Adjusted EBITDA for fiscal 2014 of $89.4 million reflects an 18.3% increase over the previous year. The payout ratio for the year was 73.5%, down from 78.7% for fiscal 2013, which means the company can even more easily afford its dividend.

New-bid and conversion contracts combined with the boost from a full year of operations for acquisitions finished in fiscal 2014 establish a “booked revenue” increase of about 12% so far for fiscal 2015.

Well positioned to make the grade for another solid school year, Student Transportation is a buy under $7.

Bank of Nova Scotia’s greater exposure to emerging markets relative to its Big Six Canadian peers has been a source of substantial concern among analysts in recent weeks, and that concern is reflected in the stock’s underperformance of late.

Indeed, Scotiabank’s (TSX: BNS, NYSE: BNS) results will be hurt by slowing economic growth in Latin America as well as rate cuts that will delay the recovery in International earnings growth until the second half of fiscal 2015.

But this slip just brings Scotiabank temporarily back to the pack, as its better relative earnings stability and momentum versus its peers have earned it a stock-price premium over the past five years.

Scotiabank’s excess capital, its greater opportunities for acquisitions and the long-term potential of its International segment should return it to premium-valuation territory.

The current dividend of 3.9% and its track record of consistent payout growth are not in any jeopardy.

Bank of Nova Scotia, which remains our preferred pick among Canada’s Big Six banks, is a buy under $69.

Aggressive Update

Extendicare (TSX: EXE, OTC: EXETF) stock has dipped since hitting a 22-month high in late August, but the post-acute and long-term-care facilities operator still posted the best third-quarter performance among Aggressive Holdings. The company’s 7.9% total return is largely the result of an enthusiastic reaction to its second-quarter earnings report and management’s accompanying commentary.

Key factors include the favorable resolution of a U.S. Detartment of Justice investigation of its U.S. subsidiary. And an agreement to lease skilled nursing centers in Pennsylvania, Delaware and West Virginia will boost earnings before interest, taxation, depreciation and amortization (EBITDA) and adjusted funds from operations by $8.9 million.

Operations in the U.S. showed solid improvement, with Medicare rates up year over year and quarter over quarter.

Canada continues to provide a solid foundation for Extendicare’s business, with still-strong occupancy driving healthy average daily revenue rates and same-facility EBITDA growth. And an eventual expansion of Extendicare’s U.S. operations will add more value.

Extendicare is a buy under $7.

Our May 2014 Best Buy recommendation on Lightstream Resources Ltd. (TSX: LTS, OTC: PBKEF) was dead wrong. The stock is down more than 30% since we made that call, hurt by declining oil prices.

We did point out Lightstream’s ­extreme vulnerability to a turn in the commodities market, as management is selling assets in an effort to ­generate cash for debt reduction. These sales are eating into production.

The combination of declining production and lower prices has put the company between the proverbial rock and a hard place, and it’s no place for any but the most aggressive speculators now.

Our blind spot here was for anticipating the weakening of the crude oil market. We have more on this topic in the October In Focus feature.

It’s time to cut losses. Sell Lightstream Resources.