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SUN LIFE FINANCIAL $38.90 (Toronto symbol SLF; Shares outstanding: 609.4 million; Market cap: $23.7 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.sunlife.ca) sells savings, retirement, pension and life insurance products to individuals and corporations.

Sun Life mainly operates in Canada, the U.S. and the U.K., but it continues to expand into Asia. It has $640 billion of assets under management.

Last year, the company sold its riskier, moneylosing U.S. annuity business, which offers products that guarantee minimum long-term returns even if markets fall.
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TORSTAR $5.67 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $402.8 million; TSINetwork Rating: (NEW) Average; Dividend yield: 9.3%; www.torstar.com) continues to cut costs as more people get their news from the Internet.

This secular trend is working against newspapers and print advertising. As a result, we’ve cut Torstar’s TSINetwork Rating from “Above Average” to “Average.” However, we feel its lower costs put it in a good position to rebound as the economy grows. The company also owns oneof- a-kind trophy assets like The Toronto Star, and it could unlock some of its hidden value by spinning off its Harlequin book business. As well, the dividend seems safe for now.

Torstar is a buy....

VERESEN $16.24 (Toronto symbol VSN; Shares outstanding: 201.5 million; Market cap: $3.3 billion; TSINetwork Rating: Average; Yield: 6.2%) owns pipelines, power plants and gas-processing facilities across North America.

A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. It also owns the Alberta Ethane Gathering System, 42.7% of the Aux Sable NGL plant and the Hythe/Steeprock natural gas gathering and processing complex in the Cutbank Ridge region of Alberta and B.C.

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PEMBINA PIPELINE $39.96 (Toronto symbol PPL; Shares outstanding: 320.0 million; Market cap: $12.8 billion; TSINetwork Rating: Average; Div. yield: 4.2%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil.

Pembina also bought rival Provident Energy in 2012 for $3.2 billion, and that’s now paying off. Provident extracts, transports and stores natural gas liquids (NGLs).

In the quarter ended December 31, 2013, Pembina’s cash flow jumped 39.6%, to $194.0 million from $139.0 million a year earlier. Cash flow per share gained 29.2%, to $0.62 from $0.48, on more shares outstanding.
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BCE INC. $48.33 (Toronto symbol BCE; Shares outstanding: 775.9 million; Market cap: $37.4 billion; TSINetwork Rating: Above Average; Dividend yield: 5.1%; www.bce.ca) earned $540 million, or $0.70 a share, in the three months ended December 31, 2013. That’s up 16.4% from $464 million, or $0.60 a share, a year earlier.

Revenue rose 4.3%, to $5.4 billion from $5.2 billion. In addition to the contribution from recently acquired Astral Media, the company is attracting more wireless, high-speed Internet and digital TV customers. That’s helping offset lower revenue from traditional phones.

The company added 93,700 new wireless subscribers, net of cancellations, in the latest quarter (it now has 7.8 million users across Canada). That’s down 10.8% from a year earlier.
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IMPERIAL OIL $50.82 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $42.7 billion; TSINetwork Rating: Average; Dividend yield: 1.0%; www.imperialoil.ca) is a major integrated oil company with oil sands projects in Alberta and conventional oil and gas operations across Western Canada. It also operates four refineries and 1,850 Esso gas stations.

In the three months ended December 31, 2013, Imperial produced an average of 329,000 barrels of oil equivalent a day, up 15.4% from 285,000 barrels a year earlier. The gain was mainly due to the start-up of its Kearl oil sands project in April 2013.

The higher production increased Imperial’s revenue by 7.2%, to $8.4 billion from $7.8 billion. However, insufficient pipeline capacity has made it difficult for the company to sell its oil in higher-priced markets. That cut its earnings per share by 1.5%, to $1.24 from $1.26. Cash flow per share fell 11.7%, to $1.67 from $1.89.
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Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks to buy 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....

Investors can gain international exposure through multinationals that trade on New York as American Depositary Receipts (ADRs). To qualify as ADRs, they have to conform to U.S. accounting and listing requirements, which cuts their risk....

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 many numbers and statistics frequently prove to be of limited value in judging stocks, there is one that is often undervalued: market cap.”...

This Canadian technology firm is adapting to fast-changing markets by making acquisitions, aggressively cutting costs and eliminating slower-selling products. It is also adding to its backlog as it sheds a U.S. government contract that was plagued by political interference....

BELL ALIANT INC. (Toronto symbol BA; 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....

TRANSCANADA CORP. $49 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.4 million; Market cap: $34.7 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.transcanada.com) could begin work on its Keystone XL oil pipeline later this year after the U.S. State Department said it wouldn’t significantly harm the environment. However, the U.S. government will probably postpone a final decision until after the November mid-term elections. So far, TransCanada has spent $2 billion on Keystone XL. If the U.S. rejects the plan, TransCanada could use some of the steel pipe, valves and pumps on its other pipelines. That would limit any potential writedown. TransCanada is a buy.

IGM FINANCIAL INC. $55 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 252.3 million; Market cap: $13.9 billion; Price-to-sales ratio: 5.3; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www. igmfinancial.com) is Canada’s largest independent mutual fund company....

DIEBOLD INC. $39 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.3 million; Market cap: $2.5 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.9%; TSINetwork Rating: Average; www.diebold.com) is a leading maker of automated teller machines (ATMs). It also makes safes, vaults and building-security systems. The company gets 52% of its revenue from overseas.

Diebold’s revenue rose 10.1%, from $2.7 billion in 2009 to $3.0 billion in 2012. That’s mainly because of pent-up ATM demand in the wake of the 2008 financial crisis. As well, U.S. banks had to upgrade their ATMs to comply with the Americans with Disabilities Act. However, revenue in 2013 fell 4.5% to $2.9 billion, due to slowing sales of ATMs to regional U.S. banks and unfavourable currency rates.

The company earned $0.97 a share (or a total of $65 million) in 2009, but it lost $0.37 a share (or $25 million) in 2010 due to goodwill writedowns and other charges. Earnings rebounded to $2.21 a share (or $143 million) in 2011, but additional writedowns cut them to $1.20 a share (or $77 million) in 2012.
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IDEXX LABORATORIES INC. $122 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 51.6 million; Market cap: $6.3 billion; Price-to-sales ratio: 4.8; No dividends paid; TSINetwork Rating: Average; www. idexx.com) earned $3.58 a share in 2013, up 12.6% from $3.18 in 2012. Sales rose 6.5%, to $1.4 billion from $1.3 billion. These gains are mainly because veterinarians are buying more of Idexx’s equipment for detecting diseases in pets.

The company recently launched two new products that should increase this year’s sales by 7.5% to 8.5%. Its earnings should also rise to $3.85 a share. However, the stock has jumped 32% in the past year and now trades at a high 31.7 times the 2014 forecast.

Idexx is still a hold....

INTERNATIONAL BUSINESS MACHINES CORP. $193 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $193.0 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.ibm.com) continues to expand its cloud-computing businesses.

It recently paid an undisclosed sum for Cloudant, a private firm that creates large databases on remote servers. IBM feels Cloudant’s technology will also enhance its analytics services, which help businesses analyze large amounts of data and improve their efficiency.

The company expects its cloud revenue to reach $7 billion in 2015. That’s equal to 7% of its overall 2013 revenue of $99.8 billion.
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3M COMPANY $133 (New York symbol MMM; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 662.7 million; Market cap: $88.1 billion; Price-to-sales ratio: 3.0; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.3m.com) feels that rising pollution in China will spur demand for its face masks and water filters. As a result, the company now predicts that its Chinese revenue will rise 15% annually over the next five years. That’s much higher than 3M’s overall annual revenue growth rate of around 5%.

3M is a buy.

ALCOA INC. $12 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.1 billion; Market cap: $13.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.0%; TSINetwork Rating: Average; www.alcoa.com) is doubling production of aluminum truck wheels at its plant in Hungary. Demand for these wheels is strong, as they are much more resistant to rust and corrosion than steel wheels. Engineered products like these also cut Alcoa’s reliance on selling less-profitable bulk aluminum.

The company will spend $13 million to upgrade the facility. That’s equal to 4% of the $357 million, or $0.33 a share, that Alcoa earned in 2013. It expects to complete the project in early 2015.

Alcoa is a buy.
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WAL-MART STORES INC. $76 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $243.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart.com) will soon let customers trade in their used video games for a credit they can use to buy other merchandise. The company will then refurbish the games and resell them in its stores.

This move should help Wal-Mart attract more customers and could spur video game console sales. As well, profit margins on used games tend to be much higher than those on new games.

Wal-Mart is a buy.
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BOEING CO. $124 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 743.4 million; Market cap: $92.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www. boeing.com) has discovered hairline cracks on the wings of 40 of its 787 Dreamliner passenger planes that are currently in production.

The problem, which does not affect planes already in service, is because the Japanese company that makes the wings changed its manufacturing process. Boeing feels it can make repairs quickly, which would let it meet its target of delivering 110 Dreamliners this year.

Boeing is a buy....

FAIR ISAAC CORP. $54 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 34.9 million; Market cap: $1.9 billion; Price-to-sales ratio: 2.7; 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. The company also makes software that helps credit card issuers control fraud and analyze cardholder spending patterns.

In its fiscal 2014 first quarter, which ended December 31, 2013, Fair Isaac’s earnings fell 17.6% to $26.2 million, or $0.73 a share. A year earlier, it earned $31.8 million, or $0.88. Revenue fell 3.0%, to $184.3 million from $190.0 million. The declines mainly resulted from a big order in the year-earlier quarter.

The company also raised its research spending by 24.3% in the latest quarter, to $18.1 million (or 9.8% of revenue) from $14.6 million (or 7.7%) a year earlier.
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BROADRIDGE FINANCIAL SERVICES INC. $37 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 119.4 million; Market cap: $4.4 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 85% of all proxy votes in the U.S.

In its fiscal 2014 second quarter, which ended December 31, 2013, Broadridge earned $31.2 million, up 43.1% from $21.8 million a year earlier. Earnings per share rose 47.1%, to $0.25 from $0.17, on fewer shares outstanding.

Revenue gained 5.6%, to $520.6 million from $493.2 million. Revenue from contracts that pay Broadridge recurring fees (two-thirds of the total) rose 9% and accounted for almost all of the overall gain. The remaining third comes from one-time events, such as special shareholder meetings and distributing information when a mutual fund changes managers.
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GENERAL MILLS INC. $51 (New York symbol GIS, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 614.5 million; Market cap: $31.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.generalmills.com) is one of the world’s largest food makers. Its top brands include Big G (cereal), Green Giant (canned and frozen vegetables), Pillsbury (baking dough), Old El Paso (tacos), Progresso (soups and salads) and Yoplait (yogurt).

In its fiscal 2014 third quarter, which ended February 23, 2014, the company’s sales fell 1.2%, to $4.38 billion from $4.43 billion a year earlier. General Mills raised its prices to cover rising costs, but it sold less food, partly because unusually cold winter weather kept U.S. shoppers at home. Unfavourable currency exchange rates, particularly in Venezuela, also weighed on sales.

Earnings rose 3.1%, to $410.6 million from $398.4 million. Per-share earnings gained 6.7%, to $0.64 from $0.60, on fewer shares outstanding. However, if you exclude unusual items, such as gains on hedging contracts General Mills uses to lock in wheat and corn prices, per-share earnings fell 6.1%, to $0.62 from $0.66.
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CINTAS CORP. $59 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 120.1 million; Market cap: $7.1 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.3%; TSINetwork Rating: Average; www.cintas .com) is selling its document-shredding operations to Toronto-based Shred-it International. In exchange, Cintas will receive 42% of the combined company, which will use the Shred-it brand, plus $180 million in cash. To put that in context, Cintas earned $84.6 million, or $0.69 a share, in the quarter ended February 28, 2014.

The partners plan to make this business more profitable by combining plants and pick-up routes. The sale will also let Cintas focus on its larger uniform rental and office cleaning operations.

Cintas is a buy....

PHILIPS ELECTRONICS N.V. ADRs $34 (New York symbol PHG; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 913.3 million; Market cap: $31.1 billion; Priceto- sales ratio: 1.0; Dividend yield: 2.9%; TSINetwork Rating: Average; www.philips.com) has agreed to merge its LED (light emitting diode) lighting product business in Saudi Arabia with local firm General Lighting.

As part of the deal, Philips will also contribute $235 million, which is equal to 42% of the $566 million, or $0.59 per ADR, that it earned in the quarter ended December 31, 2013. In return, Philips will receive a 51% stake in the combined company.

Teaming up with a well-established local firm should help Philips take advantage of fast-growing demand for LED lighting, particularly as the Saudi government aims to cut its energy use.
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