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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 It originally made ground-communication equipment and antennas for the Royal Canadian Air Force.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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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....