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TORSTAR $6.54 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $462.4 million; TSINetwork Rating: Average; Dividend yield: 8.0%; www.torstar.com) continues to attract the interest of Fairfax Financial (Toronto symbol FFH). Fairfax now owns 22.7% of Torstar’s class B non-voting shares, up from 19.3%. Insiders still control Torstar’s class A voting shares.

Fairfax’s CEO, Prem Watsa, has a reputation as a shrewd investor, and this move draws attention to Torstar’s value. Moreover, rising stock markets have cut the deficit in the company’s pension plan, so it won’t have to contribute as much this year. The extra cash will let it keep paying quarterly dividends of $0.13125 a share, for an 8.0% annualized yield.

Torstar is still a buy.

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ISHARES DEX UNIVERSE BOND INDEX FUND $30.37 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 784 bonds in the portfolio have an average term-to-maturity of 9.79 years. The fund’s MER is 0.33%.

The bonds in the index are 66.7% government and 33.3% corporate.

The fund yields 3.2%, compared to the Short-Term Bond Fund’s 2.6%. Its yield-to-maturity is 2.53%, 0.91% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.
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ISHARES DEX SHORT-TERM BOND INDEX FUND $28.60 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through brokers) mirrors the performance of the DEX Short-Term Bond Index.

This index consists of a wide range of investmentgrade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 384 bonds with an average term to maturity of 2.91 years. The bonds in the index are 60.2% government and 39.8% corporate. The fund’s MER is 0.28%.

iShares DEX Short-Term Bond Index Fund yields 2.6%. However, this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, which means the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields.
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ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $23.42 (New York symbol ESR; buy or sell through brokers) has 73.6% of its assets invested in Russia, followed by Poland at 20.3%; Czech Republic, 3.0%; and Hungary, 2.4%.

The fund’s top holdings are Gazprom (Russia: gas utility), 16.0%; Lukoil (Russia: oil), 10.0%; Sberbank (Russia: bank), 9.0%; Magnit OJSC (Russia: retailing), 5.0%; PKO Bank Polski (Poland: banking), 4.3%; Novatek (Russia: natural gas), 3.5%; and MMC Norilsk Nickel (Russia: mining), 3.3%.

iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.67%.
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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $32.00 (Toronto symbol BEP.UN; Units outstanding: 265.2 million; Market cap: $8.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.7%; www.brpfund.com) is buying the wind power assets of the Irish government’s Bord Gais Energy for $960 million.

The purchase includes 321 megawatts of capacity across 17 projects in Ireland and Northern Ireland. Bord Gais has another 125 megawatts under construction and 300 megawatts in the planning stage.

To put the acquisition in perspective, Brookfield currently operates 196 hydroelectric generating stations, 11 wind farms and two natural-gas-fired plants. In all, it has 6,000 megawatts of generating capacity.
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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, including stock trading advice that can help you reduce the risk of more aggressive investing. 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: “Although risk and volatility are magnified with thinly-traded stocks, if you can identify the stocks that will grow and prosper, the rewards could be tremendous.”...

SYMANTEC CORP. (Nasdaq symbol SYMC; www.symantec.com) sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software. In Symantec’s fiscal 2014 third quarter, which ended December 27, 2013, its earnings per share rose 13.3%, to $0.51 from $0.45 a year earlier. The gains were mainly due to savings from a new restructuring plan that includes laying off 30% to 40% of its managers and simplifying its product lines....

CENOVUS ENERGY INC. (Toronto symbol CVE; 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....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice and stock tips 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 received a question from an Inner Circle member about a company that is in the “gaming” business. Glu Mobile develops games for smartphones and tablets and gives them away free, making money by selling additional content to players, and through advertising. Pat examines the company’s business, including its latest release and a recent celebrity partnership. He also looks at whether the company’s shares are likely to go on another run, after rising with the popularity of one game and then falling back....

These two small-cap Manufacturing & Industry picks are riskier than most of the large-cap selections in that sector we cover in Wall Street Stock Forecaster. However, they are both market leaders that are investing in new products and making acquisitions. TENNANT CO. (New York symbol TNC; www.tennantco.com) makes industrial floor-cleaning equipment, including scrubbers, sweepers and polishers. It also manufactures cleaning gear for garages, stadiums, parking lots and city streets....

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 investment advice on stocks and other 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: “There are times when the advantages touted in the marketing for an investment may actually turn out to be the biggest dangers for investors.”...

In our flagship Canadian advisory, The Successful Investor, we recommend that when you select investments in the financial sector, you start by looking at Canada’s big-five banks. But we also recommend diversifying your holdings with non-bank finance stocks. Two weeks ago, we covered one such stock that more aggressive investors might consider, Home Capital (see the article here). Today we examine two conservative non-bank stocks....

MONSANTO CO. $112 (New York symbol MON, Aggressive Growth Portfolio; Manufacturing & Industry sector; Shares outstanding: 524.2 million; Market cap: $58.7 billion; Price-to-sales ratio: 3.9; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.monsanto.com) sells technology-based agricultural products, such as genetically modified seeds, to farmers, grain processors and food producers. The company’s seeds make crops more resistant to pests, diseases and bad weather.

Monsanto gets about 70% of its revenue from genetically modified seeds for corn, soybeans and other crops. The remaining 30% comes from selling herbicides, mainly under the Roundup brand.

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INTERNATIONAL BUSINESS MACHINES CORP. $192 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $192.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.ibm.com) continues to benefit from rising demand for cloud-computing services and analytics software, which helps businesses analyze large amounts of data. However, weaker mainframe computer sales are offsetting these gains.

In the three months ended March 31, 2014, IBM earned $2.6 billion, down 21.7% from $3.4 billion a year earlier. The company spent a high $8.2 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share fell at a slower pace of 15.3%, to $2.54 from $3.00.

Revenue declined 3.9%, to $22.5 billion from $23.4 billion. IBM gets two-thirds of its revenue from overseas. If you adjust for foreign exchange rates, revenue declined by 1%.

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L BRANDS INC. $54 (New York symbol LB; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 291.0 million; Market cap: $15.7 billion; Price-to-sales ratio: 1.5; Dividend yield: 2.5%; TSINetwork Rating: Average; www.lb.com) owns the Victoria’s Secret lingerie chain and the Bath & Body Works personal care products stores. Smaller chains include La Senza (lingerie) in Canada and Henri Bendel (jewellery and accessories) in the U.S.

The company’s sales rose 3.2% in March 2014, to $923.7 million from $894.8 million in March 2013.

However, that’s mainly due to promotional discounts, as cold weather hurt customer traffic. Overall same-store sales fell 1%. Victoria’s Secret reported that its same-store sales declined 1% during the month, while its online and catalogue sales rose 1%. Bath & Body Works’ same-store sales fell 2%.

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MCDONALD’S CORP. $99 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 989.0 million; Market cap: $97.9 billion; Price-to-sales ratio: 3.6; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.mcdonalds.com) plans to spur its sales in China by adding new menu items that better suit local tastes, such as rice dishes and green tea ice cream. The company is also introducing more value-priced items as China’s economic growth slows.

In addition, the company plans to add 300 new outlets to the 2,000 it currently operates in China this year.

It is also selling more of these locations to local owners. McDonald’s aims to have franchisees operate 20% of its Chinese outlets by 2015, up from 12% last year.

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SNAP-ON INC. $117 (New York symbol SNA; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 58.2 million; Market cap: $6.8 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.5%; TSINetwork Rating: Average; www.snapon.com) earned $95.9 million, or $1.62 a share, in the quarter ended March 29, 2014. That’s up 15.8% from $82.8 million, or $1.40 a share, a year earlier. Sales rose 6.2%, to $787.5 million from $741.7 million.

These improvements are partly due to Challenger Lifts, which Snap-On bought in May 2013. Challenger, a maker of systems that raise cars off the ground, added $15.2 million to Snap-On’s sales in the latest quarter.

Snap-On is a hold.

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DUN & BRADSTREET CORP. $107 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 37.6 million; Market cap: $4.0 billion; Price-to-sales ratio: 2.5; Dividend yield: 1.6%; TSINetwork Rating: Average; www.dnb.com) has paid an undisclosed sum for the social media operations of Fliptop, whose software helps businesses analyze customer data.

This technology tracks mentions of businesses by users of social media websites like Facebook. It will add to Dun & Bradstreet’s credit reports, which mainly focus on traditional information, such as a company’s financial condition and market share. Dun & Bradstreet now has over 230 million businesses in its databases.

Dun & Bradstreet is a buy.

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J.P. MORGAN CHASE & CO.
$56 (New York symbol JPM;
Income Portfolio, Finance sector;
Shares outstanding: 3.8 billion;
Market cap: $212.8 billion; Price-to-sales ratio: 2.2;
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WELLS FARGO & CO. $50 (New York symbol
WFC; Conservative Growth and Income Portfolios,
Finance sector; Shares outstanding: 5.3 billion;
Market cap: $265.0 billion; Price-to-sales ratio: 3.2;
Dividend yield: 2.8%; TSINetwork Rating: Average;
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SHERWIN-WILLIAMS CO. $202 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 100.3 million; Market cap: $20.3 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.1%; TSINetwork Rating: Above Average; www.sherwin-williams.com) has dropped its $2.3-billion offer to buy Mexican paint maker Comex, as regulators seemed unlikely to approve the deal. Sherwin did purchase Comex’s U.S. and Canadian operations and stores for $165 million in September 2013.

The new operations increased Sherwin’s revenue by 9.2% in the first quarter of 2014, to $2.4 billion from $2.2 billion a year earlier. However, costs to integrate the new stores cut its earnings by 0.6%, to $115.5 million from $116.2 million. Due to fewer shares outstanding, earnings per share rose 2.7%, to $1.14 from $1.11.

The company will likely earn $8.72 a share in 2014, up 20.1% from 2013, but the stock trades at a high 22.7 times that forecast.

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ALLIANT ENERGY CORP. $58 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 110.9 million; Market cap: $6.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.5%; TSINetwork Rating: Average; www.alliantenergy.com) sells electricity and natural gas to 1.4 million residential and business customers in Wisconsin, Iowa and southern Minnesota.

In September 2013, the company agreed to sell its Minnesota electric and natural gas distribution businesses in two separate deals. These operations represent less than 4% of its customer base. Alliant will hang on to its power plants in Minnesota.

In all, the company will receive $128 million when these deals close later this year. The cash will help it upgrade its plants to comply with tougher environmental regulations. Right now, coal accounts for 47% of Alliant’s fuel needs, followed by natural gas (39%), wind (8%), oil (5%) and hydroelectric (1%). The company also buys power from nuclear plants and other suppliers.

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WAL-MART STORES INC. $78 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $249.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart.com) continues to expand into financial services. The retailer currently offers its shoppers cheque cashing, bill payment and tax-preparation services, as well as money orders and prepaid debit cards.

The company has now teamed up with Ria Money Transfer, a subsidiary of Euronet Worldwide, to let shoppers transfer money. Using this service, called “Walmart-2-Walmart,” clients can move funds to and from over 4,000 of the company’s U.S. stores.

Many of Wal-Mart’s clients do not have bank accounts, so this new service should help bring more of these customers into its stores.

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HILLSHIRE BRANDS CO. $36 (New York symbol HSH; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 122.4 million; Market cap: $4.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.9%; TSINetwork Rating: Average; www.hillshirebrands.com) makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats.

In June 2012, the old Sara Lee Corp. spun off its international coffee and tea business, D.E. Master Blenders, as a separate company. The remaining operations became Hillshire Brands.

Hillshire gets 74% of its sales from supermarkets and other mass retailers; Wal-Mart is its largest single customer, accounting for 25% of its total sales. Restaurants supply the other 26%.

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KRAFT FOODS GROUP INC. $57 (Nasdaq symbol KRFT; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 596.3 million; Market cap: $34.0 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.kraftfoodsgroup.com) makes a variety of grocery products, including Kraft macaroni and cheese, Oscar Mayer meats, Philadelphia cream cheese, Maxwell House coffee, Jell-O desserts and Miracle Whip salad dressing.

Unlike Mondelez, Kraft prefers to focus on North America: Wal-Mart accounts for 26% of its sales. That hurts its growth prospects, but it also cuts its currency risk.

Kraft continues to reduce its costs following the breakup with Mondelez, mainly by consolidating facilities, laying off employees and eliminating less-profitable products. These moves are helping Kraft offset rising ingredient costs.

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