Search

C.R. BARD INC. $149 (New York symbol BCR; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 74.6 million; Market cap: $11.1 billion; Price-to-sales ratio: 3.7; Dividend yield: 0.6%; TSINetwork Rating: Above Average; www.crbard.comtarget=”_blank”) continues to develop successful new medical devices. For example, it should soon receive approval to start selling a catheter that uses a drug-coated balloon to treat clogged arteries. Products like this are helping Bard offset the 2.3% tax it has to pay on certain medical devices it sells in the U.S. under Obamacare.

In the second quarter of 2014, Bard’s earnings rose 22.0%, to $160.7 million from $131.7 million a year earlier. Earnings per share gained 29.6%, to $2.06 from $1.59. Revenue rose 8.8%, to $827.1 million from $759.9 million. Bard spends around 10% of its revenue on research.

The company recently increased its quarterly dividend by 4.8%, to $0.22 a share from $0.21. The stock has gained 30% in the past year, so the new annual rate of $0.88 yields just 0.6%.

...

ALCOA INC. $17 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.2 billion; Market cap: $20.4 billion; Price-to-sales ratio: 1.7; Dividend yield: 0.7%; TSINetwork Rating: Average; www.alcoa.com) continues to close older, inefficient smelters in response to weak aluminum prices.

The company now plans to shut down its Portovesme smelter in Italy, which will cut Alcoa’s global smelting capacity by 4%.

Severance payments and other costs will cut the company’s earnings by around $0.15 a share in the third quarter of 2014. To put that in context, Alcoa earned $0.18 a share before one-time items in the second quarter.

...

CENOVUS ENERGY INC. $31 (New York symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 756.5 million; Market cap: $23.4 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.2%; TSINetwork Rating: Average; www.cenovus.com) gets 40% of its output from its Alberta oil sands projects. Conventional oil and gas wells supply the other 60%.

U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects. These properties produce heavy bitumen, which Cenovus ships to its 50%-owned refineries in Illinois and Texas.

Phillips 66 (New York symbol PSX) owns the other 50% of these refineries. The company produced 286,188 barrels of oil equivalent a day (70% oil and 30% gas) in the second quarter of 2014, up 9.9% from 260,460 a year ago.

...

ENCANA CORP. $23 (New York 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: 1.2%; TSINetwork Rating: Average; www.encana.com) focuses 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. That cuts Encana’s exposure to weak natural gas prices. The company recently set up PriarieSky Royalty Ltd. (Toronto symbol PSK) as a new firm to hold its Clearwater properties in southern Alberta. PriarieSky doesn’t drill wells or explore for new reserves. Instead, it collects royalties from other oil and gas producers.

Encana sold 46% of PrairieSky to the public for $1.5 billion. In the future, it could hand out its remaining 54% stake to its investors as a special dividend.

...

APACHE CORP. $102 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 382.5 million; Market cap: $39.0 billion; Price-to-sales ratio: 2.7; Dividend yield: 1.0%; TSINetwork Rating: Average; www.apachecorp.com) plans to sell its 13% stake in Chevron’s Wheatstone LNG project in Australia, as well as its 50% interest in a proposed LNG export terminal in Kitimat, B.C.; Chevron owns the remaining 50%.

These moves are partly due to pressure from activist investment firm Jana Partners, which owns about 1.0% of the company. Jana feels selling these assets would give Apache $3 billion to $4 billion that it can use to buy back shares. It could also use the cash to expand its U.S. oil and gas operations.

The company has already sold $10 billion of less important assets in the past 18 months as part of its plan to focus on its less risky North American onshore operations.

...

CHEVRON CORP. $129 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $245.1 billion; Price-to-sales ratio: 1.6; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.chevron.com) is the second-largest integrated oil company in the U.S. by revenue, after ExxonMobil (New York symbol XOM).

In the second quarter of 2014, Chevron produced 2.55 million barrels a day (67% oil, 33% natural gas), down 1.4% from 2.58 million barrels a year earlier. Even so, earnings rose 5.6%, to $5.7 billion from $5.4 billion. Chevron spent $1.25 billion on share buybacks in the latest quarter, so its earnings per share rose at a faster rate of 7.6%, to $2.98 from $2.77.

Cash flow per share, which excludes gains on sales of less important properties, rose 3.6%, to $8.96 from $8.65. Revenue gained 1.0%, to $57.9 billion from $57.4 billion.

...

TIM HORTONS INC. $80 (New York symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 132.8 million; Market cap: $10.6 billion; Price-to-sales ratio: 3.8; Dividend yield: 1.5%; TSINetwork Rating: Average; www.timhortons.com) became a wholly owned subsidiary of the Wendy’s hamburger chain in 1995. Under pressure from activist investors, Wendy’s spun off Tims as a separate company in 2006.

The stock is up 183% since the spinoff, partly because Tims has just accepted a friendly takeover offer from Miami-based Burger King Worldwide Inc. (New York symbol BKW).

Tims shareholders can opt to take $88.50 (Canadian) a share in cash, or 3.0879 shares of Burger King (worth $93.72 U.S.). However, Burger King plans to limit the overall cash payout, so most Tims investors will get $65.50 (Canadian) in cash plus 0.8025 of a share (for a total of $84.69 U.S.).

...

AT&T INC. $35 (New York symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 5.2 billion; Market cap: $182.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 5.3%; TSINetwork Rating: Average; www.att.com) is the largest wireless service provider in the U.S., with 116.6 million subscribers. This business supplies 55% of the company’s revenue and 75% of its earnings.

The remaining 45% of revenue and 25% of earnings comes from its wireline division, which sells phone services, television packages and high-speed Internet access to 35.9 million customers. AT&T’s overall revenue rose 4.7%, from $123.0 billion in 2009 to $128.8 billion in 2013.

Earnings gained 8.6%, from $12.5 billion in 2009 to $13.6 billion in 2010. Earnings per share rose at a slower pace of 8.0%, from $2.12 to $2.29, on more shares outstanding.

...

Every Thursday we bring you “Best U.S. Stocks.”. 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, from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster. IBM has a long history of drifting in and out of investor favour, mainly due to fear that new technologies will put it out of business. However, IBM also has long history of successfully shifting out of slowing businesses into faster-growing fields. For example, as computer prices fell in the 1990s, IBM expanded its more-profitable software and consulting operations. Later it unloaded its struggling personal computer operations, and now it’s selling its low-end server business. It will invest the proceeds in areas such as cloud computing and analytics software....

We’ve just updated and re-released one of our most popular free reports: Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. It’s ready for you to download now. With today’s low interest rates, investors are paying more attention to dividend yields. Dividend paying stocks are responding by doing their best to maintain, or even increase, their payouts. In fact, dividends can now contribute up to a third of your long-term investment returns, without even considering the tax-cutting effects of the dividend tax credit....

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....

Every Monday we now feature “A Stock to Sell” as our daily post. With each sell, we give you a full explanation of why we advise against investing in these stocks. This is part of our new approach offering you buy, hold and sell advice in our daily posts. You also get “Best Canadian Stocks” on Tuesday, “Our Top U.S. Stocks” on Thursday, and every Friday, our advice on one of the stocks that members of Pat’s Inner Circle have asked about in their weekly Question & Answer sessions. Eguana Technologies (symbol EGT on Toronto; www.eguanatech.com), formerly called Sustainable Energy Technologies Ltd., makes products that convert the high-current/low-voltage (DC) electricity from solar cells into high-voltage alternating current (AC) power, which is used by power grids and most industrial and consumer electronics....

Pat McKeough responds to many requests from members of his Inner Circle for advice on stock picks, 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 had a question from an Inner Circle member about investing in a fast food franchisee. As its name Arcos Dorados (“Golden Arches” in Spanish) indicates, this company operates McDonald’s restaurants in Latin America and the Caribbean. It is McDonald’s single largest franchisee. Pat examines the pros and cons of doing business in an area that is growing rapidly but unevenly and still faces political and economic challenges. Q: Pat: What is your opinion on Arcos Dorados? Thanks....

Every Thursday we bring you “Our Top U.S. Stocks” as our daily post. In these posts, you’ll 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 covered in our newsletter on U.S. investing, Wall Street Stock Forecaster. “Our Top U.S. Stocks” is part of our new approach offering you regular buy, hold and sell advice in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday and on Friday, our advice on one of the stocks our Inner Circle members have asked about in their weekly Question & Answer sessions. GENERAL ELECTRIC CO. (New York symbol GE; www.ge.com) saw its shares drop from $42 in 2007 to under $6 in 2009, as the financial crisis caused big losses at its banking division. In response, the company decided to shrink this business’s assets to half of what they were before the recession. It expects to complete these cuts by the end of 2014....

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 investing advice on a wide range of investing topics. 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: “Investing money in futures gives you high leverage, but leverage magnifies losses as well as gains.” Trading in futures is a long-established and perfectly legal way to bet on price changes in commodity, currency and financial markets. This attracts futures traders....

Every Tuesday we bring you “Best Canadian Stocks” as our daily post. In these posts, 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 that are profiled in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor. “Best Canadian Stocks” is part of our new approach offering you regular buy, hold and sell advice in our daily posts. Every week you get “A Stock to Sell” on Monday, “Our Top U.S. Stocks” on Thursday and on Friday, our advice on one of the stocks our Inner Circle members have asked about in their weekly Question & Answer sessions. A key part of successful investing involves picking stocks with hard-to-replace assets, like popular brand names....

Every Monday we now feature “A Stock to Sell” as our daily post. With each sell, we give you a full explanation of why we advise against investing in these stocks. This is part of our new approach offering you buy, hold and sell advice in our daily posts. You also get “Best Canadian Stocks” on Tuesday, “Our Top U.S. Stocks” on Thursday, and every Friday, our advice on one of the stocks that members of Pat’s Inner Circle have asked about in their weekly Question & Answer sessions. Automodular Corp. (symbol AM on Toronto; www.automodular.com), assembles car and truck components, such as instrument panels, engines and rear suspensions....

TEMPUR SEALY $58.64 (New York symbol TPX; TSINetwork Rating: Speculative) (800-878-8889; www.tempursealy.com; Shares outstanding: 60.8 million; Market cap: $3.6 billion; No dividends paid) completed its $1.3-billion purchase of rival Sealy in March 2013. This was a major acquisition for Tempur Sealy (formerly Tempur-Pedic), but it has let the company diversify into traditional spring-coil beds.

The purchase is also helping Tempur Sealy offset rising competition in its current business; the company makes and distributes mattresses and neck pillows made of its Tempur material, which conforms to the body to provide support and alleviate pressure points.

...

ATLANTIC TELE-NETWORK $58.24 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.9 million; Market cap: $929.5 million; Yield: 1.8%) closed the sale of its Alltel wireless business to AT&T (symbol T on New York) late last year. As a result, it now holds cash of $407.6 million, or $24.64 a share, and has paid off its $271.1 million of debt.

The company bought Alltel from Verizon Wireless for just $223 million in April 2010.

Atlantic now has wireless and wireline telecom operations in the U.S. Southwest, New England, New York State, Guyana, Bermuda and parts of the Caribbean islands.

...

IMPERIAL METALS $9.07 (Toronto symbol III; TSINetwork Rating: Speculative) (604-669-8959; www.imperialmetals.com; Shares outstanding: 74.9 million; Market cap: $715.9 million; No dividends paid) is down almost 42% since a dam broke at a tailings pond at its Mount Polley mine in B.C. The breach spilled wastewater and fine sand into nearby waterways.

The extent of the damage to local lakes and rivers is unknown at this point, but estimates of the total liability for the cleanup are in the range of $225 million. Imperial has just issued $100 million in convertible debentures to help pay these costs.

Meanwhile, Mount Polley will likely be shut down for at least one to two years, perhaps indefinitely. The mine is the company’s biggest producing asset and the main contributor to its cash flow. Imperial will now likely report cash flow of $0.40 a share in 2014, down from an estimated $1.05.

...

AMAZON.COM $335.78 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 462.0 million; Market cap: $154.6 billion; No dividends paid) has launched its Kindle Unlimited service for a flat $9.99 monthly fee.

Kindle Unlimited offers access to over 600,000 books that can be read at no additional cost on Kindle e-book readers, as well as over 2,000 audiobooks. Amazon is offering a free 30-day trial to entice users to try the service, which is also available using the Kindle app on a smartphone or tablet.

The new Kindle Unlimited also lets users alternate between reading and listening to their books (if those books are available as audiobooks) without losing their place.

...

p>ACI WORLDWIDE $19.07 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 113.8 million; Market cap: $2.2 billion; No dividends paid) has agreed to buy Retail Decisions (ReD) for $205 million in cash. ReD, based in Brockwood, England, is an e-commerce and fraud-prevention firm that serves the payments industry. ReD’s software, which includes ReD Shield, ReD Fraud Xchange, ReD PRISM, ReD Alerts, ReDi, ReD1 Gateway and LiveProcessor, helps customers better manage and cut losses from fraud.

ACI Worldwide is still a hold.

...

GOODYEAR TIRE & RUBBER CO. $25.46 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 275.3 million; Market cap: $7.1 billion; Dividend yield: 0.9%) is the world’s largest tire maker, with 52 plants in 22 countries.

In the quarter ended June 30, 2014, Goodyear’s revenue fell 4.9%, to $4.66 billion from $4.89 billion a year earlier. The company sold fewer tires in Latin America, which offset higher tire sales in all other regions, including North America.

Even with the lower revenue, earnings per share rose 8.1%, to $0.80 from $0.74, excluding one-time items. Goodyear’s costs, for rubber and other raw materials, continue to fall. As well, the company now has a favourable new contract with the United Steelworkers.

...

BROADRIDGE FINANCIAL SOLUTIONS $42.03 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 120.7 million; Market cap: $4.9 billion; Dividend yield: 2.6%) earned $144.6 million in its fiscal 2014 fourth quarter, which ended June 30, 2014. That’s up 1.5% from $142.4 million a year earlier. Earnings per share rose 1.7%, to $1.17 from $1.15, on fewer shares outstanding.

Overall revenue gained 2.4%, to $885.9 million from $865.1 million. Revenue from contracts that pay recurring fees rose 7% and accounted for two-thirds of the total.

Excluding unusual items, Broadridge expects to earn $2.42 to $2.52 a share in fiscal 2015. The stock trades at a reasonable 17.0 times the midpoint of that range. The shares yield 2.6%.

...

ADOBE SYSTEMS INC. $71.02 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 497.4 million; Market cap: $35.8 billion; No dividends paid) makes a range of software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use its software to create print publications and web pages.

In its fiscal 2014 second quarter, which ended May 30, 2014, Adobe earned $186.3 million, up 1.9% from $182.9 million a year earlier. Earnings per share rose 2.8%, to $0.37 from $0.36, on fewer shares outstanding. Revenue gained 5.7%, to $1.07 billion from $1.01 billion.

The improved results are mainly because Adobe is signing up more subscribers to its Creative Cloud package of photo editing and desktop publishing programs. The company added 464,000 Creative Cloud customers in the quarter and currently has a total of 2.3 million. It now expects to end fiscal 2014 with 3.3 million users, up from its earlier target of 3.0 million.

...