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COMPUTER MODELLING GROUP $12.00 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 78.8 million; Market cap: $945.5 million; Dividend yield: 3.3%) sells software and consulting services that help oil and gas producers use advanced recovery techniques to get more out of their wells. It has clients in over 50 countries and offices in Calgary, Houston, London, Caracas, Bogota, Kuala Lumpur and Dubai.

In the quarter ended June 30, 2014, Computer Modelling’s revenue rose 7.9%, to $19.6 million from $18.1 million a year earlier. Software licence sales (89% of total revenue) rose 6.8%, and consulting and professional services revenue (11%) increased 17.9%, thanks to new projects and a large consulting contract.

Even so, earnings fell 11.8%, to $6.2 million, or $0.08 a share, from $7.1 million or $0.09. The company hired more employees to support its growth. It also raised its research spending by 21.3%, to $4.2 million (or 22% of revenue) from $3.5 million (19%).

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PASON SYSTEMS $32.79 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.7 million; Market cap: $2.7 billion; Dividend yield: 2.1%) is trading near all-time highs as it continues to benefit from the boom in U.S. shale oil and gas drilling.

Pason rents equipment for monitoring and managing oil and gas rigs. It also sells communication technology, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors in Canada, the U.S., Mexico, Argentina and Australia.

In the three months ended June 30, 2014, the company’s revenue rose 26.1%, to $103.8 million from $82.4 million a year earlier. Pason saw higher sales in all markets, but especially in the U.S.

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AMAZON.COM $324.00 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206- 266-1000; www.amazon.com; Shares outstanding: 462.0 million; Market cap: $149.7 billion; No dividends paid) has acquired gaming network Twitch Interactive for about $970 million in cash. The company reportedly outbid Google.

Twitch, which was founded in 2011, is a popular Internet video channel for broadcasting and watching people playing video games. The website is estimated to be the fourth-largest source of U.S. Internet traffic, behind Netflix, Google and Apple.

Gaming—especially mobile gaming—is a new area of focus for Amazon. Twitch is a leader, with more than 55 million users. It generates revenue from both subscriptions and advertising.

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SASOL LTD. (ADR) $56.49 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082-883-9697; www.sasol.com; ADRs outstanding: 650.6 million; Market cap: $38.4 billion; Dividend yield: 4.5%) has developed a technology to convert coal and natural gas into motor fuels.

The company is the world’s largest producer of fuel from coal at its Secunda, South Africa, facility. It also makes synthetic fuels from natural gas at plants in Qatar and Nigeria. As well, Sasol produces chemicals, oil and gas in Africa. It’s also South Africa’s thirdlargest coal producer.

In its 2014 fiscal year, which ended June 30, 2014, Sasol’s revenue rose 19.3%, to 202.7 billion South African rand (1 rand = $0.1039 U.S.) from 169.9 billion rand in fiscal 2013. Earnings per ADR rose 14.3%, to a record 60.16 rand from 52.62 rand.

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CHESAPEAKE ENERGY $25.35 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 665.8 million; Market cap: $16.9 billion; Dividend yield: 1.4%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 72% gas and 28% oil.

Chesapeake’s shares have nearly doubled since mid- 2012, when activist investor Carl Icahn bought a stake in the firm. Icahn, who has a history of pushing companies to make changes that raise shareholder value, subsequently replaced four of Chesapeake’s eight board members with his nominees. The company also pushed out controversial co-founder, CEO and chairman Aubrey K. McClendon.

The company continues to restructure by selling non-essential properties and assets. That lets it pay down debt and focus on areas with strong potential.

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ALIMENTATION COUCHE-TARD $35.09 (Toronto symbol ATD.B; TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 565.8 million; Market cap: $20.0 billion; Dividend yield: 0.5%) reported higher sales and record earnings in the latest quarter, as well as a dividend increase.

In the three months ended July 20, 2014, Couche-Tard’s sales rose 3.2%, to $9.2 billion from $8.9 billion a year earlier. Per-share earnings gained 23.1%, to $0.48 from $0.39.

The company raised its quarterly dividend by 12.5% with the September 2014 payment, to $0.045 a share from $0.04. The stock now yields 0.5%.

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BMTC GROUP $15.70 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 45.1 million; Market cap: $708.0 million; Dividend yield: 1.6%) is one of Quebec’s biggest retailers of furniture, electronics and appliances, with 36 outlets. It mainly sells these products through its two affiliates: Brault & Martineau and Ameublements Tanguay.

In March 2012, BMTC introduced a new banner, Economax, which offers lower-priced products. The company rebranded four outlets that it had operated as Brault & Martineau liquidation centres.

In 2013, BMTC opened four more EconoMax stores, and it added one, in Joliette, in March 2014. It plans to open another, in LaSalle, this fall.

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REITMANS (CANADA) LTD. $6.17 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384- 1140; www.reitmans.com; Shares outstanding: 64.5 million; Market cap: $395.9 million; Dividend yield: 3.2%) owns 900 women’s clothing stores across Canada.

The chain consists of 343 Reitmans, 143 Penningtons, 113 Smart Set, 102 Addition Elle, 76 RW & Co. and 68 Thyme Maternity stores. It also has 21 Thyme Maternity boutiques in some Canadian Babies “R” Us locations.

In the three months ended August 2, 2014, Reitmans’ sales rose 1.9%, to $258.3 million from $253.4 million a year earlier. Same-store sales increased 4.6%.

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TIM HORTONS $88.70 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 132.8 million; Market cap: $11.8 billion; Dividend yield: 1.4%) has accepted a friendly takeover offer from Burger King Worldwide (New York symbol BKW).

Tim Hortons shareholders can opt to receive $88.50 a share in cash or 3.0879 Burger King shares (currently worth $105.54).

Burger King will limit the overall cash payout, so most investors will likely receive $65.50 in cash and 0.8025 of a share, for a total value of $90.54.

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CHEMTRADE LOGISTICS INCOME FUND $20.95 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics.com; Units outstanding: 60.2 million; Market cap: $1.3 billion; Dividend yield: 5.7%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and basemetal processors. These companies create by-products like sulphur and acid, which Chemtrade turns into useful chemicals like sulphuric acid.

In the three months ended June 30, 2014, Chemtrade’s revenue rose 30.4%, to $318.1 million from $217.5 million a year earlier.

The gain was largely due to General Chemical Corp., which Chemtrade bought for $860.9 million U.S. in January 2014. General makes a range of chemicals, including aluminum sulphate, aluminum chlorohydrate and ferric sulphate (all of which are used in water treatment), as well as ingredients for prescription drugs, nutritional supplements and veterinary products.

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Every Monday we feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time. NEPTUNE TECHNOLOGIES & BIORESSOURCES INC. (symbol NTB on Toronto; www.neptunebiotech.com), makes omega-3 dietary supplements using a patented process for extracting oil from krill. (Krill are shrimp-like deepwater invertebrates that range in length from half an inch to two-and-a-half inches.) Omega-3 fatty acids reportedly help lower cholesterol and blood pressure when used as a dietary supplement....

Pat McKeough responds to many requests from members of his Inner Circle for advice 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. Beginning this week, we give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of our new approach offering you regular and specific buy, hold and sell advice in our daily posts. Every week you’ll get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday. This week we got a question from an Inner Circle member who is interested in a stock but concerned that it doesn’t pay a dividend. Gilead Sciences is a drug company that specializes in combatting viruses. Hepatitis C is the primary target of treatments developed by Gilead Sciences, but it also plays an important role in treatments for HIV/AIDS. Pat assesses the status of the company’s leading drugs and examines the challenges the company faces maintaining a position of leadership in a highly competitive field. Q: Please give your opinion on Gilead Sciences. It sounds very good to me as a physician, but it pays no dividend and I’ve bought into dividend investing. Thanks....

Symantec rises with successful restructuring plan

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 specific advice on a wide range of investing topics, including trading stocks online. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Tip of the week: “Online trading seems like an easy and convenient way to invest, but that can also make it an easy way to lose money.” Some investors may look on online trading as a fairly quick and convenient way to build wealth, but there are many hidden dangers that may not be easy to spot at first....

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. IGM Financial is in a strong position to profit as baby boomers sign up for retirement planning services. The company also trades at a low multiple to its earnings and will probably raise its dividend in 2015. IGM FINANCIAL INC. (Toronto symbol IGM; www.igmfinancial.com) is Canada’s largest independent mutual fund firm. Power Financial owns 58.7% of IGM, along with 67.0% of Great-West....

Every Monday we now feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time. EL POLLO LOCO (symbol LOCO on Nasdaq; www.elpolloloco.com), specializes in Mexican-style grilled chicken. El Pollo Loco means “the crazy chicken” in Spanish. The company fire-grills citrus-marinated chicken in front of its customers. El Pollo Loco first sold shares to the public and began trading on the Nasdaq exchange on Friday, July 25, 2014. The quick-serve restaurant chain raised $100 million in an initial public offering (IPO) of 7.1 million shares priced at $15 each....

PENGROWTH ENERGY CORP. $6.70 (www.pengrowth.com) plans to build a 15-kilometre pipeline that will pump diluted bitumen from its new Lindbergh oil sands project in Alberta to a larger pipeline operated by Husky Energy (Toronto symbol HSE). That will make it easier for Pengrowth to sell this oil to customers in Canada and the U.S. when Lindbergh starts operating next year.
The company will spend $20 million on the new pipeline.

In the second quarter of 2014, the company spent $124.1 million on Lindbergh’s first phase (the total cost is $630 million). As a
result, its cash flow fell 16.8%, to $121.4 million, or $0.23 a share, from $146.0 million, or $0.28, a year earlier. However, Lindbergh will add 12,500 barrels to its overall daily production, which totaled 73,823 barrels in the latest quarter. Natural gas accounts for 60% of Pengrowth’s production, so Lindbergh will cut its exposure to weak gas prices. That will also let it keep paying monthly dividends of $0.04 a share, for an annualized yield of 7.2%. Buy.

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TECK RESOURCES LTD. $25 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 576.2 million; Market cap: $14.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 3.6%; TSINetwork Rating: Average; www.teck.com) is a leading producer of metallurgical coal, a key ingredient in steelmaking. Its six coal mines (five in B.C. and one in Alberta) have lifespans from six to 70 years.

The company sells most of its coal to customers in Asia. In 2013, coal accounted for 43% of Teck’s revenue and 41% of its earnings.

Teck also produces copper (30%, 41%), which manufacturers use to make electrical wire, auto parts and components for electronic devices. As well, Teck is a major supplier of zinc (27%, 18%), which prevents rusting when added to steel.

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BANK OF NOVA SCOTIA $72 (Toronto symbol BNS; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.2 billion; Market cap: $86.4 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.scotiabank.com) has completed the sale of most of its shares in mutual fund company CI Financial (Toronto symbol CIX). That cut its stake to 7.7% from 36.8%.

The bank now expects to report an after-tax gain of $550 million on the sale, up from its earlier estimate of $400 million. That will help with its plan to buy back 1% of its outstanding shares by the end of May 2015.

Bank of Nova Scotia is a buy.

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BLACKBERRY LTD. $10 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 527.0 million; Market cap: $5.3 billion; Price-to-sales ratio: 1.1; No dividends paid; TSINetwork Rating: Speculative; www.blackberry.com) has won approval from the U.S. Defense Information Systems Agency for changes to its server software. These upgrades will let employees of businesses that work with the U.S. Department of Defense use non-BlackBerry devices, including the Apple iPhone and phones powered by Google’s Android software.

Adapting its mobile data systems to securely handle competing phones should help BlackBerry hang to its big government and corporate clients.

BlackBerry is still a hold.

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ENCANA CORP. $23 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 741.0 million; Market cap: $17.0 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.3%; TSINetwork Rating: Average; www.encana.com) reported that its cash flow fell 1.4% in the quarter ended June 30, 2014, to $656 million, or $0.89 a share (all amounts except share price and market cap in U.S. dollars). A year earlier, its cash flow was $665 million, or $0.90 a share. Earnings per share declined 32.4%, to $0.23 from $0.34.

These declines are mainly because the company continues to sell less-important assets as part of its plan to focus on six core properties: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico), Tuscaloosa Marine Shale (Louisiana) and Eagle Ford (Texas).

These areas contain large amounts of oil and natural gas liquids, such as butane and propane. These commodities supplied 14% of Encana’s output in the latest quarter, up from 9% a year ago. That cuts its exposure to weak gas prices.

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AGRIUM INC. $99 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 143.7 million; Market cap: $14.2 billion; Price-to-sales ratio: 0.9; Dividend yield 3.3%; TSINetwork Rating: Average; www.agrium.com) has suspended operations at its Vanscoy, Saskatchewan, potash mine because the main hoist system failed. Agrium will use the shutdown to speed up its plan to increase the mine’s capacity.

The company expects the outage to cost $40 million (all amounts except share price and market cap in U.S. dollars).

To put that in context, Agrium earned $625 million, or $4.34 a share, in the second quarter of 2014. That’s down 16.0% from $744 million, or $5.00 a share, a year earlier. Record earnings from Agrium’s retail stores, which sell fertilizers and seeds to farmers in North America, South America and Australia, offset lower bulk fertilizer prices.

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SNC-LAVALIN GROUP INC. $56 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 152.3 million; Market cap: $8.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.snclavalin.com) has agreed to sell its 21% stake in Astoria I, a private partnership that operates a gas-fired power plant in New York City.

The company did not say how much it would receive. However, it recently sold most of its interest in Astoria II, which operates a second power plant on the same site, for $87.6 million. To put that in context, SNC earned $32.1 million, or $0.21 a share, in the three months ended June 30, 2014. The sale cut SNC’s stake in Astoria II from 18.5% to 6.2%.

These sales are part of SNC’s new plan to focus on engineering projects in areas with stronger growth potential, such as mining, water treatment and oil and gas.

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MAPLE LEAF FOODS INC. $20 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 141.9 million; Market cap: $2.8 billion; Price-to-sales ratio: 0.6; Dividend yield: 0.8%; TSINetwork Rating: Average; www.mapleleaf.ca) ships only a small portion of its pork products to Russia, so that country’s recent ban on food imports from Canada will have little effect on its sales and earnings.

Pork prices have moved up recently, because a virus has cut hog supplies. As a result, consumers have shifted to beef and other meats. However, the Russian pork ban could cut prices in Canada, which would help spur demand for Maple Leaf’s products.

Meanwhile, Maple Leaf’s sales rose 9.6% in the three months ended June 30, 2014, to $831.8 million from $759.3 million a year earlier, as higher selling prices offset lower volumes. The company continues to restructure, including closing older plants. Its loss narrowed to $0.13 a share from $0.25.

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EMERA INC. $34 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 142.6 million; Market cap: $4.8 billion; Price-to-sales ratio: 1.8; Dividend yield: 4.3%; TSINetwork Rating: Average; www.emera.com) is Nova Scotia’s main power supplier. It also holds interests in electrical utilities in the U.S. and the Caribbean.

Emera is currently building the Maritime Link, which will transmit electricity from the island of Newfoundland to Nova Scotia through an undersea cable. The power will come from a new hydroelectric project on Labrador’s Churchill River. The company will spend $1.6 billion on Maritime Link, which should begin operating in 2017.

Separately, Emera will pay $390 million for a 34.9% stake in a new utility that will transmit power from Churchill River to Newfoundland.

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