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SHAWCOR LTD. $39 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 60.0 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.3%; TSINetwork Rating: Average; www.shawcor.com) expects its earnings to fall about 50% in the fourth quarter of 2013, compared to the third quarter.

That’s mainly because it completed most of a major pipeline-coating contract in Asia in the third quarter. As well, the operators of new pipeline projects in the North Sea and Brazil have delayed their start-up. As a result, ShawCor will now begin work on these contracts in the first quarter of 2014.

ShawCor is still a buy....

CANADIAN NATIONAL RAILWAY CO. $60 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 836.0 million; Market cap: $50.2 billion; Priceto- sales ratio: 4.8; Dividend yield: 1.4%; TSINetwork Rating: Above Average; www.cn.ca) expects that its operating ratio crept up to around 63% in 2013 from 62.9% in 2012. (Operating ratio is calculated by dividing a company’s regular operating costs by its revenue. The lower the ratio, the better.)

CN continues to buy fuelefficient locomotives and run longer trains. These moves should cut its operating ratio to around 60% over the next three years.

CN is also benefiting from a lack of pipeline capacity, which is prompting oil producers to ship by rail. Higher demand for automotive equipment and building materials should also increase its shipping volumes. As a result, CN’s earnings should rise 13.2%, from a projected $3.10 a share in 2013 to $3.51 in 2014. The stock trades at a reasonable 17.1 times the 2014 estimate.
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BLACKBERRY LTD. $9.36 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.6 million; Market cap: $4.9 billion; Price-to-sales ratio: 0.6; No dividends paid; TSINetwork Rating: Speculative; www.blackberry.com) has sold an additional $250 million worth of convertible debentures (all amounts except share price and market cap in U.S. dollars) to its largest shareholder, Fairfax Financial Holdings (Toronto symbol FFH).

Fairfax now holds $500 million of these debentures, which it can convert into BlackBerry common shares at $10.00 a share. If it did, Fairfax would own 17.6% of the total shares outstanding.

The extra cash should help the smartphone maker complete its restructuring, which includes cutting 40% of its workforce and focusing on corporate and government clients. However, the stock will remain volatile until its revenue and earnings improve.
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AGRIUM INC. $104 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 144.5 million; Market cap: $15.0 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.2%; TSINetwork Rating: Average; www.agrium.com) makes nitrogen-based fertilizers from natural gas. That could weaken its earnings growth, because the particularly cold North American winter has pushed up gas prices.

However, Agrium uses hedging contracts to lock in gas prices, which cuts its risk. Moreover, it gets 70% of its revenue by selling seeds and fertilizers to farmers through its 1,250 stores in North America, South America and Australia. That further reduces its gas-price exposure.

Agrium is a buy....

CANADIAN TIRE CORP. $98 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.2 million; Market cap: $7.9 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www. canadiantire.ca) recently sold 16.9% of CT Real Estate Investment Trust (Toronto symbol CRT.UN) through an initial public offering. CT REIT holds 72% of Canadian Tire’s real estate assets, including 255 stores and one distribution centre. The company received $279.3 million for these shares.

Meanwhile, Canadian Tire earned $145.5 million in the three months ended September 28, 2013, up 10.7% from $131.4 million a year earlier. Earnings per share gained 11.2%, to $1.79 from $1.61, on fewer shares outstanding. Sales rose 4.5%, to $3.0 billion from $2.8 billion.

Strong demand for automotive and kitchen products pushed up same-store sales by 2.0% at the company’s 491 Canadian Tire stores. Same-store sales rose 6.3% at its 415 sports outlets, partly due to the Pro Hockey Life chain, acquired in August 2013. Same-store sales at the 386-store Mark’s clothing chain gained 4.3%.
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MOLSON COORS CANADA INC. (Toronto symbols TPX.A $62 and TPX.B $62; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 183.9 million; Market cap: $11.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.3%; TSINetwork Rating: Average; www.molsoncoors.com) continues to make progress integrating StarBev LP, which it bought for $3.4 billion in June 2012 (all amounts except share prices and market cap in U.S. dollars). StarBev owns nine breweries in central and eastern Europe.

These savings are helping Molson Coors offset slowing beer demand. In the third quarter of 2013, its earnings rose 7.7%, to $268.1 million from $248.9 million a year earlier. Due to more shares outstanding, earnings per share gained 5.8%, to $1.45 from $1.37. However, sales fell 2.0%, to $1.17 billion from $2.0 billion.

The class B shares have less voting power to elect directors than the class A shares, but they are more liquid and receive the same dividend.
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CANADIAN PACIFIC RAILWAY LTD. $164 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 175.4 million; Market cap: $28.8 billion; Price-to-sales ratio: 4.8; Dividend yield: 0.9%; TSINetwork Rating: Above Average; www.cpr.ca) is selling 26% of the track miles of its Dakota, Minnesota & Eastern (DM&E) railway, which carries grain, fertilizer and other products between Minnesota and South Dakota.

The company acquired DM&E in 2008 for $1.5 billion. It decided to sell this portion as part of its new plan to focus on its more profitable rail lines. It will receive $210 million U.S. when the deal closes later this year. That’s equal to 69% of the $331 million (Canadian), or $1.88 a share, that CP earned in the three months ended September 30, 2013.

CP Rail is a buy....

DUNDEE CORP. $19 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 54.1 million; Market cap: $1.0 billion; Price-to-sales ratio: 2.8; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) owns businesses in the wealth management, real estate, natural resource and agriculture industries.

In the three months ended September 30, 2013, Dundee earned $2.6 million, or $0.01 a share. That’s a big drop from the $21.2 million, or $0.34 a share, it earned a year earlier. Dundee’s earnings fell on higher costs as it expands its agricultural businesses. Revenue fell 14.5%, to $41.2 million from $48.2 million.

Dundee is still a buy....

CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $37 and CU.X [class B voting] $37; Income Portfolio, Utilities sector; Shares outstanding: 260.1 million; Market cap: $9.6 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.9%; 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 page 14) owns 53.1% of the company.

In the three months ended September 30, 2013, Canadian Utilities earned $127 million, up 8.5% from $117 million a year earlier. Earnings per share rose 4.8%, to $0.44 from $0.42, on more shares outstanding.

Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 6.7%. Revenue gained 5.7%, to $755 million from $714 million, mainly due to higher power rates.
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ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $47 and ACO.Y [class II voting] $47; Income Portfolio, Utilities sector; Shares outstanding: 115.2 million; Market cap: $5.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.atco.com) holds 53.1% of Canadian Utilities (see page 15). 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 the three months ended September 30, 2013, ATCO’s revenue rose 3.5% to $1.02 billion from $981.0 million a year earlier. That’s mainly because higher power rates in Alberta increased Canadian Utilities’ contribution. The structures division’s revenue fell 2.5% after it completed three contracts to build temporary housing and offices at an Australian liquefied natural gas (LNG) project in late 2012 and early 2013.

Earnings jumped 63.0%, to $132 million, or $1.15 a share, from $81 million, or $0.71. Without unusual items, earnings rose 6.3%.
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CANADA BREAD CO. LTD. $72 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.canadabread.ca) recently sold its Olivieri Foods business, which makes pasta and sauces, to Spain’s Ebro Foods. The company received $120 million, increasing its cash holdings to $308 million. Its recent $8.00-a-share special dividend cost it $203.2 million.

The special dividend would seem to indicate that Maple Leaf (see page 13) is close to selling its 90.0% stake in Canada Bread. If not, Canada Bread would likely invest the cash from the Olivieri sale in its own bakeries or pursue acquisitions.

But even if Maple Leaf hangs on to Canada Bread, its future looks bright. It recently opened a $100-million bakery in Hamilton, Ontario, which let it close three outdated facilities in Toronto and shift their production to the new plant.
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MAPLE LEAF FOODS INC. $16 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 140.1 million; Market cap: $2.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.0%; TSINetwork Rating: Average; www.mapleleaf.ca) is Canada’s largest food processing company. It mainly sells its products, including fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands.

The company recently said it plans to sell its 90.0% stake in Canada Bread (see right), Canada’s second-largest producer of baked goods after Weston Bakery.

Canada Bread supplies a third of Maple Leaf’s sales. Maple Leaf’s $1.6-billion stake in this business is equal to 73% of its $2.2-billion market cap.
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TECK RESOURCES LTD. $27 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 576.3 million; Market cap: $15.6 billion; Price-tosales ratio: 1.6; Dividend yield: 3.3%; TSINetwork Rating: Average; www.teck.com) is down 27.0% since we made it our #1 pick for 2013.

That’s mainly because slowing industrial activity, mainly in Asia, has hurt demand for Teck’s metallurgical coal, a key ingredient in steelmaking.

The company sold a record 7.6 million tonnes of metallurgical coal in the third quarter of 2013, up 36.5% from a year earlier. However, coal prices fell 28.0%, to $139 U.S. a tonne from $193. The uncertain economy has also hurt prices for Teck’s other products, including copper and zinc.
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CAE INC. $14 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 261.4 million; Market cap: $3.7 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.7%; TSINetwork Rating: Average; www.cae.com) began operating in 1947 as Canadian Aviation Electronics Ltd. It originally made ground-communication equipment and antennas for the Royal Canadian Air Force.

In 1952, the company began making flight simulators for air force pilots. It’s now the world’s leading maker of flight simulators for commercial and military aircraft. CAE made about half of the commercial aircraft simulators in use today and has 16% of the military simulator market.

Sales of simulators to airlines tend to move up and down with the economy. To steady its revenue, CAE began training pilots in 2001. It now trains over 100,000 pilots and crew members a year at 50 schools worldwide.
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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 a specific advice on successful investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away....

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....

TRANSCONTINENTAL INC. (Toronto symbol TCL.A; www.tctranscontinental.com) is Canada’s leading printer of flyers, magazines, newspapers and books. This business accounts for 67% of its revenue and 85% of its earnings. The remaining 33% of revenue and 15% of earnings comes from publishing 35 magazines and 175 daily and weekly newspapers....

BELL ALIANT INC. $26.56 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $6.1 billion; TSINetwork Rating: Average; Dividend yield: 7.2%; www.aliant.ca) continues to replace copper wires with fibre optic cable. It now has 944,914 high-speed Internet users, up 3.4% from a year ago, and 163,264 digital TV customers, up 52.0%.

In the three months ended September 30, 2013, Bell Aliant’s revenue fell 0.4%, to $694.9 million from $697.4 million a year earlier. Before one-time items, earnings fell 6.7%, to $0.42 a share from $0.45. However, cash flow (after capital expenditures) jumped 28.0%, to $0.64 a share from $0.50.

The stock trades at 16.6 times the company’s likely 2013 earnings of $1.60 a share. The $1.90 dividend still seems safe and yields 7.2%.
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CANADIAN REIT $43.32 (Toronto symbol REF.UN; Units outstanding: 68.7 million; Market cap: $3.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.8%; www.creit.ca) owns 194 properties, including retail, industrial and office buildings, across Canada and in Chicago. These holdings contain over 19.7 million square feet of leasable area. The trust’s occupancy rate is 94.9%.

In the three months ended September 30, 2013, Canadian REIT’s revenue rose 6.8%, to $94.3 million from $88.3 million a year earlier. Cash flow per unit gained 8.8%, to $0.62 from $0.57.

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H&R REIT $21.22 (Toronto symbol HR.UN; Units outstanding: 269.6 million; Market cap: $5.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.4%; www.hr-reit.com) owns stakes in 42 office buildings, 112 industrial properties and 164 shopping malls across Canada. The trust has a 98.2% occupancy rate.

In March 2013, H&R finished building The Bow, a $1.33-billion, two-million-square-foot office complex in Calgary. Encana Corp. has already leased the entire building for 25 years.

In April 2013, H&R completed the purchase of 27 properties from Primaris REIT for about $3.1 billion. These assets include the aging 567,000-square-foot Dufferin Mall in Toronto’s west end, which has huge redevelopment potential. As well, eight of the 27 properties now have Target stores as their main tenants.
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ISHARES AUSTRALIA INDEX FUND $24.15 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 71 largest Australian stocks. Its MER is 0.51%.

The fund’s top holdings include Commonwealth Bank of Australia, 11.4%; BHP Billiton, 10.9%; Westpac Banking Corp., 9.0%; Australia and New Zealand Banking Group, 8.0%; National Australia Bank, 7.4%; Wesfarmers, 3.9%; Woolworths, 3.8%; CSL Ltd., 3.0%; Rio Tinto, 2.7%; Woodside Petroleum, 2.3%; Telstra Group, 2.1%, Westfield Group, 1.9%; and Macquarie Group, 1.4%.

Australia benefits from its stable banking and political systems. It is also rich in natural resources, and it’s close to key Asian markets with vast potential, including India and China.
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TRANSCANADA CORP. $47.76 (Toronto symbol TRP; Shares outstanding: 707.0 million; Market cap: $33.6 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.transcanada.com) recently completed the purchase of another Ontario solar power facility from Canadian Solar (Nasdaq symbol CSIQ).

TransCanada now owns four of the nine solar farms it agreed to buy from Canadian Solar in 2011. It expects to take possession of the remaining five by the end of 2014. In all, it will pay about $500 million.

The company has 20-year deals to sell the power from these nine solar farms, which cuts the risk of this investment.
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MANITOBA TELECOM SERVICES INC. $29.70 (Toronto symbol MBT; Shares outstanding: 76.8 million; Market cap: $2.3 billion; TSINetwork Rating: Average; Dividend yield: 5.7%; www.mts.ca) plans to build a new data-storage facility in Manitoba that will help it profit from rising demand for cloud computing services.

Technology firms will be able to rent space in this building to house their servers and related equipment. Manitoba Telecom will also help these tenants manage and operate their systems.

The company will spend $50 million to build this facility. That’s equal to 2.0 times the $25.4 million, or $0.38 a share, that Manitoba Telecom earned in the three months ended September 30, 2013. The company expects to complete this project in 2015.
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ISHARES MSCI BRAZIL INDEX FUND $42.51 (New York Exchange symbol EWZ; buy or sell through brokers) is an exchange traded fund that is designed to track the Brazilian stock market.

Top holdings are Petrobras (oil and gas), 10.7%; Vale do Rio Doce (mining), 9.1%; Cia Itau Unibanco Holding (banking), 7.4%; Cia de Bebidas das Americas (beer and beverages), 6.9%; Banco Brandesco, 5.5%; and BRF SA (food), 3.5%.

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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $45.70 (New York Exchange symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that are mainly traded on the Santiago Stock Exchange.

The fund’s top holdings are S.A.C.I. Falabella (retail), 9.2%; Empresas Copec SA (conglomerate), 8.6%; Enersis AS (electricity), 8.4%; Empresa Nacional de Electricidad (electricity), 6.7%; Cencosud SA (retailer), 5.7%; LATAM Airlines, 5.6%; Banco Santander Chile (banking), 4.7%; Banco de Chile, 4.3%; Empresas CMPC (pulp and paper), 4.2%; and Quimica y Minera de Chile (mining), 3.5%.

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