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Patrick McKeough is one of Canada’s top safe-money advisors. The Wall Street Journal, Forbes and The Hulbert Financial Digest have all recognized his ability to find stocks with hidden value. He is editor and publisher of The Successful Investor, Stock Pickers Digest, Wall Street Stock Forecaster and Canadian Wealth Advisor; inventor of the Quick Profit/Value System and the ValuVesting System™. A best-selling Canadian author, he wrote Riding the Bull, the book that predicted the 1990s stock-market boom.

Updating Our Current Recommendations for Arbor Memorial Services Inc., IGM Financial Inc., Metro Inc. and CGI Group Inc.

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ARBOR MEMORIAL SERVICES INC. $19 (Toronto symbol ABO.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 10.7 million; Market cap: $203.3 million; Price-to-sales ratio: 0.9; SI Rating: Average) owns 41 cemeteries, 26 crematoria, four reception centres for memorial services and 87 funeral homes in eight provinces. In its fiscal year ended October 26, 2008, earnings rose 10.0%, to $19.7 million, or $1.84 a share, from $17.9 million, or $1.69 a share, in the prior year. If you disregard unusual items, earnings would have grown 2.7%. Revenue increased 3.2%, to $236.6 million from $229.3 million.

Arbor Memorial Services is a buy.

IGM FINANCIAL INC. $34 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 262.4 million; Market cap: $8.9 billion; Price-to-sales ratio: 3.1; SI Rating: Above Average) reported that its assets under management fell 16.8%, to $97.8 billion as of January 31, 2009 from $117.6 billion a year earlier. The drop was largely caused by falling stock markets, plus $27.3 million in net redemptions in January 2009. It should be noted that IGM’s decline was better than the roughly 27% drop in assets under management for the entire Canadian mutual fund industry.

IGM Financial is a buy.

METRO INC. $38 (Toronto symbol MRU.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 111.1 million; Market cap: $4.2 billion; Price-to-sales ratio: 0.4; SI Rating: Average) continues to enjoy the benefits of its purchase of the A&P/Dominion supermarket chain in Ontario and its new information system.

In its first fiscal quarter, ended December 20, 2008, Metro’s earnings rose 34.8%, to a record $84.1 million from $62.4 million a year earlier. Earnings per share rose 40.7%, to $0.76 from $0.54 on fewer shares outstanding. Sales rose 3.7%, to $2.6 billion from $2.5 billion. Same-store sales grew 3.5%.

The strong results let Metro increase its quarterly dividend by 10%, to $0.1375 a share from $0.125. The new annual rate of $0.55 yields 1.4%.

Metro is a buy.

CGI GROUP INC. $10 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 308.5 million; Market cap: $3.1 billion; Price-to-sales ratio: 0.9; SI Rating: Extra Risk) provides information technology and business-process services to a wide range of business and government clients. By automating routine business transactions, CGI helps its clients focus on their main businesses.

CGI’s strong reputation continues to help it win new contracts; it will help U.S. Medicare administrators develop a system to process appeals, and the main electrical utility in Tacoma, Washington, has selected CGI to automate some of its systems.

CGI Group is a buy.


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