TRANSCONTINENTAL INC. (Toronto symbol TCL.A; www.tctranscontinental.com) is the largest commercial printer in Canada and the fourth-largest in North America. It also publishes newspapers and magazines.

Transcontinental also has over 1,000 websites, which supply 16% of its total revenue. These websites will become more important to this blue chip stock’s growth in the next few years as advertisers spend more on the Internet than print products.

The company recently swapped its printing plants in Mexico for six facilities in Canada. If you exclude the contribution from the Mexican plants and other unusual items, such as goodwill writedowns, Transcontinental earned $161.7 million, or $2.00 a share, in its 2011 fiscal year (which ended October 31, 2011). That’s up 3.7% from $155.9 million, or $1.93 a share, in fiscal 2010.

Sales rose 0.8%, to $2.04 billion from $2.03 billion. About 40% of Transcontinental’s revenue comes from its less-cyclical clients, such as supermarket chains. That cuts its risk.

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Blue chip stocks: New sales revenue coming from deals with Globe & Mail and Canadian Tire

The company continues to benefit from several new printing contracts. For example, it recently expanded its contract to print The Globe and Mail newspaper. This will add $25 million to its yearly sales. And starting in January 2012, it will begin printing advertising flyers for Canadian Tire under a new four-year deal. That will add a further $30 million to $40 million to its annual sales.

The company’s total debt of $564.4 million is a high 51% of its market cap. However, it has lowered its debt from $730.7 million a year earlier.

Transcontinental has raised its dividend twice in the past year. The current annual rate of $0.54 a share yields a high 4.2%.

In the latest edition of The Successful Investor, we look at how Transcontinental’s advertising revenue is holding up in a slower economy, as well as assessing the impact of its websites. We conclude with our clear buy-sell-hold advice on the stock.

You get our recommendation on Transcontinental and many more Canadian blue chip stocks when you try a risk-free introductory subscription to The Successful Investor. As a new subscriber, you can save $50.00 — and get all the details on “My #1 Stock Pick for 2012.” Click here to take advantage of this special subscription offer.

CANADIAN NATIONAL RAILWAY CO. (Toronto symbol CNR; www.cn.ca) operates the largest freight rail network in Canada. It also serves 16 U.S. states. Ottawa nationalized CNR in 1918 because of the vital role the company played in Canada’s early growth. CNR became a publicly traded company in 1995.

The company is upgrading its Alberta rail networks to take advantage of expanding oil sands development. These investments are helping drillers in remote areas without pipelines ship their heavy oil to refineries and other destinations.

CNR also continues to benefit from the expansion of the container-handling facilities in Prince Rupert, B.C., which is the closest North American port to Asia. The port’s container volumes rose 10.0% in the first nine months of 2011. CNR is the only railway that serves Prince Rupert.

CNR’s sound balance sheet will let it keep growing. Its long-term debt of $5.9 billion is just 1.8 times its annual cash flow of $3.3 billion.

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Blue chip stocks: CNR’s operating ratio improves even with higher fuel costs

A big part of CNR’s recent success is its focus on efficiency. For example, the company has been investing in fuel-efficient locomotives and working closely with customers to speed up the transfer of goods from trains to trucks and ships.

CNR is now one of the most efficient railways in North America. Even with a 41% jump in fuel costs, its operating ratio improved to 59.3% in the third quarter of 2011 from 60.7% a year earlier. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.)

This stock’s share price is up 23.4% in the past three months.

In the latest edition of The Successful Investor, we examine the competition CNR may face from proposed pipelines to B.C. ports. We also look at whether its share price can continue to move up. We conclude with our clear buy-sell-hold advice on CNR.

You get our recommendation on CNR and many more Canadian blue chip stocks when you try a risk-free introductory subscription to The Successful Investor. As a new subscriber, you can save $100.00 — and reserve a copy of my latest report, “My #1 Aggressive Stock Pick for 2012.” Click here to take advantage of this special subscription offer.

Bank of Nova Scotia will pay $500 million U.S. plus 10 million common shares. That gives the deal a value of roughly $1 billion U.S.

After the deal closes in December 2011, Bank of Nova Scotia will merge its existing wholesale banking operations in Colombia, which focus on corporate clients, with Banco Colpatria.

This investment will help the bank profit from rising economic prosperity in Colombia. As well, Bank of Nova Scotia has a long history of operating in Central and South America. That helps cut the risk of this purchase.

Bank of Nova Scotia is a buy.

The stock is now around 44.3% above the $63.75 peak that it hit prior to the 2009 market downturn. Its profits have grown thanks in part to new menus items, such as premium coffees and oatmeal.

In the third quarter of 2011, sales rose 13.7%, to $7.2 billion from $6.3 billion a year earlier. Same-store sales rose 5.0%. Earnings rose 8.6%, to $1.5 billion from $1.4 billion. Earnings per share rose 12.4%, to $1.45 from $1.29, on fewer shares outstanding.

McDonald’s now has 33,144 restaurants in 118 countries. It plans to spend $2.6 billion on capital upgrades in 2011. Half will go to build 1,100 to 1,200 new restaurants; the other half will go to renovating 2,200 outlets.

The company recently raised its quarterly dividend by 14.8%, to $0.70 a share from $0.61. The new annual rate of $2.80 yields 3.1%. McDonald’s has increased its dividend each year since it started paying them in 1976.

The stock trades at a reasonable 17.7 times the $5.21 a share that it should earn in 2011.

McDonald’s is still a buy.

In the three months ended June 30, 2011, BCE’s earnings per share rose 10.3%, to $0.86 from $0.78. Revenue rose 11.6%, to $5.0 billion from $4.4 billion a year earlier. Revenue fell 2.0% at the wireline division, which accounts for 53% of total revenue. This division, which includes BCE’s traditional land-line business, faces rising competition. As well, many customers are cancelling their land lines and switching to wireless devices.

Revenue from wireless services (26% of total revenue) rose 6.1%. The company’s recent network upgrades continue to attract new subscribers and prompt existing customers to upgrade their mobile-phone plans. BCE is also benefiting from rising use of smartphones, which generate higher monthly fees.

The stock has gained 16% in the past year, but it still trades at just 12.6 times BCE’s forecast 2011 earnings of $3.03 a share. There is also potential for further dividend increases.

BCE is still a safety-conscious buy.

Telus has 7.1 million wireless subscribers across Canada, and gets twice as much of its revenue from wireless as BCE (52% compared to BCE’s 26%). The company continues to expand its wireless business.

Telus gets the remaining 48% of its revenue from its traditional phone business, which has 3.7 million customers in B.C., Alberta and eastern Quebec. Telus also has 1.2 million Internet subscribers.

In the three months ended June 30, 2011, Telus’ earnings per share rose 4.3%, to $0.98 from $0.94 a year earlier. Rising demand for wireless and high-speed Internet services helped push up revenue by 6.4%, to $2.6 billion from $2.4 billion.

Right now, about 73% of Canadians use a wireless device. That should rise to around 80% in the next two years as more consumers upgrade from standard cellphones to smartphones and tablet computers.

To take advantage of that demand, Telus plans to spend $1.7 billion on capital upgrades in 2011. That’s equal to what it spent in 2010.

Telus is up 10% over the past year. Even so, it trades at just 12.8 times its forecast 2011 earnings of $3.79 a share. The stock yields 4.5%.

Telus Corp. is still a buy.

Bad weather slowed the company’s shipments during the quarter; that was the main reason for the change. CP still aims to cut its operating ratio to around 70% in the next three to four years. To meet this goal, it will run longer trains and work more closely with its main customers to speed up the loading and unloading of cargo.

A good example is CP’s new long-term deal with Teck Resources Ltd., which sells coal from its mines in B.C. to steelmakers in Asia.

Under the deal, CP is upgrading the tracks from Teck’s mines to handle longer trains. Teck plans to increase its production by 30% over the next two years, and longer trains will help CP profit from that expansion.

CP Railway is a buy.

In its fiscal 2012 first quarter, which ended August 28, 2011, General Mills’ sales rose 8.9%, to $3.8 billion from $3.5 billion a year earlier. That’s mainly because the company raised its prices to offset rising fuel and ingredient costs. As well, General Mills recently bought 51% of the company that makes Yoplait yogurt. This purchase accounted for a third of General Mills’ sales growth in the latest quarter.

However, earnings fell 14.1%, to $405.6 million, or $0.61 a share, from $472.1 million, or $0.70 a share, a year earlier. Besides higher ingredient costs, earnings were also held back by the cost of the Yoplait purchase and a 7% rise in advertising spending.

Blue chip stocks: Keeping dividend payout intact for 113 years

If you exclude gains and losses on hedging contracts that General Mills uses to lock in prices for corn, wheat and other ingredients, it would have earned $0.64 a share in the latest quarter, unchanged from a year earlier. That beat the consensus estimate of $0.62 a share.

General Mills has paid dividends for 113 straight years, and has never cut its payout. This blue chip stock’s annual rate of $1.22 yields 3.2%.

We updated our advice on General Mills in our September 23, 2011, Wall Street Stock Forecaster hotline, You can view it immediately view when you take a 1-month free trial to Wall Street Stock Forecaster, our newsletter written especially for Canadians interested in U.S. stocks with a substantial margin of safety. Click here to get started right away.

(Note: If you are a current Wall Street Stock Forecaster subscriber, please click here to view Pat’s recommendation. Be sure to log in first.)

GE sold these shares to Berkshire during the 2008-2009 financial crisis. The cash from the sale helped stabilize GE’s finance division.

The company will pay $3.3 billion to buy back these shares. That’s nearly equal to the $3.5 billion, or $0.33 a share, that GE earned in the three months ended June 30, 2011. However, this purchase will save the company $300 million a year in dividend payments.

Blue chip stocks: Order backlog for GE reaches record proportions

In the quarter ended June 30, 2011, GE Capital’s earnings jumped 117.0%, to $1.6 billion from $734 million a year earlier. That played a large part in pushing up the company’s overall earnings to $3.5 billion. A year earlier, it earned $3.2 billion, or $0.29 a share.

Revenue fell 3.5%, to $35.6 billion from $36.9 billion. However, that’s partly because the company sold 51% of its NBC Universal entertainment business in February 2011. If you exclude the impact of this sale, revenue from this blue chip stock’s ongoing businesses would have risen 7%.

GE’s order backlog is now a record $189 billion, or 1.3 times its annual revenue.

We updated our advice on GE and other blue chip stocks in our September 16, 2011, Wall Street Stock Forecaster hotline, You can view it immediately view when you take a 1-month free trial to Wall Street Stock Forecaster, our newsletter written especially for Canadians interested in U.S. stocks with a substantial margin of safety. Click here to get started right away.

(Note: If you are a current Wall Street Stock Forecaster subscriber, please click here to view Pat’s recommendation. Be sure to log in first.)

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you our specific advice on the fundamentals of successful investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away.

Today’s tip: “The quality of a stock matters more than its size.”

Shares of large, well-established companies generally rebounded well after the 2007-2009 market crisis. Investors sometimes refer to these companies as “large cap stocks.” That’s because they have a market “cap” (that’s short for “capitalization,” or total value of shares outstanding) of several billion dollars or more.

Some investors now wonder whetherlarge caps will continue to outperform. They wonder if they should sell their large cap stocks and instead buy more “small caps.” These are smaller companies with a market capitalization below some arbitrary figure, such as $1 billion.

• Look beyond market cap to judge a company’s investment quality. Large cap stocks can be leaders in giant fields with expanding potential. Or they can be wounded behemoths in declining fields. The investment quality of small caps varies even more. They range from near-worthless promotional issues to leaders in small but fast-growing fields.
  
  To tell good companies from bad, you have to look at a variety of factors much subtler than market cap. They include earnings, dividends, the strength of the corporate balance sheet, the strength of the company’s products, customer loyalty or fickleness, and so on.

In Wall Street Stock Forecaster, you get an investment advisory that's 100% focused on U.S. value stocks identified by my ValuVesting System™. What's more, today's low U.S. dollar provides you with a rare opportunity to add world-dominating U.S. stocks to your portfolio at bargain prices. Don’t miss out. Click here to learn how Wall Street Stock Forecaster can help you tap into high-quality opportunities in the U.S. stock markets.

• A large cap stock may have a high or low price per share. Remember, a company’s market cap is equal to the total number of shares outstanding multiplied by the price per share. However, a largecap stock can have a low price per share if it has many shares outstanding.

Investment opinion: To succeed in today’s highly volatile markets, you’ll need to own shares in a variety of companies of varying sizes. But here’s one thing your best choices will have in common: each will be about the right size to succeed in the business it is in.

You can get our investing advice, plus buy/sell/hold advice on stocks you may be considering buying, in our Successful Investor newsletter. Click here to learn how you can get one month free when you subscribe today.