Search

MCCORMICK & CO. INC. $71 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 119.0 million; Market cap: $8.4 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.1%; TSINetwork Rating: Average; www.mccormick.com) makes spices, herbs, seasonings and flavours. It sells these products to consumers and industrial clients. In its fiscal 2014 second quarter, which ended May 31, 2014, McCormick’s sales rose 3.1%, to $1.03 billion from $1.00 billion a year earlier. That’s mainly because McCormick bought a Chinese bouillon maker for $144.8 million in May 2013. This purchase offset lower sales in the Americas.

Earnings gained 7.5%, to $84.5 million, or $0.64 a share, from $78.6 million, or $0.59, a year earlier.

McCormick continues to benefit from its ongoing cost cuts, which should save it $45 million in fiscal 2014. That will help fund the additional $25 million it plans to spend on advertising this year.

...

ALCOA INC. $15 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.2 billion; Market cap: $18.0 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.8%; TSINetwork Rating: Average; www.alcoa.com) plans to upgrade its Hampton, Virginia, plant to make lightweight aluminum blades that help cut new jet engines’fuel consumption by 20% over older models.

Alcoa will spend $25 million on this project. To put that in context, it earned $98 million, or $0.09 a share, in the three months ended
March 31, 2014.

...

INTEL CORP. $31 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.0 billion; Market cap: $155.0 billion; Price-to-sales ratio: 2.9; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.intel.com) now expects $13.7 billion of revenue in the second quarter of 2014, up from its earlier forecast of $13.0 billion. That’s because businesses are replacing their older computers at a faster-than-expected pace.

The stock has gained 19% since the start of the year and trades at 15.2 times the $2.04 a share that Intel will probably earn in 2014. That’s a particularly attractive p/e ratio for a tech leader that spends a high 22% of its revenue on research.

Intel is a buy.

...

FEDEX CORP. $151 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 318.0 million; Market cap: $48.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) delivers packages and documents in the U.S. and over 220 other countries through its fleet of 650 planes and over 108,000 trucks and other surface vehicles.

The company recently changed the way it charges for shipping bulky packages by truck. In the past, it based its fee on weight, but it will now charge according to size. This makes it more expensive to ship lighter items that take up significant space, such as diapers. FedEx has also raised its fuel surcharge, which will help offset its rising fuel costs.

Meanwhile, the company earned $2.10 billion in its 2014 fiscal year, which ended May 31, 2014. That’s up 6.1% from $1.98 billion in fiscal 2013. FedEx spent $4.9 billion on share buybacks in its latest fiscal year. As a result, its earnings per share rose 8.3%, to $6.75 from $6.23. Revenue gained 2.9%, to $45.6 billion from $44.3 billion.

...

EBAY INC. $49 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $63.7 billion; Priceto- sales ratio: 3.8; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) gets 51% of its revenue by charging users fees to sell goods on its shopping websites, including its main auction site, which it launched in September 1995. This site now has 145.1 million users.

eBay gets a further 43% of its revenue from processing online transactions, mostly through its wholly owned PayPal subsidiary. This business now has 148.4 million users. The remaining 6% of eBay’s revenue comes from its Enterprise division, which helps businesses process online orders.

The company lost $2.4 billion, or $1.82 a share, in the three months ended March 31, 2014. That’s mainly because it transferred $9.0 billion in cash from its overseas businesses to its U.S. headquarters, triggering a $3.0-billion tax bill.

...

VISA INC. $209 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 628.4 million; Market cap: $131.3 billion; Price-to-sales ratio: 10.9; Dividend yield: 0.8%; TSINetwork Rating: Above Average; 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 card issuers and merchants for using its network. It bases its fees on payment volume, transactions processed and other factors. The banks that issue the cards are responsible for evaluating customer creditworthiness and collecting payments, not Visa.

In its fiscal 2014 second quarter, which ended March 31, 2014, Visa’s earnings jumped 25.8%, to $1.6 billion from $1.3 billion a year earlier. Per-share earnings rose 31.3%, to $2.52 from $1.92, on fewer shares outstanding. However, if you exclude a one-time tax benefit in the latest quarter, earnings per share rose 14.6%, to $2.20.

...

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 buying satellite TV provider DirecTV (Nasdaq symbol DTV) for $48.5 billion (70% stock and 30% cash).

Satellite TV demand has slowed in the past few years as consumers switch to online services like Netflix. However, DirecTV’s rural customers are a good fit with AT&T’s urban U-verse fibre optic TV service. It’s a bold move, but it could pay off.

The takeover will make AT&T the second-largest provider of pay-TV services in the U.S., with 27 million subscribers. That will help it compete with Comcast, which will have 30 million customers after it buys rival Time Warner Cable. It will also give AT&T more clout when buying entertainment and sports programming.

...

GENERAL ELECTRIC CO. $26 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.0 billion; Market cap: $260.0 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.ge.com) is one of the world’s largest manufacturers. It makes machinery for power generation and distribution, such as turbines, as well as other products, like jet engines, medical equipment, appliances, lighting and locomotives.

The company also operates GE Capital, which mainly provides loans to GE’s clients. The company scaled back GE Capital after the division suffered big losses in the 2008/09 financial crisis. It now accounts for 30% of GE’s revenue and 37% of its earnings.

As part of these reductions, GE Capital will soon unload its North American consumer lending business as a separate firm called Synchrony Financial (New York symbol SYF). GE will sell 20% of Synchrony’s shares through an initial public offering. After that, the company will give its shareholders the chance to swap their GE stock for Synchrony shares.

...

Pat McKeough responds to many requests from members of his Inner Circle for specific stock advice 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 one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week we had a question from an Inner Circle member on one of the many tech stocks on the Nasdaq market. ON Semiconductor serves a diverse clientele, although almost a third of its customers are in the automotive industry. The company is pursuing growth by acquisition. Pat examines this strategy as well as the company’s financial outlook and its ability to increase its chip sales in the competitive markets in which it operates. Q: Pat: What is your opinion on ON Semiconductor Corp.?...

IAMGOLD (Toronto symbol IMG; www.iamgold.com) owns 41% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 95% of the Rosebel mine in Suriname, South America. In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. When used as an additive, niobium makes steel stronger, more heat-resistant and easier to weld. In the three months ended March 31, 2014, IAMGold’s revenue fell 8.5%, to $279.3 million from $305.3 million a year earlier. Cash flow per share dropped to $0.17 from $0.31. The declines were mostly due to 21.2% lower gold prices and an 8.5% production decrease....

FAIR ISAAC CORP. $93 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 31.1 million; Market cap: $2.9 billion; Price-to-sales ratio: 3.5; Dividend yield: 0.1%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. FICO Scores dominates this niche market. Fair Isaac also sells software that helps credit card issuers control fraud and analyze cardholders’ spending patterns.

In January 2015, Fair Isaac paid $59.6 million for Tonbeller, a German firm whose software helps banks and insurance companies detect and prevent money laundering and fraud.

In its fiscal 2015 second quarter, which ended March 31, 2015, the company’s revenue increased 11.7%, to $207.1 million from $185.5 million a year earlier. Tonbeller contributed $3.2 million to revenue in the latest quarter.

...

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you advice on specific investment advice. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “Value investing’s good reputation owes a great deal to Warren Buffett, but he and other successful investors owe their success to much more than just one relatively narrow approach to the market.” In last week’s Investor Toolkit, I pointed out that learning what not to do can be the hardest and costliest part of an investor’s education (see the Toolkit here). I focused on how this applies to technical analysis—the practice of trying to base investment decisions on past trading and market history. This week I want to expand on what I said, since the idea applies to a wide range of narrow approaches to investing....

PEYTO EXPLORATION & DEVELOPMENT CORP. (Toronto symbol PEY; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 72,209 barrels of oil equivalent is 90% gas and 10% oil. In the quarter ended March 31, 2014, Peyto’s cash flow rose 53.6%, to $1.06 a share from $0.69 a year earlier. That’s because the company raised its production by 30.4%. Gas prices also gained 27.5%, to an average of $4.45 per thousand cubic feet from $3.49, while oil prices rose 6.1%, to $80.49 a barrel from $75.88. Peyto plans to spend $625 million on exploration and development in 2014, which will let it drill 110 to 125 wells. To put that in context, the company spent $578 million to drill 99 wells in 2013....

Businesses will likely spend more on software this year, as the global economy continues to recover. That’s good news for two market leaders we cover regularly in our advisory on U.S. stocks, Wall Street Stock Forecaster. We analyze which is in a better position to benefit as more companies adopt cloud computing. Note: This article updates our recent report on Symantec, issued just after the company had fired its CEO (see the article here). ADOBE SYSTEMS INC. (Nasdaq symbol ADBE; www.adobe.com) earned $151.3 million, or $0.30 a share, in its fiscal 2014 first quarter, which ended February 28, 2014. That’s down 14.9% from $177.9 million, or $0.35, a year ago. Revenue fell 0.8%, to $1.00 billion from $1.01 billion. The declines are mainly because Adobe is now selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription instead of a one-time purchase. That hurts the company’s short-term growth, but it should provide stable revenue streams as more users switch over. Subscriptions now supply over half of Adobe’s revenue....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice on buying 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 one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. Recently an Inner Circle member asked us about a Canadian stock that is tapping into the economic growth of Western Canada. WesternOne operates through a series of smaller acquisitions that build up its business in construction heating, aerial equipment and modular buildings. Pat looks at the company’s expanding business and the potential risks and rewards of its growth-by-acquisition strategy in a very competitive market. Q: Pat, could you give me your opinion on WesternOne, please?...

The outlook for automakers was grim following the financial crisis of 2008. Once-dominant firms like General Motors and Chrysler were forced to turn to the government for bailouts. But few industries have rebounded stronger than the automobile industry....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you advice on specific investment topics such as technical analysis. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “Technical analysis can be a useful investment tool, but if you rely too heavily on it—or any other single facet of investing—you have little chance of profiting consistently.” Learning what not to do can be the hardest and costliest part of an investor’s education....

PFIZER INC. (New York symbol PFE; www.pfizer.com) is the world’s largest maker of prescription drugs. Its main brands include Lyrica (epilepsy), Celebrex (arthritis), Viagra (erectile dysfunction) and Prevnar (a pneumonia vaccine). Pfizer also makes popular over the-counter drugs, including Advil (pain relief), Centrum (vitamins) and Robitussin (cough syrup)....

CHIPOTLE MEXICAN GRILL (New York symbol CMG; www.chipotle.com) is a Denver-based Mexican restaurant chain. It charges slightly higher prices than fast food companies, but it offers better quality food, including naturally raised meat, and superior decor and service. In the three months ended March 31, 2014, Chipotle’s sales rose 24.4%, to $904.2 million from $726.8 million a year earlier. The company’s restaurants attracted more customers during the quarter, which pushed up same-restaurant sales by 13.4%. Chipotle also opened 44 new outlets and now has a total of more than 1,600. In all of 2014, it aims to open 180 to 195 locations....

ALARMFORCE INDUSTRIES $11.23 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800- 267-2001; www.alarmforce.com; Shares outstanding: 11.9 million; Market cap: $134.1 million; Dividend yield: 1.1%) sells twoway voice-alarm systems and monitoring services in Canada and increasingly in the U.S.

In the quarter ended April 30, 2014, the company’s sales rose 8.7%, to $13.2 million from $12.1 million a year earlier. It earned $1.8 million, or $0.15 a share, up 34.3% from $1.3 million, or $0.11.

AlarmForce’s revenue rose along with its subscriber base. Earnings jumped because it spent a lot less on marketing after launching its VideoRelay system. This service lets subscribers watch their homes through computers and smartphones. AlarmForce now has 7,500 VideoRelay subscribers, with 4,400 in Canada and 3,100 in the U.S.

...

FIRSTSERVICE CORP. $55.55 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.7 million; Market cap: $2.0 billion; Dividend yield: 0.8%) serves the following areas of the real estate market: commercial real estate, residential property management and property improvement. The company has more than 24,000 employees worldwide.

In the quarter ended March 31, 2014, FirstService’s revenue rose 15.1%, to $548.4 million from $476.4 million a year earlier (all figures except share prices in U.S. dollars). Excluding one-time items, earnings per share were $0.09, compared to a loss of $0.20. The first quarter is typically a slower time for the company.

Revenue rosRe at all three of FirstService’s divisions: Colliers International (commercial real estate), up 28%; FirstService Residential (residential property management), up 7%; and FirstService Brands (property services), up 11%. FirstService Brands operates Paul Davis Restoration, California Closets and CertaPro Painters.

...

STUART OLSON INC. $10.79 (Toronto symbol SOX; TSINetwork Rating: Speculative) (780-454-3667; www.stuartolson.com; Shares outstanding: 24.9 million; Market cap: $270.0 million; Dividend yield: 4.4%) is the new name for The Churchill Corp. (old symbol CUQ).

Stuart Olson provides building construction, commercial and industrial electrical contracting, earth moving and industrial insulation services to government and private sector clients, mainly in Western Canada.

In the three months ended March 31, 2014, the company lost $614,000, or $0.02 a share. That’s an improvement from a loss of $1.2 million, or $0.05 a share, a year earlier. Revenue rose 15.9%, to $274.6 million from $236.8 million, thanks to rising construction activity in Western Canada.

...

IAMGOLD $4.39 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 376.7 million; Market cap: $1.6 billion; No dividends paid) has signed an agreement with Calibre Mining (symbol CXB on Toronto) that gives it the option to invest in a proposed gold-silver mine in Nicaragua.

Under the deal, IAMGold can earn a 51% stake in Calibre’s Easter Borosi project over the next three years if it pays $450,000 and spends $5.0 million to develop the property (all amounts except share price in U.S. dollars).

After that, IAMGold can earn an additional 19% interest if pays Calibre another $450,000 and contributes $5.0 million more to development costs.

...

CAMECO CORP. $21.57 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 395.8 million; Market cap: $8.5 billion; Dividend yield 1.9%) has decided to postpone developing its Millennium uranium deposit in central Saskatchewan. Cameco owns 69.9% of this property, and Japan’s JCU Exploration holds the other 31.1%.

Uranium prices have declined from around $42 U.S. a pound in February 2014 to $28 today. That’s because delays in restarting Japan’s nuclear reactors have caused uranium inventories to rise. However, prices should recover once the Japanese reactors begin operating.

Cameco is still a buy.

...

ACI WORLDWIDE $55.40 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 37.9 million; Market cap: $2.1 billion; No dividends paid) makes software that processes transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. Its products also help cut fraud.

The company has added another major client for its Postilion retail point-to-point encryption (PSPE) software. This technology encrypts credit card numbers and other sensitive information from the point of entry (card swipe) at the merchant to the other end (issuing bank or other payment processor).

The client is Ecentric Payment Systems, South Africa’s leading payment processor. Ecentric processes nearly 400 million transactions a year for retailers. This number should rise as African markets continue to develop and South African retailers expand into other countries on the continent.

...