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ENCANA CORP. $18 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 740.1 million; Market cap: $13.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.6%; TSINetwork Rating: Average; www.encana.com) plans to spend $2.4 billion to $2.5 billion on its properties in 2014. That’s down from the $2.8 billion it will likely spend in 2013.

Encana will devote 75% of its 2014 spending to five properties: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico) and the Tuscaloosa Marine Shale (Louisiana).

These fields produce significant amounts of oil and natural gas liquids (NGLs), such as butane and propane. The company expects oil and NGLs to supply 75% of its cash flow by 2017, up from about 35% today.
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Pat McKeough responds to many requests from members of his Inner Circle for specific tips on investing in stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week we offer you a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday.

This week we received a question from an Inner Circle Member about one of Canada’s leading packaging firms. CCL Industries makes 83% of its revenue from pressure-sensitive labels, and the U.S. and Europe supply 73% of its overall revenue. The company grows by acquisition and bought three companies in 2014 alone. Pat balances CCL’s ability to build market share with its size and technology against the risk of growth by acquisition and exposure to volatile commodity prices.

Q: Pat: Do you have any comments on CCL Industries as an investment? Thanks.

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C.R. BARD INC. $166 (New York symbol BCR; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 74.9 million; Market cap: $12.4 billion; Price-to-sales ratio: 3.9; Dividend yield: 0.5%; TSINetwork Rating: Above Average; www. crbard.com) makes over 15,000 medical devices in four main areas: oncology products that detect and treat various types of cancer (28% of 2013 sales); vascular products, like stents and catheters (27%); urology goods, such as drainage and incontinence devices (26%); and surgical tools (16%). Other medical products supply the remaining 3%.

The company’s products are typically only used once, so customers must continually buy new ones.

Acquisition targets fit well

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RESTAURANT BRANDS INTERNATIONAL INC. $35 (New York symbol QSR; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 483.3 million; Market cap: $16.9 billion; Priceto- sales ratio: 0.7; Dividend yield: n.a.; TSINetwork Rating: Average; www.rbi.com) is the new company formed by the merger of Tim Hortons Inc. (old symbol THI) and Burger King Worldwide (old symbol BKW).

Restaurant Brands is the world’s third-largest fast-food chain, after McDonald’s and Yum Brands, with 14,000 Burger King restaurants and 4,590 Tim Hortons outlets in 100 countries. In all, these locations have annual sales of over $23 billion.

Roughly 72% of Tim Hortons shareholders opted to receive 3.0879 shares of the new company for each Tim Hortons share they held. A further 26% chose the default option of $65.50 (Canadian) in cash plus 0.8025 of a Restaurant Brands share, while 2% picked the all-cash option of $88.50 (Canadian) a share.

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FRONTIER COMMUNICATIONS CORP. $6.36 (Nasdaq symbol FTR; Income Portfolio, Utilities sector; Shares outstanding: 1.0 billion; Market cap: $6.4 billion; Price-to-sales ratio: 1.4; Dividend yield: 6.6%; TSINetwork Rating: Average; www. frontier.com) recently completed its $2.0-billion purchase of AT&T’s traditional phone business in Connecticut. It now has 3.0 million customers in 28 states.

By combining these operations with its existing systems, Frontier has already cut its annual costs by $150 million. That should rise to $200 million a year by the end of 2017.

Thanks to these expected savings, Frontier has increased its quarterly dividend by 5.0%, to $0.105 a share from $0.10. The new annual rate of $0.42 yields 6.6%.

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CONAGRA FOODS INC. $37 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 424.5 million; Market cap: $15.7 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.conagrafoods .com) owns 50% of a plant in the Netherlands that makes frozen potato products; Holland-based Meijer Frozen Food owns the other 50%.

The partners now plan to increase this facility’s capacity by mid-2016. That will help them meet fast-food chains’ rising demand for french fries.

The joint venture has enough cash flow to cover the expansion’s $150-million cost, so ConAgra won’t have to commit any additional funds.

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STANLEY BLACK & DECKER INC. $94 (New York symbol SWK; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 156.7 million; Market cap: $14.7 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.2%; TSINetwork Rating: Average; www.stanleyblack anddecker.com) earned $249.1 million in the third quarter of 2014, up 12.7% from $221.1 million a year earlier. Earnings per share rose 11.5% to $1.55 from $1.39, on more shares outstanding.

Sales gained 5.2%, to $2.9 billion from $2.8 billion, as Stanley released new tools for consumers and industrial users. It also raised its prices. That offset lower sales of building-security systems, particularly in Europe, and the negative impact of currency exchange rates.

Stanley Black & Decker is a buy.

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ABB LTD. ADRs $21 (New York symbol ABB; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 2.3 billion; Market cap: $48.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.abb.com) makes transformers, transmission systems and circuit breakers for power utilities. The Switzerland-based firm also produces automation systems and robotics that its industrial clients use to improve their productivity.

In the three months ended September 30, 2014, ABB’s revenue fell 6.8%, to $9.8 billion from $10.5 billion a year earlier. That’s mainly due to slowing demand for transmission gear in Europe. Earnings declined 12.1%, to $734 million from $835 million. ABB continues to buy back shares and recently earmarked $4 billion for future repurchases. Due to fewer shares outstanding, earnings per ADR fell 11.1%, to $0.32 from $0.36 (each American depositary receipt represents one ABB common share).

The company aims to improve its profitability by selling non-essential businesses. It’s also turning down riskier, lessprofitable orders. These moves should boost its earnings per ADR from a projected $1.20 in 2014 to $1.41 in 2015. The stock trades at 14.9 times the 2015 forecast. The $0.77 dividend yields 3.7%.

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GENERAL ELECTRIC CO. $24 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.0 billion; Market cap: $240.0 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.ge.com) recently agreed to form a major new alliance with France’s Alstom SA, a leading maker of electrical-transmission equipment and parts for power plants.

Under the deal, GE will form three 50/50 joint ventures with Alstom. One will combine the companies’ electrical grid operations, while a second will focus on products for renewable energy projects, like offshore wind farms. The third will hold Alstom’s nuclear-equipment division.

In all, GE will pay $10 billion when the Alstom deal closes in 2015. The new operations it brings should add about $0.07 a share to GE’s annual earnings, starting in 2016.

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SONY CORP. ADRs $20 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.2 billion; Market cap: $24.0 billion; Price-to-sales ratio: 0.3; Dividend suspended in September 2014; TSINetwork Rating: Average; www.sony.com) recently lost digital copies of its upcoming movies to online intruders. If the thieves post these films on the Internet, it would likely hurt future sales of both cinema tickets and DVDs.

The company also recently announced that it would stop making cheaper mobile phones for emerging markets and focus on higher-priced models for developed nations. Severance costs and other expenses will widen its expected loss to $1.38 per ADR in the year ending March 31, 2015, from $1.21 in 2014.

Sony is still a hold.

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HONDA MOTOR CO. LTD. ADRs $29 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $52.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.honda.com) is Japan’s secondlargest carmaker and the world’s biggest motorcycle manufacturer.

In the three months ended September 30, 2014, Honda sold 1.07 million cars and trucks, up 2.3% from 1.05 million a year earlier. New models spurred gains in Asia (up 13.3%) and Europe (up 12.5%). However, sales fell 2.9% in the U.S. and 2.2% in Japan. Motorcycle sales rose 8.7%.

Due to unfavourable currency rates, revenue fell 2.0% in the quarter, to $27.6 billion from $28.1 billion. However, lower costs helped increase the company’s earnings per ADR by 10.8%, to $0.72 from $0.65 (each ADR equals one common share).

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TOYOTA MOTOR CO. ADRs $122 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $207.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.toyota.com) is the world’s biggest carmaker by sales.

In its fiscal 2015 second quarter, which ended September 30, 2014, Toyota sold 2.24 million vehicles, unchanged from a year ago. North American sales jumped 12.5%, thanks to strong demand for sport utility vehicles. That offset declines in Japan (down 8.9%), other parts of Asia (down 4.2%) and Europe (down 3.3%).

Overall revenue fell 6.5%, to $59.8 billion from $63.9 billion, but revenue improved 4.3% in Japanese yen. A cost-cutting plan helped boost earnings per ADR by 10.3%, to $3.11 from $2.82 (each American depositary receipt equals two Toyota common shares).

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PROCTER & GAMBLE CO. $89 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.7 billion; Market cap: $240.3 billion; Price-to-sales ratio: 3.1; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.pg.com) aims to sell its Germany-based Wella hair care operation, which makes shampoos, dyes and styling products.

The company would probably receive $7 billion for Wella, roughly what it paid for it in 2003.

This sale is part of Procter’s plan to sell about 100 less-profitable brands. That will leave it with around 80 that together account for 90% of its sales and 95% of its profits. This tighter focus will also cut Procter’s manufacturing and distribution costs...

VERIZON COMMUNICATIONS INC. $46 (New York symbol VZ, Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 4.2 billion; Market cap: $193.2 billion; Price-to-sales ratio: 1.3; Dividend yield: 4.8%; TSINetwork Rating: Average; www.verizon.com) says strong price competition will likely slow its wireless division’s growth, particularly sales of cheaper mobile phones and service plans. Wireless accounts for 70% of Verizon’s revenue.

However, the company is doing a good job of getting customers to upgrade from basic cellphones to more profitable smartphones. In addition, demand for its FiOS high-speed fibre optic Internet and TV services continues to improve.

Verizon is a buy.

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QUAKER CHEMICAL CORP. $85 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 13.3 million; Market cap: $1.1 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.4%; TSINetwork Rating: Average; www.quakerchem.com) makes lubricants and chemicals that keep mechanical parts from rusting.

The company continues to buy smaller firms that add to its expertise.

For example, it recently paid $18.9 million for Binol AB, a Swedish firm that makes lubricants from vegetable fats and oils. Binol, which sells its products to clients in the metalworking, forestry and construction industries, will add $15.3 million to Quaker’s annual sales.

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NEWELL RUBBERMAID INC. $35 (New York symbol NWL; Aggressive Growth and Income Portfolios, Consumer sector; Shares outstanding: 271.1 million; Market cap: $9.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.9%; TSINetwork Rating: Average; www.newellrubbermaid.com) makes plastic storage bins, tools, window blinds, pens and many other household goods.

The company makes most of its products from oilbased resins, so it stands to gain from the recent drop in oil prices.

Newell continues to streamline its manufacturing and distribution operations, which should cut $270 million from its annual costs by mid-2015. The company now feels it can save an additional $200 million a year by the end of 2017.

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SHERWIN-WILLIAMS CO. $246 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 96.0 million; Market cap: $23.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 0.9%; TSINetwork Rating: Above Average; www.sherwin-williams.com) is North America’s largest paint and varnish producer.

Sherwin sells to consumers through over 4,100 company-owned stores in the U.S., Canada and Latin America. It also distributes its products through other retailers and makes paint for carmakers and other industrial users.

In September 2013, the company paid $165 million for Mexican paint maker Comex’s U.S. and Canadian operations, including 314 stores.

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PETSMART INC. $81 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 99.4 million; Market cap: $8.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.0%; TSINetwork Rating: Above Average; www.petm.com) has accepted an $83.00-a-share takeover offer from a group of private firms.

The purchase price works out to a 159.4% gain since we first recommended PetSmart at $32 in our October 2007 issue.

The buyers aim to complete the takeover in the first half of 2015. Investors should hold their shares and tender them to avoid paying brokerage fees.

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GANNETT CO., INC. $30 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 225.8 million; Market cap: $6.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.7%; TSINetwork Rating: Average; www.gannett.com) is the largest newspaper publisher in the U.S., with 82 dailies, including USAToday, its flagship paper.

The company offers subscribers in 35 markets a special rate if they also take USAToday, which is partly why USAToday is the top-selling newspaper in the U.S., at 1.1 million copies a day.

Gannett also publishes 443 non-daily papers in the U.S., as well as 17 dailies and over 200 weekly papers and magazines in the U.K. Publishing accounts for 57% of its revenue but just 22% of its profits.

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Every Thursday we bring you one of our best U.S. stock picks. You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, most often from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster.

TUPPERWARE BRANDS CORP. (New York symbol TUP; www.tupperwarebrands.com) makes household goods, mainly plastic food and beverage containers, as well as cosmetics and fragrances.

In the quarter ended September 27, 2014, Tupperware’s sales fell 2.4%, to $588.7 million from $603.2 million a year earlier.

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If you’re looking for stock-market bargains, December is the best time of year to find them.

Here’s why: Investors love to sell stocks for a profit, but they hate to sell at a loss. That’s why many investors spread their selling-for-a-profit throughout the year, while holding on to stocks that have dropped.

Toward year-end, it occurs to these investors that they’ll have to pay taxes on their capital gains, regardless of whether they made money overall. This leads some investors to dump their losers near year-end, simply to establish a capital loss for tax purposes, to offset a capital gain.

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Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves you should know about, from coverage in one of our three newsletters featuring Canadian stocks - The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor.

CAE INC. (Toronto symbol CAE; www.cae.com) gets 55% of its revenue by selling flight simulators and pilot-training services to commercial airlines. Another 40% comes from simulators and training for military clients, mainly in the U.S.

CAE gets the remaining 5% of its sales by making medical-simulation products, such as mannequins, for training nurses and medical students.

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Every Monday we feature “A Stock to Sell” as our daily post. With every stock or investment we recommend as a sell, we give you a full explanation of why we advise against investing in it at this time.

RepliCel Life Sciences Inc., (symbol RP on Toronto; www.replicel.com), aims to develop and patent its hair-loss treatment.

RepliCel’s technology uses cells taken from each patient’s own healthy hair follicles to reproduce and “reintroduce” cells to the affected areas. RepliCel also believes it can use its technology to treat a variety of issues that stem from cell deficiencies, including chronic tendinosis and aging skin.

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Pat McKeough responds to many requests from members of his Inner Circle for specific tips on trading stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week we offer you a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday.

This week an Inner Circle member asked us about Canadian engineering firm WPS Group. This firm’s growth strategy centres on the steady acquisition of smaller firms. This approach (similar to that of Edmonton-based engineering firm Stantec, a stock we follow in Stock Pickers Digest) has been producing profitable results for WPS. Pat examines all four of the company’s 2014 acquisitions and assesses the risk that comes with the acquisition and integration of new firms.

Q: Dear Pat: I would like to have your opinion on WSP Global. Thank you very much.

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Every Thursday we bring you one of our best U.S. stock picks. You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, most often from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster.

VISA INC. (New York symbol V; www.visa.com) operates the world’s largest electronic payments network, through which it processes credit, debit, prepaid and commercial transactions.

Visa gets most of its revenue from fees it charges the card issuers and merchants that use its network. It bases these fees on transaction volumes and other factors. The banks that issue the cards are responsible for evaluating customer creditworthiness and collecting payments, not Visa.

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