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ISHARES MSCI GERMANY FUND $30.82 (New York Exchange symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index.

This index aims to replicate 85% of the total market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.

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ISHARES MSCI SOUTH KOREA INDEX FUND $60.73 (New York Exchange symbol EWY; buy or sell through brokers) aims to track the MSCI Korea Index.

The ETF’s top holdings are Samsung Electronics, 20.1%; Hyundai Motor Co., 5.5%; Posco (steel), 3.4%; Naver (Internet content), 3.2%; SK Hynix Semiconductor, 3.1%; Shinhan Financial, 3.1%; Hyundai Mobis (auto parts), 3.1%; Kia Motors, 2.3%; LG Chemical, 2.2%; and KB Financial, 2.1%.

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ISHARES MSCI EMERGING MARKETS INDEX FUND $39.78 (New York symbol EEM; buy or sell through brokers) is an ETF that aims to track the MSCI Emerging Markets Index.

Its geographic breakdown includes China, 18.3%; South Korea, 16.0%; Taiwan, 11.7%; Brazil, 10.6%; South Africa, 7.4%; India, 6.4%; Russia, 6.2%; Mexico, 5.4%; Malaysia, 3.9%; and Indonesia, 2.2%.

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ISHARES MSCI JAPAN INDEX FUND $12.04 (New York Exchange symbol EWJ; buy or sell through brokers; us.ishares.com) is an exchange traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index.

The ETF’s top holdings include Toyota, 6.1%; Mitsubishi UFJ Financial, 3.1%; Softbank Corp., 3.0%; Honda Motor, 2.5%; Sumitomo Mitsui Financial, 2.4%; Mizuho Financial Group, 1.8%; Hitachi, 1.4%; Takeda Pharmaceutical, 1.3%; Canon, 1.3%; and Mitsubishi Estate Co., 1.3%.

The fund’s industry breakdown is as follows: Financials, 21.5%; Consumer Discretionary, 20.9%; Industrials, 19.3%; Information Technology, 10.4%; Consumer Staples, 6.3%; Health Care, 6.0%; Materials, 5.9%; Telecommunication Services, 5.8%; Utilities, 2.5%; and Energy, 1.2%.
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PENGROWTH ENERGY $6.66 (Toronto symbol PGF; Shares outstanding: 519.8 million; Market cap: $3.5 billion; TSINetwork Rating: Average; Dividend yield: 7.2%; www.pengrowth.com) recently sold off $1 billion of less-important properties to raise funds for its $590-million Lindbergh oil sands project in Alberta.

As a result, Pengrowth’s average daily production fell 11.7% in the three months ended September 30, 2013, to 83,275 barrels of oil equivalent (57% gas, 43% oil) from 94,284 a year earlier. But thanks to higher prices, cash flow per share rose 10.7%, to $0.31 from $0.28.

The stock is up 33% since the start of 2013, but it still trades at just 5.8 times the company’s forecast 2014 cash flow of $1.14 a share.
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ENERPLUS CORP. $18.97 (Toronto symbol ERF; Shares outstanding: 202.1 million; Market cap: $3.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.7%) produces an average of 87,729 barrels of oil equivalent a day (52% gas and 48% oil).

The company’s properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia.

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ARC RESOURCES $28.78 (Toronto symbol ARX; Shares outstanding: 313.6 million; Market cap: $9.2 billion; TSINetwork Rating: Speculative; Dividend yield: 4.2%; www.arcresources.com) produces oil and natural gas in Western Canada. The company’s average daily output of 94,915 barrels of oil equivalent (including gas) is weighted 62% to gas and 38% to oil.

In the quarter ended September 30, 2013, ARC’s cash flow per share rose 29.1%, to $0.71 from $0.55 a year earlier. Production gained 5.6%, plus its gas prices rose 20.0% and oil prices increased 24.6%.

ARC’s long-term debt is $739.8 million, or a low 8.0% of its market cap. It trades at 8.6 times its forecast 2014 cash flow of $3.36 a share.
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BANK OF NOVA SCOTIA $64.40 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $77.9 billion; TSINetwork Rating: Above Average; Div. yield: 3.9%, www.scotiabank.com) is the third-largest of Canada’s five big banks, with assets of $743.8 billion.

In its fiscal 2013 fourth quarter, which ended October 31, 2013, the bank earned $1.30 a share, up 10.2% from $1.18 a year earlier.

Higher loan demand and an increase in deposits pushed up the Canadian banking division’s earnings by 23.3%. That includes the contribution from ING Direct, which Bank of Nova Scotia bought for $3.1 billion in late 2012. ING Direct offers a variety of no-fee banking services, mainly over the Internet. It has 1.8 million customers and $30 billion of deposits.
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Pat McKeough responds to many requests from members of his Inner Circle for specific advice on the top 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....

AT&T and Verizon keep making their wireless networks faster, which is fuelling demand for new services, like mobile video. They are also making upgrades to their regular phone networks in order to spur sales of high-speed Internet access....

Holding companies give you an easy way to buy a variety of businesses at a discount. As well, their structure makes it easy for them to unlock hidden value by selling undervalued subsidiaries....

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus....

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....

Fertilizer prices remain volatile, but these two producers have bright long-term outlooks. That’s because the growing global population is increasing food demand. Without fertilizer, the world would need 50% more farmland to meet this need....

INTERNATIONAL FLAVORS & FRAGRANCES INC. $86 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.5 million; Market cap: $7.0 billion; Priceto- sales ratio: 2.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.iff.com) makes over 36,000 unique compounds that improve the taste of foods and the smell of a wide variety of consumer products. Major clients include Procter & Gamble, Nestle, Kraft, Unilever and General Mills.

The company has two divisions: Flavors, which makes ingredients for soups, soft drinks and gum; and Fragrances, which produces compounds for soaps, detergents and air fresheners. Each business supplies roughly half of IFF’s sales and earnings.


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INTEL CORP. $25 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.0 billion; Market cap: $125.0 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.intel.com) is selling its Intel Media business, which is developing a service calle...

BHP BILLITON LTD. ADRs $64 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.7 billion; Market cap: $172.8 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.7%; TSINetwork Rating: Average; www.bhpbilliton.com) produced a record 97.8 million tonnes of iron ore in the six months ended December 31, 2013, up 19.3% from a year earlier. That’s mainly due to the start-up of its 85%-owned Jimblebar mine in Western Australia. BHP still expects to produce 192 million tonnes of iron ore for its full 2014 fiscal year.

The company also produced more metallurgical coal (up 21.9%), alumina (up 8.4%) and copper (up 6.2%). As well, new onshore oil wells in the U.S. pushed up its oil output by 6.3%. However, natural gas production fell 6.7% as BHP shifts its focus to its more profitable oil operations.

BHP Billiton is a buy....

FEDEX CORP. $132 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 312.2 million; Market cap: $41.2 billion; Price-to-sales ratio: 1.0; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) plans to sell $2 billion worth of new long-term notes. The delivery firm will use the cash to buy back 11.4 million of its common shares, or 4% of the total outstanding, at current market prices. It aims to complete these purchases by May 31, 2014.

Share buybacks raise earnings per share and other per-share calculations and give the remaining shareholders a larger stake in the company.

The notes will raise the company’s long-term debt to around $4.7 billion. That’s still a low 11% of its market cap. FedEx also held cash of $3.9 billion, or $12.37 a share, as of November 30, 2013.
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THE BOEING CO. $130 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 751.5 million; Market cap: $97.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.boeing.com) delivered a record 648 passenger jets in 2013, beating its earlier forecast of 645. The 2013 figure is also 7.8% higher than the 601 planes the company delivered in 2012.

In addition, Boeing won orders for 1,531 commercial planes in 2013 (or 1,355 after cancellations). It ended the year with a record backlog of 5,080 aircraft orders.

Boeing is a buy.
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MCKESSON CORP. $173 (New York symbol MCK; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 229.7 million; Market cap: $39.7 billion; Price-to-sales ratio: 0.3; Dividend yield: 0.6%; TSINetwork Rating: Above Average; www.mckesson- .com) has agreed to buy shares of Celesio AG, a German firm that distributes prescription drugs in Europe and Brazil, from its two largest investors. The move will give McKesson about 75% of Celesio. It then plans to buy the remaining 25%.

Buying all of Celesio will cost $8.4 billion, including its debt. However, the purchase should add $1.00 to $1.20 a share to McKesson’s annual earnings; it earned $6.33 a share in the fiscal year ended March 31, 2013.

McKesson is a buy....

NEWMONT MINING CORP. $25 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 493.1 million; Market cap: $12.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.2%; TSINetwork Rating: Average; www.newmont.com) owns 48.5% of the Batu Hijau copper/gold mine in Indonesia, which supplies 7% of its revenue.

The Indonesian government wants miners to process more ore in the country, so it recently announced a ban on mineral exports. Batu Hijau can still export its ore until 2016, but it will face a new export tax in the meantime. Newmont will challenge these changes, because its contract exempts it from extra taxes and fees.

Newmont is still a hold....

INTERNATIONAL BUSINESS MACHINES CORP. $176 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $193.6 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.ibm.com) is selling its low-end server operations to China’s Lenovo Group, the same company that acquired IBM’s personal computer division in 2005. IBM will hang on to its more profitable mainframe computer business.

Because Lenovo is a Chinese company, the deal could run into trouble on national security grounds. But if regulators approve, IBM will receive $2 billion in cash and $300 million in Lenovo shares. The cash would help the company expand in areas with greater potential, including cloud computing and analytics services, which help businesses analyze large amounts of data and improve their efficiency.

IBM is a buy....

TEXAS INSTRUMENTS INC. $42 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $46.2 billion; Price-to-sales ratio: 4.0; Dividend yield: 2.9%; TSINetwork Rating: Average; www.ti.com) gets 65% of its revenue from analog chips, which convert inputs like touch, sound and pressure into electronic signals. Manufacturers use these chips in a variety of products, including cars, medical devices and appliances.

The company gets a further 20% of its revenue by making processor chips, which perform mathematical calculations. Many clients supply their own software for these chips. That lets Texas Instruments form long-term relationships with these users, as it helps them carry their software over when they upgrade.

The remaining 15% of revenue comes from other chips, handheld calculators and licensing. In the quarter ended December 31, 2013, the company’s earnings jumped 93.6%, to $511 million from $264 million a year earlier. Earnings per share rose 100.0%, to $0.46 from $0.23, on fewer shares outstanding. Texas Instruments recently quit making chips for mobile devices and closed plants as a result. Without closure-related costs, it earned $0.49 a share in the latest quarter.
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CISCO SYSTEMS INC. $22 (Nasdaq symbol CSCO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.4 billion; Market cap: $118.8 billion; Price-to-sales ratio: 2.4; Dividend yield 3.1%; TSINetwork Rating: Average; www.cisco.com) makes hardware and software that links and manages computer networks. Its hardware includes routers, local area network (LAN) and asynchronous transfer mode (ATM) switches, and server computers. Cisco mainly sells this gear to large businesses and governments.

In its 2014 first quarter, which ended October 26, 2013, Cisco’s earnings rose 11.6%, to $2.9 billion from $2.6 billion a year earlier. Per-share earnings gained 10.4%, to $0.53 from $0.48, because it had more shares outstanding.

Revenue rose just 1.8%, to $12.1 billion from $11.9 billion. Many businesses are holding off on router purchases as they wait for Cisco to launch new models. However, demand for data centre and wireless networking equipment remains steady. As well, revenue from technical support and other services (22% of the total) rose 4.2%.
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MICROSOFT CORP. $37 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.3 billion; Market cap: $307.1 billion; Price-to-sales ratio: 3.7; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.microsoft.com) gets most of its revenue from Windows, the software that powers over 90% of the world’s computers, and its Office suite of business programs.

More users are upgrading their systems because Microsoft will soon stop supporting Windows XP, which it launched in 2001. At the same time, demand for its server software and cloud computing services is rising. In addition, the company launched new versions of its Xbox game console and Surface tablet before the Christmas shopping season.

These strengths lifted Microsoft’s revenue by 14.3% in its fiscal 2014 second quarter (which ended December 31, 2013), to $24.5 billion from $21.5 billion a year earlier. Earnings gained 2.8%, to $6.6 billion, or $0.78 a share, from $6.4 billion or $0.76.
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