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VERESEN $14.25 (Toronto symbol VSN; Shares outstanding: 290.0 million; Market cap: $4.3 billion; TSINetwork Rating: Average; Dividend yield: 7.0%; www.vereseninc.com) owns pipelines, power plants and gas-processing facilities across North America.

A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Veresen also owns the Alberta Ethane Gathering System, 42.7% of the Aux Sable NGL plant and the Hythe/Steeprock natural gas gathering and processing complex in the Cutbank Ridge region of Alberta and B.C.

In the three months ended June 30, 2015, Veresen’s cash flow per share fell 24.1%, to $0.22 from $0.29 a year earlier.

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PEMBINA PIPELINE $37.12 (Toronto symbol PPL; Shares outstanding: 340.4 million; Market cap: $13.0 billion; TSINetwork Rating: Average; Dividend yield: 4.7%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil.

Pembina also owns extensive facilities to extract, process and store NGLs.

In the three months ended March 31, 2015, the company’s cash flow per share fell 24.1%, to $0.63 from $0.83 a year earlier. That’s mainly because lower oil and gas prices cut profit margins and volumes at its NGL extraction business.

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CANADIAN PACIFIC RAILWAY LTD. $208.83 (Toronto symbol CP; Shares outstanding: 161.0 million; Market cap: $34.0 billion; TSINetwork Rating: Above Average; Dividend yield: 0.7%; www.cpr.ca) transports freight over a 22,000-kilometre rail network between Montreal and Vancouver, as well as hubs in the U.S. Midwest and Northeast.

CP continues to benefit from lower fuel prices and an aggressive cost-cutting plan, but the slowing economy is hurting its freight volumes and revenue. That has caused the shares to fall about 14% from earlier this year.

In the three months ended June 30, 2015, the railway earned $404 million, up 8.9% from $371 million a year earlier. Per-share profits jumped 16.1%, to $2.45 from $2.11, on fewer shares outstanding.

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LOBLAW COMPANIES $72.20 (Toronto symbol L; Shares outstanding: 412.6 million; Market cap: $29.4 billion; TSINetwork Rating: Above Average; Dividend yield: 1.4%; www.loblaw.ca) is Canada’s largest food retailer.

Loblaw plans to close 52 underperforming stores in the next year, including supermarkets, gas bars and stand-alone Joe Fresh clothing outlets. Following these closures, it will operate roughly 2,400 stores, including 1,250 Shoppers Drug Mart pharmacies.

The move will cut Loblaw’s yearly sales by $300 million, but it should add $35 million to $40 million to its annual gross profits. It also expects to save at least $200 million this year by merging its warehouses and other operations with Shoppers.

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In response to a question by a Member of his Inner Circle, Pat McKeough looks at the prospects of one of Canada’s biggest, and oldest, retailers, Hudson’s Bay Company. With five banners in North America, including several leading luxury chains in the U.S., the company has added one of Germany’s largest department store chains. Pat examines the costs and risks of such a big acquisition, but also looks at some of the advantages this growth stock could unlock with its European takeover.
For a recent report on a Canadian growth stock that has achieved rapid growth in the past year, read AirBoss of America gets big profit bounce from rubber products.

Q: Hi, Pat: Could I have your latest recommendations on Hudson’s Bay Co.? Regards.

A: Hudson’s Bay Co. (symbol HBC on Toronto; www.thebay.com) has five main banners:

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Because it’s always important to diversify beyond Canada, a look at two Vanguard ETFs that offer a low-fee way to achieve diversification.

Adding strength with timely U.S. acquisitions, Royal Bank and TD Bank bolster their status as solid blue chips stocks in a sluggish economy.

Our outlook for Canadian dividend stock Freehold Royalties as it maintains a high yield while buying up oil and gas properties.

Two energy exploration stocks for conservative investors—we give Peyto the edge over Bonavista right now thanks to its more secure dividend.

Our take on whether Germany’s demand for more wind power will keep cash flowing for high-yielding Canadian dividend stock Northland Power.

With subprime loans shrinking and a new deal with GE Capital in hand, blue chip stock Wells Fargo should easily keep raising its dividend.

At a slow time for energy stocks, we like Pembina Pipeline and Veresen for their high yields and readiness to invest in new projects.

Both are growth stocks, but we see Sierra Wireless growing with the Internet of Things while Adobe Systems merits a hold right now.

Simplifying operations and boosting its balance sheet under new capital rules, JP Morgan Chase remains one of our top U.S. dividend stocks.

NEWELL RUBBERMAID INC. $41 (www.newellrubbermaid.com) continues to aggressively cut costs and sell less profitable businesses, such as its Rubbermaid medical-cart operations. Thanks to these moves, the company’s earnings gained 8.5% in the three months ended June 30, 2015, to $0.64 from $0.59 a year earlier....

BUCKEYE PARTNERS L.P. $69 (www.buckeye.com) earned $0.71 a share in the three months ended June 30, 2015, up 34.0% from $0.53 a year earlier. Many oil producers are opting to store their crude instead of selling it at today’s depressed prices, which has spurred demand for Buckeye’s oil-storage terminals....

MICROSOFT CORP. $43 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.0 billion; Market cap: $344.0 billion; Price-to-sales ratio: 3.5; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.microsoft.com) is the world’s largest software company. Its Windows operating system powers about 90% of the world’s personal computers.

Microsoft’s other main product— its Office suite, which includes a word processor (Word) and spreadsheet program (Excel)— controls 90% of this market.

Over the past few years, Microsoft has expanded into computer-hardware products, including its Xbox video game console and Surface tablet computer.

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BROADRIDGE FINANCIAL SOLUTIONS INC. $52 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 118.2 million; Market cap: $6.1 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.3%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing.

Without one-time items, the company earned $171.5 million in its fiscal 2015 fourth quarter, which ended June 30, 2015. That’s up 18.6% from $144.6 million a year earlier. Earnings per share rose 20.7%, to $1.40 from $1.16, on fewer shares outstanding.

Revenue gained 4.9%, to $929.6 million from $885.9 million. Broadridge continues to add new clients and is doing a good job of holding on to existing ones. Recurring fee revenue rose 7% in the latest quarter and accounted for 65% of the total.

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APPLE INC. $110 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.7 billion; Market cap: $627.0 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.9%; TSINetwork Rating: Average; www.apple.com) plans to let Best Buy and other retailers sell its new Apple Watch. Until now, customers could only purchase the watch through Apple’s website or in its company-owned stores.

In its latest quarter, Apple didn’t provide specific sales data for the watch, but it did say that demand exceeded its initial projections.

Apple is still a hold.

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T. ROWE PRICE GROUP INC. $71 (Nasdaq symbol TROW; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 256.2 million; Market cap: $18.2 billion; Priceto- sales ratio: 4.2; Dividend yield: 2.9%; TSINetwork Rating: Average; www.troweprice.com) earned $1.24 a share in the second quarter of 2015, up 9.7% from $1.13 a year earlier. Revenue gained 10.2%, to $942.2 million from $855.3 million. On June 30, 2015, the company had $773.0 billion of assets under management, up 3.5% from $746.8 billion at the end of 2014.

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PEPSICO INC. $92 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $138.0 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.pepsico.com) has suffered lately as a more health-conscious population consumes fewer soft drinks. Sales of its low-calorie sodas have also fallen on concerns over the long-term health effects of the artificial sweetener aspartame. In 2014, total U.S. diet soda sales declined 5.9%.

In response, PepsiCo has replaced the aspartame in Diet Pepsi with Splenda, a low-calorie sweetener made from regular sugar. The switch will likely boost sales, as the company has launched a new marketing campaign and promotions that will likely encourage consumers to try the new drink. Even so, PepsiCo’s overall sales will likely stay weak for the rest of 2015.

PepsiCo is a hold.
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MONDELEZ INTERNATIONAL INC. $42 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $67.2 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.mondelezinternational.com) makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone), gum and candy (Trident, Chiclets) and Halls cough drops.

The stock gained 10% recently on news that activist investment firm Pershing Square Capital now owns 7.5% of the company. Pershing will likely pressure Mondelez to improve its profitability, instead of trying to break it up or merge it with another food maker. However, the stock is expensive at 23.6 times the company’s projected 2015 earnings of $1.78 a share.

Mondelez is a hold.

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SONY CORP. ADRs $25 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.3 billion; Market cap: $32.5 billion; Price-to-sales ratio: 0.4; Dividend suspended in September 2014; TSINetwork Rating: Average; www.sony.com) recently announced plans to sell $2.6 billion worth of new common shares, as well as $1.0 billion of convertible bonds. It will use the proceeds to make more of its industry-leading image sensors for digital cameras, smartphones and tablets.

The company has had trouble selling its own smartphones and other devices, so it makes sense to focus on electronic components. As part of a recent restructuring, Sony quit making cheaper mobile phones for emerging markets, though it still makes higher-priced models for developed nations.

Meanwhile, in its fiscal 2016 first quarter, which ended June 30, 2015, Sony’s revenue fell 17.3%, to $14.8 billion from $17.9 billion a year earlier. In Japanese yen, revenue fell just 0.1%.

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CANON INC. ADRs $30 (New York symbol CAJ; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.1 billion; Market cap: $33.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.canon.com) gets over half of its revenue by making office equipment, mainly printers and copiers. Other products include digital cameras and parts for TVs and medical gear.

Businesses continue to buy more of Canon’s copiers and laser printers, but consumers are taking more pictures with smartphones. That’s hurting the company’s camera sales.

In the three months ended June 30, 2015, Canon’s revenue fell 13.0%, to $8.0 billion from $9.2 billion a year earlier. Without the negative impact of the high U.S. dollar, sales in Japanese yen gained 5.1%. Overall earnings fell 30.2%, to $559.0 million from $800.5 million. Earnings per ADR dropped 29.2%, to $0.51 from $0.72, on fewer ADRs outstanding (each American depositary receipt represents one common share).

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NEWMONT MINING CORP. $16 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 529.1 million; Market cap: $8.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.6%; TSINetwork Rating: Average; www.newmont.com) has purchased the Cripple Creek & Victor gold mine in Colorado for $820 million.

Cripple Creek will produce 350,000 to 400,000 ounces of gold a year once it completes its current expansion in 2016. To put that in context, Newmont expects to produce 4.6 million to 4.9 million ounces in 2015. The mine should last until at least 2026. The company feels it can cut Cripple Creek’s operating costs by 10%. However, like most gold firms, Newmont’s shares will need a gold-price recovery to move significantly higher.

Newmont is still a hold.

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