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YAMANA GOLD $9.18 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 753.3 million; Market cap: $7.1 billion; Dividend yield: 1.7%) recently teamed up with Osisko Mining (symbol OSK on Toronto) to thwart a hostile takeover of Osisko by Goldcorp (symbol G).

Yamana bid $1.4 billion in cash and shares for 50% of Osisko, which owns the Canadian Malartic mine in Quebec. Canadian Malartic produced 475,277 ounces of gold in 2013.

However, Goldcorp has now raised its bid to $3.6 billion in cash and shares for all of Osisko. Yamana’s offer, combined with contributions from two of Canada’s largest pension funds in the form of a loan and the purchase of a 37,500-ounce-per-year gold stream, valued Osisko at $3.4 billion.

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THOMSON REUTERS CORP. (Toronto symbol TRI; www.thomsonreuters.com) gets 55% of its revenue by selling news and information to professionals in the banking industry. The remaining 45% comes from providing specialized information products to clients in the legal, accounting and scientific research fields. Thomson earned $137 million, or $0.16 a share, in 2013 (all amounts except share price and market cap in U.S. dollars). That’s down sharply from $2.0 billion, or $2.39 a share, in 2012....

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 advice on stock market trading and other investment topics that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “The saying ‘Sell in May and go away’ is based on an approach to the stock market that works only sporadically and could actually cost you money if you go along with it.”...

We’ve had great success with companies spun off from larger parent firms in the past few years. That’s mainly because spinoffs let both companies focus on their already well-established businesses. As well, a parent will only hand out a subsidiary’s shares to its own investors if it’s confident the spinoff will benefit both companies. Shares of this food producer we cover in Wall Street Stock Forecaster have jumped since it was spun off to become a separate firm. Here is our analysis of its future prospects....

AURICO GOLD (Toronto symbol AUQ; www.auricogold.com) operates the El Chanate gold mine in Mexico, which produced 71,864 ounces in 2013. The company’s Young-Davidson gold mine in Northern Ontario reached full production in 2013, with total output of 120,738 ounces. The project’s output should rise to over 152,000 ounces this year....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice and 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 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 an Inner Circle member asked us about a Canadian stock whose products came into sharper focus following the disappearance of Malaysia Airlines Flight MH370. Flyht Aerospace Solutions makes a number of products, but the two attracting the most attention are devices that collect and stream flight data and could have shed light on the fate of the Malaysian airliner as it disappeared. Pat examines the company’s business and assesses its prospects for growth in a highly competitive market. ...

POTASH CORP. OF SASKATCHEWAN $37 (www.potashcorp .com) exports potash fertilizer to customers outside North America through Canpotex, a marketing joint venture. Potash Corp., Agrium (see below) and Mosaic Co. (New York symbol MOS) each own a third of Canpotex....

CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 756.5 million; Market cap: $24.5 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.3%; TSINetwork Rating: Average; www.cenovus.com) gets about 40% of its output from its oil sands projects in Alberta. Conventional oil and natural 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 in Alberta. 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. In 2013, refining accounted for 66% of Cenovus’s revenue and 40% of its earnings.


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DUNDEE CORP. $17 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 54.1 million; Market cap: $919.7 million; Price-to-sales ratio: 2.4; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) owns businesses in the wealth management, real estate, natural resource and agriculture industries.

The company lost $92.6 million, or $1.88 a share, in 2013. That’s a big drop from the $25.2 million, or $0.29 a share, it earned in 2012. Revenue fell 6.3%, to $200.7 million from $214.2 million.

The declines are mainly because weak commodity prices hurt the contribution of Dundee’s resource holdings. As well, fewer firms issued shares in 2013, which hurt profits at its Dundee Securities brokerage firm. The company is also spending more to expand its agriculture businesses, which further depressed results.
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TRANSCANADA CORP. $51 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.6 million; Market cap: $36.1 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.transcanada.com) has received new long-term commitments from U.S. natural gas producers for its ANR pipeline system. Trans- Canada has now sold all of this line’s capacity.

This strong demand should prompt Trans- Canada to expand the ANR line over the next few years. That would let it handle rising production at the Utica and Marcellus shale gas fields in New York State and Pennsylvania.

TransCanada is a buy....

CANADIAN PACIFIC RAILWAY LTD. $162 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 175.7 million; Market cap: $28.5 billion; Priceto- sales ratio: 4.6; Dividend yield: 0.9%; TSINetwork Rating: Above Average; www.cpr.ca) will repurchase up to 1.3 million of its shares from a private seller at a discount to the market price.

This move is part of the company’s plan to buy back up to 5.3 million of its common shares, or roughly 3% of the total outstanding, by March 16, 2015. Share buybacks raise earnings per share and other per-share calculations, and give the remaining shareholders a larger stake in the company.

CP Rail is a buy....

CANADA BREAD CO. LTD. $73 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.9 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.canadabread.ca) is Canada’s second-largest producer of fresh and frozen baked goods, after Weston Bakery.

Shareholders recently approved a $72.00-a-share takeover offer from Mexican bakery giant Grupo Bimbo SAB. Competition regulators in Canada and the U.S. have also approved the deal.

Canada Bread’s shares are trading slightly higher than the bid. That’s because the deal lets the company keep paying quarterly dividends of up to $0.75 a share until Grupo Bimbo completes the takeover, probably by June 30, 2014. Before the deal, Canada Bread paid quarterly dividends of $0.50 a share.
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BANK OF MONTREAL $75 (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 644.7 million; Market cap: $48.4 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.bmo.com) earned $787 million from its U.S. banking operations (or 27% of the total) in the year ended October 31, 2013.

The bank continues to integrate Milwaukee-based Marshall & Ilsley, which it bought in 2011. The move doubled the size of its U.S. retail banking business. Bank of Montreal has already cut this division’s annual costs by $400 million, which should help it meet its goal of raising this business’s earnings to $1 billion in 2015.

Bank of Montreal is a buy....

IGM FINANCIAL INC. $52 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 252.4 million; Market cap: $13.1 billion; Price-to-sales ratio: 4.9; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www. igmfinancial.com) is Canada’s largest independent mutual fund company. Power Financial owns 58.6% of IGM.

As of December 31, 2013, IGM had $131.8 billion of assets under management, up 9.2% from $120.7 billion at the end of 2012. The company’s fee income rises and falls with the value of the securities it manages, so its revenue and earnings gain when the price of these assets rises.

In 2013, IGM’s earnings rose 2.3%, to $763.5 million from $746.4 million in 2012. Per-share earnings gained 3.4%, to $3.02 from $2.92, on fewer shares outstanding. Revenue for the year increased 3.7%, to $2.7 billion from $2.6 billion. Sales of mutual funds rose 22.1%, while fund redemptions fell 33.7%.
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GREAT-WEST LIFECO INC. $30 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 999.2 million; Market cap: $30.0 billion; Price-to-sales ratio: 1.2; Dividend Yield: 4.1%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is one of Canada’s largest insurance companies, with $758.3 billion of assets under administration. It also offers mutual funds, retirement planning and wealth management. Power Financial (Toronto symbol PFC) owns 67.0% of Great-West.

The company continues to benefit from its recent $1.75-billion purchase of Irish Life Group, Ireland’s largest pension manager and life insurance provider.

If you exclude integration costs, Great-West earned $2.05 billion in 2013, including $85 million of profits from Irish Life. The latest earnings are also up 5.4% from $1.95 billion in 2012. Due to more shares outstanding, earnings per share rose 2.9%, to $2.11 from $2.05.
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THOMSON REUTERS CORP. $38 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 815.8 million; Market cap: $31.0 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.thomsonreuters.com) gets 55% of its revenue by selling news and information to professionals in the banking industry. The remaining 45% comes from providing specialized information products to clients in the legal, accounting and scientific research fields.

Thomson earned $137 million, or $0.16 a share, in 2013 (all amounts except share price and market cap in U.S. dollars). That’s down sharply from $2.0 billion, or $2.39 a share, in 2012.

Financial institutions continue to cut their spending on information products in the wake of the 2008 credit crisis. In response, Thomson is cutting jobs and eliminating less-profitable products.
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LOBLAW COMPANIES LTD. $46 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 412.5 million; Market cap: $19.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.loblaw.ca) has completed its acquisition of Shoppers Drug Mart, which operates 1,253 drugstores across Canada.

Loblaw paid $12.4 billion, consisting of $6.6 billion in cash and $5.8 billion in shares. Shoppers shareholders now own 29% of the combined company.

In all, the firm will have $43 billion of annual revenue and $3 billion of gross earnings. Combining marketing and distribution should save $100 million in the first year and $300 million annually by the end of the third year.
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BLACKBERRY LTD. $8.66 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 526.6 million; Market cap: $4.6 billion; Price-to-sales ratio: 0.5; No dividends paid; TSINetwork Rating: Speculative; www.blackberry.com) lost $711 million, or $1.35 a share, in the fiscal year ended March 1, 2014 (all amounts except share price and market cap in U.S. dollars). A year earlier, it lost $317 million, or $0.60 a share.

Revenue fell 38.5%, to $6.8 billion from $11.1 billion, mainly due to slow demand for its new smartphones. Last year, the company removed several buttons from some of its devices as part of the switch to its new BlackBerry 10 operating system. That alienated many of its users. However, as part of its new turnaround strategy, it plans to launch phones with its traditional physical keyboard.

The company’s balance sheet remains sound: its long-term debt is just $1.6 billion, and it holds cash and investments of $2.7 billion, or $5.05 a share. However, BlackBerry will probably lose money for the next year or two.
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EMERA INC. $35 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 142.1 million; Market cap: $5.0 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.1%; 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.

The company recently sold 8.7 million common shares at $28.85 each. That increased the total number outstanding by 6.5%.

Emera will use the $239.9-million net proceeds to help fund its $1.6-billion Maritime Link project, 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.
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ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $54 and ACO.Y [class II voting] $54; Income Portfolio, Utilities sector; Shares outstanding: 115.1 million; Market cap: $6.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.atco.com) holds 53.1% of Canadian Utilities (see left). It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction and energy-exploration firms; Canadian Utilities owns the remaining 24.5%.

In 2013, ATCO’s revenue rose 8.6% to $4.4 billion from $4.0 billion in 2012. That’s mainly because Canadian Utilities’ new power lines boosted its contribution. The structures division’s revenue rose just 0.4%, partly because ATCO sold its 50% stake in a South American joint venture for $124 million. It also completed three large projects in Australia in 2012 and early 2013.

Earnings rose 13.0%, to $418 million, or $3.62 a share, from $370 million, or $3.20. Without unusual items, earnings rose 5.4%.
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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $41 and CU.X [class B voting] $41; Income Portfolio, Utilities sector; Shares outstanding: 261.0 million; Market cap: $10.7 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www. canadianutilities.com) distributes electricity and natural gas in Alberta and Australia. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see right) owns 53.1% of the company.

Canadian Utilities continues to invest in projects that will make Alberta’s electricity grid more reliable. For example, it recently spent $650 million to build 355 kilometres of new transmission lines and substations in the province’s southeast.

Thanks to these new assets, Canadian Utilities earned $587 million in 2013, up 6.1% from $553 million in 2012. Earnings per share rose 3.5%, to $2.09 from $2.02, on more shares outstanding. Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 11.1%. Revenue gained 11.3%, to $3.4 billion from $3.0 billion.
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strong>CAE INC. $15 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 263.2 million; Market cap: $3.9 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.6%; TSINetwork Rating: Average; www.cae.com) recently sold five flight simulators to Southwest Airlines, Lufthansa and other customers.

In all, these orders are worth $75 million. That’s equal to 3% of CAE’s annual revenue of $2.2 billion.

Including these deals, CAE has sold 48 simulators in its 2014 fiscal year, which ended March 31, 2014. That’s up 37.1% from the 35 it sold in 2013. It also beats the company’s previous all-time high of 38 simulator sales in fiscal 1998.
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RIOCAN REAL ESTATE INVESTMENT TRUST $27

(Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 303.2 million; Market cap: $8.2 billion; Price-to-sales ratio: 5.8; Dividend yield: 5.2%; TSINetwork Rating: Average; www.riocan.com) started up in 1993 and is now Canada’s largest REIT. In Canada, it owns all or part of 293 shopping centres, including 16 under development. These holdings account for 85% of its rental revenue. The remaining 15% comes from 47 malls in the U.S. In the wake of the recession, RioCan took advantage of lower property values and interest rates to expand its portfolio. As a result, its revenue jumped 52.0%, from $758 million in 2009 to $1.15 billion in 2013....

TRANSCANADA CORP. $55 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 708.9 million; Market cap: $39.0 billion; Price-to-sales ratio: 4.7; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.transcanada.com) has decided not to build an oil-export terminal at Cacouna, Quebec, due to concerns that it could endanger beluga whales in the St. Lawrence River.

This terminal was one of two (the other is near Saint John, New Brunswick) that are part of TransCanada’s proposed Energy East pipeline project, which would pump crude oil from Alberta to refineries in Eastern Canada.

TransCanada is now looking for an alternative site. That will delay Energy East for at least two years, to 2020, and add to its $12-billion cost. However, cancelling the Cacouna terminal makes it more likely that regulators will approve the project.

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Canada’s inflation rate is just 1.1%, well below the Bank of Canada’s 2% target. That lets the bank keep interest rates low, which holds down our dollar, making our exports cheaper in world markets. That’s good for Canada’s economic growth, but bad for income investors. We continue to advise against investing in bonds right now. Today’s low interest rates make them unattractive for income. Rising rates would push down their asset value....