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Investors can expect the devastating drought in the U.S. midwest to take a bite from profits at Maple Leaf Foods Inc.

"The worst drought to hit the United States in over half a century has pushed up commodity prices – some to multi-year highs – and ... will make it next to impossible for Maple Leaf to meet its guidance in 2012," TD Securities analyst Michael Van Aelst warned in a report on Wednesday.

The Canadian food processor, whose brands include Dempster's bread and Schneider's meats, reports its second-quarter results on Aug. 1.

The analyst expects a lower profit for the third consecutive quarter despite "solid execution to date" of its restructuring plan to boost competitiveness and profitability. "We are now looking for adjusted earnings per share of 22 cents (down from 28 cents) for the second quarter versus 30 cents last year," he wrote.

"We now believe that commodity pressures will allow the protein group (meat products) to just barely achieve its target margin in 2012, while commodity pressures and unusual competitive activity will leave the bakery operations well short of short-term targets," Mr. Van Aelst added.

"However, with valuation well below its peers and matching its all-time low, we expect the second-quarter results and anticipated revised guidance to create an attractive entry point for longer-term investors with higher risk tolerance."

Downside: The analyst cut his one-year target to $14 a share from $15, but maintained his "buy" rating.

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Penn West Petroleum Ltd.
RBC Dominion Securities analyst Greg Pardy cut his dividend outlook for the oil and gas company to 80 cents a share in 2013 from $1.08 this year. It's balance sheet is more highly leveraged amid weak commodity prices, he said.

Downside: He slashed his one-year target to $17 a share from $25, while downgrading the stock to "sector perform."

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Mainstreet Equity Corp.
The apartment operator reported better-than-expected third-quarter results. It reflects net migration into markets like Calgary and Edmonton which "continue to experience strong growth," said M Partners analyst Brendon Abrams.

Upside: He maintains his "buy" rating, but raised his one-year target to $36 a share from $31.50.

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Héroux-Devtek Inc.
Desjardins Securities analyst Benoit Poirier raised his target on the buy-rated aerospace manufacturer even though its stock jumped on Tuesday after the sale of its aerostructure and industrial products operations. Sale of its landing gear division could unlock more value, he said.

Upside: He increased his one-year target to $13.50 a share from $11.

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AuRico Gold Inc.
The gold producer released lower-than-expected results for the second quarter and reduced production guidance due to a high turnover of skilled labour at its Ocampo mine in Mexico, said Canaccord Genuity analyst Rahul Paul.

Downside: He downgraded AuRico to a "hold" rating, and cut his one-year target to $8 (U.S.) a share from $12.

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