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AGRIUM INC. $105 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 143.7 million; Market cap: $15.1 billion; Price-to-sales ratio: 0.9; Dividend yield 3.2%; TSINetwork Rating: Average; www.agrium.com) plans to expand its nitrogen fertilizer plant in Borger, Texas.

Besides increasing fertilizer production, these upgrades will let Agrium make diesel exhaust fluid, which helps cut harmful emissions from diesel-powered vehicles.

The company will spend $720 million U.S. on this project, which it expects to complete in the second half of 2015.
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MANITOBA TELECOM SERVICES INC. $30 (Toronto symbol MBT; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 77.1 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.7%; TSINetwork Rating: Average; www.mts.ca) get 60% of its revenue from its 501,388 wireless, 486,833 telephone, 208,331 highspeed Internet and 109,085 TV customers in Manitoba. The remaining 40% comes from Allstream, which sells integrated telephone, Internet and other communication services to businesses across Canada.

The company paid $8.8 million for new spectrum in Manitoba. To put that in context, it lost $84.4 million, or $1.24 a share, in 2013. However, that loss was mainly due to a $130.4-million writedown of Allstream after the federal government blocked the sale of this business. Excluding all unusual items, Manitoba Telecom earned $1.69 a share. In 2012, it earned $144.5 million, or $2.17 a share.

Revenue fell 4.1% in 2013, to $1.6 billion from $1.7 billion. That’s mainly because declining demand for local and long-distance service cut Allstream’s revenue by 11.2%.
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TELUS CORP. $39 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 623.4 million; Market cap: $24.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.telus.com) gets 54% of its revenue from its 7.8 million wireless subscribers across Canada. It also has 3.3 million phone customers, 1.4 million highspeed Internet users and 815,000 TV subscribers.

The company spent $1.14 billion on new spectrum in the recent auction. That will let it expand its high-speed wireless network to reach 97% of Canada’s population, up from 80% now.

Meanwhile, strong demand for wireless and high-speed Internet continues to offset weaker revenue from its land line business. Telus earned $1.4 billion in 2013, up 13.4% from $1.2 billion in 2012. Due to fewer shares outstanding, earnings per share gained 15.5%, to $2.16 from $1.87. Revenue rose 4.4%, to $11.4 billion from $10.9 billion.
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HOME CAPITAL GROUP INC. $44 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 69.5 million; Market cap; $3.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.5%; TSINetwork Rating: Average; www. homecapital.com) gets around 90% of its revenue by making residential mortgage loans to borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks. Its clients include recent immigrants with limited credit histories, and self-employed people.

The remaining 10% of Home Capital’s revenue mainly comes from credit cards and other loans to consumers and businesses.

Low interest rates continue to fuel loan demand. As a result, Home Capital’s revenue rose 7.0% in 2013, to $949.5 million from $887.7 million in 2012. Earnings gained 14.8%, to $257.7 million, or $3.68 a share, from $224.6 million, or $3.23. (All per-share amounts adjusted for a 2-for-1 stock split in March 2014.)

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ENCANA CORP. $22 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 740.9 million; Market cap: $16.3 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.4%; TSINetwork Rating: Average; www.encana.com) has decided not to sell its Deep Panuke offshore natural gas platform near Nova Scotia. This project reached full production of 300 million cubic feet a day in late 2013, which is equal to 11% of Encana’s total output.

Unusually cold winter weather has surred higher natural gas usage, and pushed up prices. That helps improve Deep Panuke’s profitability.

Encana is a buy.

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LINAMAR CORP. $50 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.8 million; Market cap: $3.2 billion; Price-to-sales ratio: 0.9; Dividend yield: 0.8%; TSINetwork Rating: Extra Risk; www.linamar.com) continues to benefit from strong car sales, which have increased demand for its engines and transmissions. At the same time, rising construction activity has spurred sales of its self-propelled, scissor-type elevating work platforms, which it sells under the Skyjack name.

In 2013, the company earned a record $3.34 a share, up 49.1% from $2.24 in 2012. Sales rose 11.6%, to a record $3.6 billion from $3.2 billion.

The company also raised its quarterly dividend by 25.0%, from $0.08 a share to $0.10. The stock has nearly doubled in the past year, which is why the new annual rate of $0.40 yields just 0.8%. However, the stock is still attractive at 13.1 times Linamar’s likely 2014 earnings of $3.83 a share.
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NORDION INC. $12 (Toronto symbol NDN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 61.9 million; Market cap: $742.8 million; Price-to-sales ratio: 2.7; Dividend suspended in September 2012; TSINetwork Rating: Extra Risk; www.nordion.com) sells isotopes for cancer detection and research. It also makes products that sterilize food and surgical tools.

In its fiscal 2014 first quarter, which ended January 31, 2014, Nordion’s earnings jumped to $36.5 million, or $0.59 a share (all amounts except share price and market cap in U.S. dollars). A year earlier, it earned $2.9 million, or $0.05 a share. The gain was partly due to positive exchange rates, which added $0.31 to the latest per-share earnings.

These figures exclude unusual items, such as costs related to the company’s strategic review. As part of this process, Nordion sold its Targeted Therapies division for $190 million in July 2013. This business makes TheraSphere, a process for treating liver cancer using millions of microscopic glass beads containing radioactive materials.
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BLACKBERRY LTD. $10 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 526.0 million; Market cap: $5.3 billion; Price-to-sales ratio: 0.6; No dividends paid; TSINetwork Rating: Speculative; www.blackberry.com) has jumped about 50% in the past three months, thanks to its new strategic plan.

In response to weak sales of its new BlackBerry 10 smartphones, the company is cutting 40% of its workforce and selling most of its Canadian real estate, mainly buildings near its Waterloo, Ontario, headquarters. It will lease back some of these properties after the sale.

As well, BlackBerry has signed a new five-year deal with Taiwan-based electronics maker Foxconn. Under this agreement, BlackBerry and Foxconn will jointly develop new smartphones, particularly for fast-growing markets like Indonesia. Foxconn will also assume responsibility for making these phones, which should help BlackBerry better manage its inventories and avoid costly writedowns of unsold phones.
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TRANSCONTINENTAL INC. $15 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.0 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 4.3%; TSINetwork Rating: Average; www. tctranscontinental.com) aims to cut its reliance on cyclical print advertising with a new deal to buy Missouri-based Capri Packaging, which makes plastic packaging for food. The company will pay $133 million U.S. when the deal closes later this year.

Capri’s two plants generate $72 million U.S. of annual revenue. Transcontinental feels its commercial printing expertise will help it make Capri more efficient.

Acquisitions always expose the buyer to hidden risks. However, Transcontinental has signed a 10-year deal to supply packaging to dairy producer Schreiber Foods, Capri’s parent company. Schreiber accounts for 75% of Capri’s revenue, so this acquisition is safer than it looks.
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FINNING INTERNATIONAL INC. $31 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.1 million; Market cap: $5.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.finning.com) is the world’s largest dealer of tractors, bulldozers and trucks made by Caterpillar Inc. (New York symbol CAT). It also sells equipment made by other firms.

The company sells these products to customers in the mining, forest products and construction industries in Western Canada (50% of revenue, 47% of earnings), South America (37%, 45%) and the U.K. (13%, 8%).

Finning’s revenue rose 50.8%, from $4.5 billion in 2009 to $6.7 billion in 2013. That’s largely because prices for commodi- ties, like oil and coal, rebounded strongly after the recession, spurring heavy equipment demand.
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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....

DOREL INDUSTRIES (Toronto symbol DII.B; www.dorel.com) makes a range of items, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational goods, mainly bicycles....

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 investment advice 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: “While new financial products flooding the market may offer some benefits, it pays to remember that the incentives are heavily weighted in favour of the seller, not the buyer.”...

Yes, you can collect up to $48,483 in dividends every year, and not pay a single dime in income tax....

TIM HORTONS INC. (Toronto symbol THI; www.timhortons.com) operates 3,588 coffee-and-donut stores in Canada, 859 in the U.S. and 38 in the Persian Gulf. Franchisees operate 99.6% of these outlets....

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $31.49 (Toronto symbol BEP.UN; Units outstanding: 265.2 million; Market cap: $8.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.8%; www.brpfund.com) owns 196 hydroelectric generating stations, 11 wind farms and two natural-gas-fired plants. In all, it has 6,000 megawatts of generating capacity.

Roughly 31% of Brookfield’s generating capacity is in Canada, with another 52% in the U.S. and 17% in Brazil.

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BELL ALIANT INC. $26.87 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $6.1 billion; TSINetwork Rating: Average; Dividend yield: 7.1%; www.aliant.ca) sells phone and Internet services to 2.5 million customers in Atlantic Canada and rural Ontario and Quebec. It also provides wireless services through an alliance with BCE, which owns 45% of Bell Aliant.

The company continues to replace copper wires with fibre optic cable, which is attracting more high-speed Internet and digital TV customers. Strong demand for these services is also helping offset lower revenue from traditional phones, which still supply 52% of Bell Aliant’s revenue.

The company’s high-speed fibre optic systems now reach 806,000 homes, up from 725,000 at the start of last year. By the end of 2014, it plans to expand its network to one million homes.
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TRANSCANADA CORP. $49.58 (Toronto symbol TRP; Shares outstanding: 707.0 million; Market cap: $34.8 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.transcanada.com) may face higher costs for its proposed Keystone XL pipeline, which would pump crude oil from Alberta to Steele City, Nebraska. From there, existing lines would carry it to refineries in the U.S.

A court recently overturned a Nebraska law that let the state’s governor force property owners to accept the pipeline. As a result, TransCanada may have to seek permission from individual landowners on the route.

So far, the company has spent $2.2 billion U.S. on the $5.4-billion U.S. project. If the U.S. government rejects the line, TransCanada could use some of the materials on other projects, which would limit any potential writedown.
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SPDR S&P CHINA ETF $74.08 (New York Exchange symbol GXC; buy or sell through brokers; www.spdrs.com) aims to track the S&P China BMI Index, which is made up of all publicly traded Chinese stocks available to foreign investors. Right now, this ETF holds 251 stocks.

The $778.9-million fund’s top holdings are Tencent Holdings, 8.8%; China Construction Bank, 6.0%; China Mobile, 5.3%; Baidu, 5.2%; Industrial & Commercial Bank, 5.1%; Bank of China, 3.2%; CNOOC Ltd., 2.9%; China Petroleum & Chemical, 2.4%; PetroChina, 2.4%; and China Life.

The ETF was launched on March 19, 2007. It has a 0.59% MER and yields 1.3%.
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POWERSHARES QQQ ETF $91.06 (Nasdaq symbol QQQQ; buy or sell through brokers; www.invescopowershares- .com), formerly called Nasdaq 100 Trust Shares, holds stocks that represent the Nasdaq 100 Index, which consists of the 100 largest shares on the Nasdaq exchange, based on market cap.

The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets.

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SPDR DOW JONES INDUSTRIAL AVERAGE ETF $163.35 (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average.

The SPDR Dow Jones ETF’s top holdings are Visa, IBM, Goldman Sachs Group, ExxonMobil, Chevron, 3M, McDonald’s, Caterpillar, United Technologies and Boeing. The fund’s expenses are about 0.17% of its assets.

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SPDR S&P 500 ETF $187.75 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major U.S. companies that are chosen based on their market cap, liquidity and industry group.

The index’s highest-weighted stocks are Apple, ExxonMobil, Google, Microsoft, Procter & Gamble, Johnson & Johnson, J.P. Morgan Chase, IBM, Chevron, General Electric, Pfizer, Berkshire Hathaway, Verizon and Wells Fargo. The fund’s expenses are just 0.10% of its assets.

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ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $24.40 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.55%. It yields 3.8%.

The fund’s top holdings are CIBC, 7.0%; TD Bank, 6.3%; National Bank, 6.2%; Bonterra Energy, 6.0%; Bank of Montreal, 5.6%; Royal Bank, 5.1%; BCE, 4.3%; AG Growth International, 4.3%; and IGM Financial, 3.9%.

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GREAT-WEST LIFECO $30.32 (Toronto symbol GWO; Shares outstanding: 999.3 million; Market cap: $30.5 billion; TSINetwork Rating: Above Average; Yield: 4.1%; www.greatwestlifeco.com) acquired the London Life insurance company in 1997.

In response, former London Life policyholders launched a class-action lawsuit accusing Great- West of using $220 million of London Life’s surplus funds, which they felt belonged to them, to finance the deal.

In 2010, a court ordered Great-West to pay $455.7 million in damages. The company appealed the ruling, and last year a higher court cut the award to $284.6 million.
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MANULIFE FINANCIAL $21.24 (Toronto symbol MFC; Shares outstanding: 1.8 billion; Market cap: $39.2 billion; TSINetwork Rating: Above Average; Dividend yield: 2.5%; www.manulife.ca) sells life and other forms of insurance, as well as mutual funds and investment-management services. The company operates globally and has $599 billion of assets under management.

Manulife’s earnings per share rose 25.0% in the three months ended December 31, 2013, to $0.35 from $0.28 a year earlier. However, revenue declined 2.4%, to $5.92 billion from $6.07 billion. Insurance revenue fell mostly due to lower sales in Asia, where the year-earlier quarter was unusually strong ahead of tax changes. That offset higher demand for mutual funds and investment products.

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