BROADRIDGE FINANCIAL SOLUTIONS INC. $20 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 139.3 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.3; WSSF Rating: Extra Risk) provides communication, processing and other back-office services to the investment industry. By outsourcing these activities to Broadridge, its clients can focus on their main businesses. Its clients include 250 banks, 500 mutual-fund families and over 5,000 publicly listed companies. The stock began trading on April 2, 2007, after former parent Automatic Data Processing Inc. (Nasdaq symbol ADP) distributed Broadridge shares to its own shareholders as a special dividend. Since it became a public company, Broadridge’s annual revenue has hovered around $2.15 billion. Earnings fell from $1.42 a share (or a total of $197.1 million) in 2007 to $1.36 a share (or $192.2 million) in 2008. Broadridge’s fiscal year ends on June 30. In 2009, its earnings rose to $1.58 a share (or $223.3 million). If you disregard unusual items, including a gain on the early retirement of debt and a tax credit that lowered its effective income-tax rate, Broadridge’s earnings per share rose 6.3%, to $1.51 from $1.42. The improved earnings came despite difficult conditions in the financial sector....

HARTE-HANKS INC. $14 (New York symbol HHS; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 63.6 million; Market cap: $890.4 million; Price-to-sales ratio: 0.9; WSSF Rating: Average) gets roughly two-thirds of its revenue by selling direct-mail and other marketing services to clients in a wide variety of industries. These help them attract new customers, and sell more goods and services to existing ones. The remaining third of its revenue comes from publishing free “shopper” newspapers in Florida and California. These papers rely solely on advertising. Both of these are cyclical businesses, and they have suffered during the recession as advertisers look to conserve cash. In response, Harte-Hanks has consolidated printing plants and closed call centres. These moves helped cut Harte-Hanks’s operating expenses by $49.3 million in the three months ended June 30, 2009. Despite the lower costs, overall earnings in the quarter still fell 28.3%, to $13.1 million, or $0.20 a share, from $18.2 million, or $0.29 a share, a year earlier. Revenue fell 21.5%, to $215.7 million from $274.8 million....

DIEBOLD INC. $30 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 66.3 million; Market cap: $2 billion; Price-to-sales ratio: 0.6; WSSF Rating: Average) is one of the world’s leading makers of automated-teller machines (ATMs). The company also makes safes, vaults, building-security systems and electronic-voting machines. Banks have been spending less on new ATMs because of the financial crisis. As well, the recession has prompted many retailers to close stores. This has hurt demand for Diebold’s building-security products and services. The company has aggressively cut its costs in response, including moving most of its manufacturing to China and Hungary. It also sold its manufacturing operations in Argentina. In the three months ended June 30, 2009, Diebold earned $30.4 million, or $0.46 a share. That’s up 11.8% from $27.2 million, or $0.41 a share, a year earlier. If you exclude unusual costs, most of which were in the year-earlier period, earnings per share would have fallen 29.0%, to $0.49 from $0.69. Sales fell 8.9%, to $700.5 million from $768.7 million....

CINTAS CORP. $28 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 152.8 million; Market cap: $4.3 billion; Price-to-sales ratio: 1.1; WSSF Rating: Average) provides a variety of products and services to over 800,000 businesses, mainly in North America. These include selling and renting uniforms, entrance mats, fire extinguishers, first-aid kits and cleaning products. The company also shreds documents. Many of its clients cancelled these services to cut costs during the recession. In response, Cintas closed some of its uniform-making plants in 2008. This has already saved it $60 million. Moreover, the company plans to lay off 1,200 of its 31,000 employees over the next year. It has set aside $59.1 million for severance and other costs. In the fiscal year ended May 31, 2009, Cintas earned $226.4 million, or $1.48 a share. If you exclude restructuring costs, it would have earned $1.83 a share. In the prior year, the company earned $335.4 million, or $2.15 a share. Revenue fell 4.1%, to $3.8 billion from $3.9 billion, mostly due to lower demand for uniforms and cleaning services. Cintas sells scrap paper from its shredding operations, and lower paper prices have also hurt its revenue....

TERADATA CORP. $27 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.8 million; Market cap: $4.6 billion; Price-to-sales ratio: 2.6; WSSF Rating: Average) makes computers and software that capture and store large amounts of a business’s data, including its sales and inventory. Teradata then analyzes this information and identifies buying habits and trends. This helps its clients make better decisions. In the three months ended June 30, 2009, Teradata’s earnings dropped 10.1%, to $62 million from $69 million a year earlier. Earnings per share fell 5.3%, to $0.36 from $0.38, on fewer outstanding shares. However, Teradata is selling more high-margin services. At the same time, it is cutting overhead and travel expenses. As a result, its gross margin (gross profits as a percentage of revenue) rose to 55.3% from 54.7%. Revenue fell 7.5%, to $421 million from $455 million. Teradata gets about half of its revenue from its international operations, and the higher U.S. dollar hurt the value of this contribution during the quarter....

XEROX CORP. $8.72 (New York symbol XRX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 869.1 million; Market cap: $7.6 billion; Price-to-sales ratio: 0.5; WSSF Rating: Average) makes copiers, laser printers and other high-end publishing equipment. The company spends about 5% of its revenue on research. Over the past few years, this has let it develop new colour printers that have helped its customers cut their paper use. It has also produced other innovations, such as its proprietary solid-ink technology, which is less expensive on a per-page basis than traditional ink cartridges. The recession weighed on Xerox’s revenue and earnings in the latest quarter. In the three months ended June 30, 2009, Xerox earned $140 million, or $0.16 a share. That’s 34.9% less than the $215 million, or $0.24 a share, it earned a year earlier. Revenue fell 17.7%, to $3.7 billion from $4.5 billion....

ALCOA INC. $12 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 974.4 million; Market cap: $11.7 billion; Price-to-sales ratio: 0.6; WSSF Rating: Average) is one of the world’s largest aluminum producers. Its customers are mainly in the aerospace, automotive and construction industries, all of which have struggled lately. Aluminum prices fell 49% in the second quarter of 2009 from a year earlier, but are 9% higher than they were in the first quarter. In response to the lower prices, The company will lay off 16% of its 87,000 employees by the end of this year. This should save it $2.4 billion a year. As well, Alcoa cut its quarterly dividend to $0.03 a share from $0.17. It now yields 1.0%. This will save an additional $430 million a year. Alcoa lost $256 million, or $0.26 a share, in the second quarter of 2009, excluding severance costs. A year earlier, it earned $553 million, or $0.67 a share. Revenue fell 41.4%, to $4.2 billion from $7.2 billion....

BHP BILLITON LTD. ADRs $63 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.8 billion; Market cap: $176.4 billion; Price-to-sales ratio: 3.5; WSSF Rating: Average) is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, aluminum, manganese, diamonds and titanium. In its latest fiscal year, which ended June 30, 2009, BHP’s revenue fell 15.6%, to $50.2 billion from $59.5 billion a year earlier. Lower resource prices were the main reason for the drop. Earnings before unusual items fell 30.2%, to $10.7 billion from $15.4 billion. Earnings per ADR fell 29.9%, to $3.85 from $5.50. (Each American Depositary Receipt represents two BHP common shares.) The stock has jumped by 70% since we first recommended it at $37 in our March 2009 issue. The gain was partly caused by BHP’s new agreement to merge its iron-ore mining operations in Western Australia with those of Rio Tinto Ltd. (New York symbol RTP) to form a new 50/50 joint venture. The deal should close in 2010, and save BHP $5 billion a year....

Japan is heading into an election on August 30. Polls show the Democratic Party of Japan stands a good chance of defeating Prime Minister Taro Aso’s Liberal Democratic Party in the Japanese parliament’s lower house.

To spur economic activity, the Democratic Party of Japan plans to push for more aggressive stimulus spending, such as allowances for families with children, free public high-school education and cuts to the gasoline tax.

Stimulus spending drives rebound

Government stimulus spending has already played a big role in the country’s recent turnaround. In the latest quarter, ended June 30, 2009, Japan’s economy posted an annualized growth rate of 3.7%. The turnaround comes after four quarters of steep contraction, and is one reason why investors are wondering if Japan is now a good place for offshore investing.

Under Prime Minister Aso, Japan’s government is spending 25 trillion yen ($284.6 billion Canadian) to help the economy grow. As in many other developed countries, this is taking the form of infrastructure spending, direct handouts to consumers and incentives for environmentally friendly products.

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Aggressive investors need to be more skeptical and discriminating than conservative investors, because they take on great risk. Conservative investors mainly buy well-established companies with a history of earnings and possibly dividends, and a secure hold on a growing, or at least stable, clientele. When an investment like that runs into problems, its stock price can fall — sometimes drastically. But it will usually survive. It can then go on to prosper all over again when good times return. When something goes wrong with an aggressive investing stock pick, there is far greater risk of serious, if not total, loss....