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< strong>TIM HORTONS $61.81 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 151.0 million; Market cap: $9.1 billion; Dividend yield: 1.7%) is testing a new dark roast blend of its coffee in London, Ontario, and Columbus, Ohio.
< br /> For the past 49 years, the company has had huge success with its medium-roast coffee. However, many of its competitors now offer a variety. For example, Starbucks recently launched a lighter blend that is similar to Tim Hortons’ regular blend.
< br /> If this test is successful, Tim Hortons could start selling the dark roast in all of its 4,300 stores in 2014.
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TEMPUR SEALY $47.05 (New York symbol TPX; TSINetwork Rating: Speculative) (800-878-8889; www.tempursealy.com; Shares outstanding: 60.4 million; Market cap: $2.8 billion; No dividends paid) is the new name of Tempur-Pedic after its March 2013 purchase of rival Sealy Corp. for $1.3 billion.
< br /> In the quarter ended September 30, 2013, Tempur Sealy’s revenue rose 1.5%, to $390.1 million from $384.4 million a year earlier. Sealy’s contribution was the main reason for the rise. Excluding one-time items, earnings per share gained 4.3%, to $0.73 from $0.70. That beat the consensus estimate of $0.69.
< br /> The company’s long-term prospects are sound, and the Sealy purchase is a positive. However, the stock now trades at a somewhat high 20.9 times Tempur Sealy’s forecast 2013 earnings of $2.25 a share. In addition, while the Sealy acquisition should pay off, a major acquisition like this can always come with hidden problems.
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BROADRIDGE FINANCIAL $37.09 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 119.0 million; Market cap: $4.4 billion; Dividend yield: 2.3%) earned $48.0 million, or $0.39 a share, in its fiscal 2014 first quarter, which ended September 30, 2013. That’s up 116.0% from $22.0 million, or $0.18 a share, a year earlier.
< br /> Revenue rose 11.0%, to $545.2 million from $495.8 million. Broadridge continues to do a good job of attracting new clients. It also held on to 99% of its existing customers.
< br /> Excluding unusual items, the company expects to earn $2.00 to $2.10 a share in fiscal 2014. The stock trades at a reasonable 18.1 times the midpoint of this range.
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DOREL INDUSTRIES $36.46 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.5 million; Market cap: $1.2 billion; Dividend yield: 3.4%) makes a range of products, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational products, mainly bicycles.
< br /> In the three months ended September 30, 2013, Dorel’s sales fell 1.0%, to $607.3 million from $613.3 million a year earlier (all figures except share price and market cap in U.S. dollars). Slower sales in the juvenile products segment offset gains at the home furnishing division and the recreational and leisure business.
< br /> Excluding one-time items, earnings per share were unchanged at $0.64.
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FAIR ISAAC CORP. $57.71 (New York symbol FICO; TSINetwork Rating: Average) (415- 472-2211; www.fairisaac.com; Shares outstanding: 35.2 million; Market cap: $2.0 billion; Dividend yield: 0.1%) reports that its earnings per share before one-time items rose 16.7% in the three months ended September 30, 2013, to $0.98 from $0.84 a year ago.
< br /> Revenue gained 2.3%, to $190.3 million from $186.1 million. That’s largely due to acquisitions, which contributed $23 million to the company’s revenue in the latest quarter. Due to the uncertain economy, Fair Isaac has had trouble closing deals with several North American banks. It aims to complete these sales in the next few months.
< br /> The company continues to spend around 9% of its revenue on research. That lets it keep producing innovative products that help it stay ahead of the competition.
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< strong>DELPHI ENERGY $1.43 (Toronto symbol DEE; TSINetwork Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 153.1 million; Market cap: $217.4 million; No dividends paid) develops, produces and explores for oil and natural gas. About 74% of its production is gas. The remaining 26% is oil.
< br /> The company’s output rose 6.5% in the three months ended September 30, 2013, to 8,797 barrels of oil equivalent per day (including gas) from 8,257 barrels a year earlier.
< br /> Cash flow per share gained 16.7%, to $0.07 from $0.06. The higher production was the main reason for the increase. The company also realized higher prices for its oil and gas in the latest quarter.
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BIRCHCLIFF ENERGY $7.27 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 142.8 million; Market cap: $1.1 billion; No dividends paid) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 81% of its output is gas. The remaining 19% is oil.
< br /> In the three months ended September 30, 2013, Birchcliff’s production rose 15.1%, to 24,662 barrels of oil equivalent per day (including gas) from 21,426 barrels a year earlier. Cash flow per share gained 50.0%, to $0.30 from $0.20, on the increased production and higher oil and gas prices.
< br /> Last year, Birchcliff completed Phase III of its gas plant expansion in Pouce Coupe, Alberta. This project doubled the facility’s capacity and is helping the company bring the additional gas it is producing to market.
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ACI WORLDWIDE $62.74 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402- 334-5101; www.tsainc.com; Shares outstanding: 39.5 million; Market cap: $2.4 billion; No dividends paid) makes software that processes transactions involving credit cards, debit cards, ATMs, point-of-sale terminals and interbank payments. Its products also help cut fraud.
< br /> In the quarter ended September 30, 2013, acquisitions increased ACI’s revenue by 38.0%, to $213.9 million from $155.1 million a year earlier. Earnings per share rose 79.3%, to $0.52 from $0.29. Cost cuts and the higher revenue were behind the rise.
< br /> The company’s outlook is positive, but the stock trades at a high 22.4 times ACI’s forecast 2014 earnings of $2.80 a share. Moreover, any problems with integrating its recent acquisitions could significantly cut into 2014 earnings.
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< strong>RUBY TUESDAY, INC. $6.58 (New York symbol RT; TSINetwork Rating: Speculative) (865-379-5700; www.rubytuesday.com; Shares outstanding: 61.4 million; Market cap: $405.1 million; No dividends paid) owns 703 casual dining restaurants in the U.S. Franchisees operate 33 outlets in the U.S. and 42 overseas.
< br /> In the three months ended September 3, 2013, Ruby Tuesday’s sales fell 11.7%, to $289.7 million from $327.9 million a year earlier. Continued weak consumer spending was the main reason for the decline. As well, the company closed less profitable restaurants in the quarter, and competition remains intense in the casual-dining business.
< br /> Ruby Tuesday lost $21.9 million, or $0.36 a share, compared to a year-earlier profit of $3.1 million, or $0.22 a share. That widely missed the consensus estimate of a $0.05-a-share loss, although the latest quarter included a $7.5-million pre-tax charge for closing underperforming locations.
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CHIPOTLE MEXICAN GRILL $531.66 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 30.9 million; Market cap: $16.7 billion; No dividends paid) is a Denver- based Mexican restaurant chain. It charges slightly higher prices than fast food companies, but it offers better quality food, including naturally raised meat, and superior decor and service.
< br /> In the three months ended September 30, 2013, Chipotle’s sales gained 18.0%, to $826.9 million from $700.5 million a year earlier. The company’s restaurants attracted more customers during the quarter, which pushed up same-restaurant sales by 4.3%. Chipotle also opened 37 new outlets, and now has a total of 1,539. In 2014, it aims to open 180 to 195 more.
< br /> Earnings rose 15.3%, to $83.4 million from $72.3 million. Per-share earnings increased 18.4%, to $2.70 from $2.28, on fewer shares outstanding.
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HECLA MINING $2.98 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769- 4100; www.hecla-mining.com; Shares outstanding: 342.6 million; Market cap: $1.0 billion) explores for, mines and processes silver and gold in the U.S. and Mexico.
< br /> Most of the company’s silver output comes from its Greens Creek mine in Alaska and its Lucky Friday project in Idaho. Its gold production mainly comes from its newly acquired Casa Berardi mine in Quebec.
< br /> All of Hecla’s mines have potential for higher production, including Casa Berardi, where the company is deepening the mine shaft to boost output and extend the project’s life. However, Hecla is cutting back on capital spending while it waits for higher gold and silver prices.
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< strong>IMPERIAL METALS $14.25 (Toronto symbol III; TSINetwork Rating: Speculative) (604-669-8959; www.imperialmetals.com; Shares outstanding: 74.5 million; Market cap: $1.1 billion) is a Vancouver-based firm that produces and explores for base and precious metals.
< br /> Imperial’s producing assets include two B.C. mines: 100%-owned Mount Polley (copper and gold) and 50% of Huckleberry (copper and molybdenum). Japan’s Mitsubishi Materials holds 31.1% of Huckleberry, and Furukawa Co., Dowa Holdings and Marubeni Corp. own 6.3% each.
< br /> Imperial restarted Mount Polley in 2005. It continues to explore around the known deposit to increase the mine’s reserves and lengthen its life. Right now, Imperial expects Mount Polley to produce until mid- 2023.
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YAMANA GOLD $9.46 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.- yamana.com; Shares outstanding: 752.9 million; Market cap: $7.3 billion; Dividend yield: 2.9%) owns eight operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina, and has a number of other properties in advanced stages of development.
< br /> In the three months ended September 30, 2013, Yamana’s revenue fell 25.4%, to $456.7 million from $611.8 million a year earlier (all figures except share price and market cap in U.S. dollars).
< br /> Gold production declined 1.1%, to 306,935 ounces from 310,490. Prices for gold, and for copper and silver, also fell. Both copper and silver are significant byproducts of Yamana’s gold mining. The company’s cash flow per share fell 36.9% in the latest quarter, to $0.24 from $0.38.
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ALIMENTATION COUCHE-TARD $73.50 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard. com; Shares outstanding: 179.4 million; Market cap: $13.6 billion; Dividend yield: 0.5%) operates 6,198 convenience stores throughout North America. The Canadian outlets operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand.
< br /> In Europe, Couche-Tard operates 2,287 stores across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltic states (Estonia, Latvia and Lithuania) and Russia.
< br /> In the three months ended July 21, 2013, Couche-Tard’s sales jumped 48.0%, to $8.9 billion from $6.0 billion a year earlier. The gain mostly came from Norway’s Statoil Fuel & Retail chain of European gas stations, which Couche-Tard bought for $2.7 billion in June 2012 (all figures except share price in U.S. dollars). The company also sold more fuel, and expanded its merchandise sales.
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HEWLETT-PACKARD CO. (New York symbol HPQ; www.hp.com) is a leading maker of personal computers and printers. It also makes server computers and networking products for businesses....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice on trading 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....

PRECISION DRILLING CORP. (Toronto symbol PD; www.precisiondrilling.com) provides contract-drilling services to land-based oil and gas producers, mainly in North America. As of June 30, 2013, it had 324 rigs in service....

PENGROWTH ENERGY CORP. $6.37 (www.pengrowth.com) has gained nearly 30% in the past three months. That’s mainly because the company has successfully completed its plan to sell some of its less important oil and gas properties in Western Canada. The cash from these sales will help Pengrowth speed up the development of its Lindbergh oil sands project in Alberta....

METRO INC. $65 (www.metro.ca) has developed a new mobile app for the Apple iPhone. This program lets Metro offer shoppers customized discounts and promotions based on the location of their nearest Metro supermarket. The app also makes it easier to find specific items within a store and suggests alternative products....

SNC-LAVALIN GROUP INC. $43 (www.snclavalin.com) continues to win new engineering contracts despite last year’s bribery scandal. ZADCO, a joint venture headed by Abu Dhabi’s state owned oil company, recently hired SNC to design a major addition to its oil refinery. Buy.

HOME CAPITAL GROUP INC. $72 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.7 million; Market cap; $2.5 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.6%; TSINetwork Rating: Average; www. homecapital.com) gets 90% of its revenue by making residential mortgage loans to borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks. These clients include recent immigrants with limited credit histories and self-employed individuals.

The remaining 10% of Home Capital’s revenue mainly comes from credit cards and other loans to consumers and businesses.


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LOBLAW COMPANIES LTD. $46 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 282.1 million; Market cap: $13.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.loblaw.ca) continues to expand its Joe Fresh business, which makes casual clothing and accessories.

In addition to selling these goods in its supermarkets, Loblaw has also opened over 20 stand-alone Joe Fresh stores in Canada and the U.S. In October 2013, Joe Fresh began selling its products in Canada through its own website.

In the U.S., Joe Fresh sells its goods online through an alliance with struggling department store operator J.C. Penney (New York symbol JCP). Joe Fresh has also opened boutiques inside nearly 700 of Penney’s 1,100 department stores in the U.S.
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SUNCOR ENERGY INC. $36 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $54.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.2%; TSINetwork Rating: Average; www. suncor.com) produced an average of 365,000 barrels of oil a day at its oil sands projects in September 2013....

MAPLE LEAF FOODS INC. $13 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 140.0 million; Market cap: $1.8 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.2%; TSINetwork Rating: Average; www.mapleleaf.ca) has received regulatory approval for its plan to sell its Rothsay rendering operations.

Rothsay recycles by-products from Maple Leaf’s main meatprocessing operations into a variety of ingredients for other products, including animal feed, soaps, lotions, cosmetics, fertilizers and plastics. Rothsay also makes biodiesel fuels.

The company will receive $645 million when the deal closes on October 28, 2013. It will use the cash to pay down its $1.3 billion of long-term debt.
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CANADIAN IMPERIAL BANK OF COMMERCE $82 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 400.0 million; Market cap: $32.8 billion; Price-to-sales ratio: 1.9; Dividend yield: 4.7%; TSINetwork Rating: Above Average; www.cibc.com) has launched Aventura, a new credit card loyalty plan for travellers. Aventura cards let users earn points on their purchases and redeem them for free flights and other benefits.

Toronto-Dominion Bank (see page 104) recently replaced CIBC as the primary issuer of cards under the popular Aeroplan loyalty program. As part of the deal, CIBC will hang on to Aeroplan accounts held by customers who also bank at CIBC. That’s about half the Aeroplan portfolio.

The bank estimates that losing half of the Aeroplan business will cut its annual earnings by $0.45 a share; in the year ended October 31, 2012, it earned $8.07 a share. However, the additional benefits of the Aventura plan, including letting users fly on any airline and not just Air Canada, should help it attract more customers.
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