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ENBRIDGE INC. $42.55 (Toronto symbol ENB; Shares outstanding: 825.7 million; Market cap: $35.0 billion; TSINetwork Rating: Above Average; Yield: 3.0%) invested $23.8 million in 2010 for a 20% interest in the 35-megawatt Neal Hot Springs facility in Oregon, which was then under construction. U.S. Geothermal (New York symbol HTM) owns the other 80%.

The plant, which taps into heat from below the earth’s crust, has now started up.

The renewable energy facility is a small one for pipeline operator Enbridge, which also owns 12 wind farms and four solar plants. But these should help deflect criticism from environmentalists opposed to some of its pipelines, as well as let it steadily diversify into power generation.
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ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $32.50 (Toronto symbol AP.UN; Units outstanding: 68.2 million; Market cap: $2.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.2%; www.alliedpropertiesreit.com) owns 134 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.5 million square feet of leasable area.

Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to retail space. They usually feature exposed beams, interior brick and hardwood floors.

The trust bought $400 million worth of properties in 2012. In the first half of 2013, it added a further $170.2 million worth. Allied has a 92.0% occupancy rate.
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RIOCAN REAL ESTATE INVESTMENT TRUST $24.19 (Toronto symbol REI.UN; Units outstanding: 300.7 million; Market cap: $7.3 billion; TSINetwork Rating: Average; Dividend yield: 5.8%; www.riocan.com) is Canada’s largest real estate investment trust (REIT), with interests in 348 shopping malls containing over 83 million square feet of leasable area. That total includes 50 U.S. malls with over 13.7 million square feet.

Earlier this year, RioCan ended its joint venture with Retail Properties of America (New York symbol RPAI). As a result, RioCan now holds 100% of eight malls in Texas, including the dominant shopping centres in Austin and San Antonio.

In the quarter ended June 30, 2013, RioCan’s revenue rose 9.7%, to $272 million from $248 million a year earlier. Cash flow per unit increased 8.1%, to $0.40 from $0.37. The units yield 5.8%.
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LOBLAW COS. $45.67 (Toronto symbol L; Shares outstanding: 282.1 million; Market cap: $12.8 billion; TSINetwork Rating: Above Average; Dividend yield: 2.1%; www.loblaw.ca) has transferred the bulk of its real estate holdings to a new, publicly traded real estate investment trust called Choice Properties REIT, $10.10, Toronto symbol CHP.UN.

Loblaw sold a 16.9% interest in the REIT to the public in July 2013 as a new issue at $10. It kept 83.1% of Choice Properties’ units.

Choice owns 425 properties, including 415 supermarkets and shopping centres, nine warehouses and one office building. Ontario accounts for 43.2% of its earnings, followed by Quebec (17.8%), Alberta (13.1%), B.C. (7.7%), Saskatchewan (5.1%), Nova Scotia (4.6%), New Brunswick (3.9%), Manitoba (2.5%), Newfoundland (1.7%) and P.E.I. (0.4%).
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BANK OF NOVA SCOTIA $59.16 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $71.5 billion; TSINetwork Rating: Above Average; Div. yield: 4.2%, www.scotiabank.com) is the third-largest of Canada’s five big banks, with assets of $742.6 billion.

In its fiscal 2013 third quarter, which ended July 31, 2013, the bank earned $1.30 a share, up 12.1% from $1.16 a year earlier.

Higher loan demand and an increase in deposits pushed up the Canadian banking division’s earnings by 13.2%. That includes the contribution from ING Direct, which Bank of Nova Scotia bought for $3.1 billion late last year. ING Direct offers a wide 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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WYNDHAM WORLDWIDE (New York symbol WYN; www.wyndhamworldwide.com) is one of the world’s largest hospitality companies, with 7,440 franchised hotels worldwide. Its business originated with the Howard Johnson and Ramada chains which opened their first hotels in 1954. The company subsequently added such well-known brands as Days Inn, Super 8, Knights Inn and Travelodge hotels....

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

Natural gas prices are now at $3.58 U.S. per thousand cubic feet. That’s down from their high of almost $4.40 in April 2013 but well above the low of $1.82 in April 2012. Here are two high-yielding producers that we follow on behalf of the readers of Canadian Wealth Advisor....

TEMPUR SEALY (New York symbol TPX; www.tempursealy.com) is the world’s largest bedding provider. The company completed its $1.3-billion purchase of rival Sealy in March 2013. In May the company announced that shareholders had approved a change in its name, from Tempur-Pedic to Tempur Sealy....

HOME CAPITAL GROUP INC. (Toronto symbol HCG; 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....

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

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST (Toronto symbol AP.UN; www.alliedpropertiesreit.com) owns 134 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.5 million square feet of leasable area....

PHILIPS ELECTRONICS N.V. ADRs $33 (New York symbol PHG; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 913.9 million; Market cap: $30.2 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.0%; TSINetwork Rating: Average; www.philips.com) gets 43% of its revenue by making health care products, such as X-ray and magnetic resonance imaging (MRI) scanners. It also makes lighting (37% of revenue) and consumer electronics, such as appliances (20%).

In the quarter ended June 30, 2013, revenue rose 1.5%, to 5.65 billion euros from 5.57 billion euros a year earlier (1 euro = $1.40 Canadian). Philips earned 317 million euros, or 0.35 euros per ADR (each American Depositary Receipt represents one Philips common share). That’s up sharply from 102 million euros, or 0.11 euros per ADR, a year ago.

If you exclude restructuring costs and other unusual items, gross profits as a percentage of revenue improved to 9.4% from 7.3%.
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KRAFT FOODS GROUP INC. $54 (Nasdaq symbol KRFT; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 595.6 million; Market cap: $32.2 billion; Price-to-sales ratio: 1.8; Dividend yield: 3.9%; 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.




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WELLS FARGO & CO. $43 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 5.3 billion; Market cap: $227.9 billion; Price-to-sales ratio: 2.7; Dividend yield: 2.8%; TSINetwork Rating: Average; www.wellsfargo.com) earned $5.3 billion, or $0.99 a share, in the quarter ended September 30, 2013. That’s up 12.7% from $4.7 billion, or $0.88 a share, a year ago.

These gains are largely the result of more borrowers repaying their loans on time. Loan-loss provisions fell 95.3%, to $75 million from $1.6 billion.

Revenue declined 3.5%, to $20.5 billion from $21.2 billion. Higher interest rates have hurt demand for new mortgages and refinancing of existing loans. Mortgage applications dropped 40.4%, to $87 billion from $146 billion a year earlier.
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APACHE CORP. $89 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 389.4 million; Market cap: $34.7 billion; Price-to-sales ratio: 2.1; Dividend yield: 0.9%; TSINetwork Rating: Average; www.apachecorp.com) has stopped looking for oil and gas off the coast of Kenya, because it has been unable to find enough to justify developing these fields.

The company now plans to focus on its onshore projects in North America, which should account for 55% of its production in 2013, up from 31% in 2009. That should cut Apache’s risk.

Apache is still a hold....

AMEREN CORP. $36 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $8.7 billion; Priceto- sales ratio: 1.3; Dividend yield: 4.5%; TSINetwork Rating: Average; www.ameren.com) has received approval from federal regulators to sell five of its nonregulated coal-fired power plants in Illinois to Dynegy Inc. (New York symbol DYN).

Weak power demand and lower rates have hurt these plants’profits. As a result, Ameren will receive no cash for them. However, Dynegy will assume $825 million of their debt.

Regulators in Illinois have also let Ameren put off installing new pollution-control equipment in these plants until 2020. However, Dynegy may cancel the deal if regulators force it to make these upgrades sooner.
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FEDEX CORP. $130 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 316.6 million; Market cap: $41.2 billion; Price-to-sales ratio: 0.9; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) has announced a new share buyback program that lets it repurchase up to 32 million of its common shares. If you include the 7.4 million shares left under its old plan, the company can now buy back up to 39.4 million shares, or 12.4% of the total outstanding.

Share buybacks raise earnings per share and other per-share calculations and give the remaining shareholders a larger stake in the company. There are no time limits for these purchases.

The company’s customers continue to shift to slower but cheaper forms of transportation, such as trucks and ships, instead of its more expensive overnight international air service. However, more of its clients are ordering goods online, which has pushed up volumes at its ground delivery division.
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FORD MOTOR CO. $18 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.9 billion; Market cap: $70.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.2%; TSINetwork Rating: Extra Risk; www.ford.com) sold 185,146 vehicles in the U.S. in September 2013, up 5.8% from 174,976 in September 2012. That easily beat the consensus estimate of no increase.

The gain was largely due to a 13.6% jump in passenger car sales, including 62.4% higher sales of its Fusion mid-sized sedan. In addition, truck sales rose 8.3%. However, sport utility vehicle sales declined 4.1%.

Ford is a buy....

SNAP-ON INC. $101 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.2 million; Market cap: $5.9 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.5%; TSINetwork Rating: Average; www. snapon.com) makes tools for auto mechanics and sells them through a fleet of franchised vans that visit garages. It also makes specialized tools for mining companies, electrical power generators and other industrial customers.

In the three months ended September 28, 2013, Snap-On’s revenue rose 6.1%, to $798.3 million from $752.1 million a year earlier. The latest figure includes $15.6 million from Challenger Lifts, which the company bought for $38 million in May 2013. This business makes systems that raise cars off the ground.

If you exclude Challenger’s contribution and the negative impact of foreign currency rates, revenue would have risen 4.7%.
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GENUINE PARTS CO. $78 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing sector; Shares outstanding: 154.9 million; Market cap: $12.1 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.8%; TSINetwork Rating: Average; www.genpt.com) gets half of its sales and earnings by selling auto parts. The company operates 1,300 of its own outlets under the NAPA banner, and its distribution business serves 4,750 independent stores across North America.

Genuine also distributes industrial parts, office furniture and electrical equipment.

In the three months ended September 30, 2013, revenue rose 9.2%, to a record $3.7 billion from $3.4 billion a year earlier. The gain is mainly because Genuine bought the 70% of an Australian auto parts distributor that it didn’t already own last April. The company paid $820 million for this additional stake. However, revenue fell 2.5% at the industrial parts division, 3.1% at office products and 5.3% at electrical materials.
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ALCOA INC. $9.27 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.1 billion; Market cap: $10.2 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.3%; TSINetwork Rating: Average; www.alcoa.com) owns 25.1% of a joint venture that operates a new aluminum smelter in Saudi Arabia; a state-owned mining company owns the remaining 74.9%.

This facility recently suffered problems while ramping up its production, which forced it to shut down one of its two production lines. Repairs will take about six months, but the other production line should let the plant make its initial deliveries on time.

Alcoa is a buy....

MOLSON COORS BREWING CO. $54 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 183.5 million; Market cap: $9.9 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.4%; TSINetwork Rating: Average; www.molsoncoors.com) continues to benefit from last year’s $3.5-billion purchase of StarBev, which owns nine breweries in central and eastern Europe.

Thanks to StarBev, Molson Coors’ sales rose 17.9% in the quarter ended June 29, 2013, to $1.2 billion from $999.4 million a year ago. StarBev is also helping offset slower North American sales.

If you exclude costs to integrate StarBev and other unusual items, the company earned $278.6 million in the quarter, up 11.4% from $250.1 million a year earlier. Due to more shares outstanding, earnings per share rose 9.4%, to $1.51 from $1.38.
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DIAGEO PLC ADRs $131 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 627.6 million; Market cap: $82.2 billion; Price-to-sales ratio: 4.5; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.diageo.com) is the world’s largest premium alcoholic beverage company. Its major brands include Guinness stout, Smirnoff vodka, Johnnie Walker whisky and Captain Morgan rum.

Diageo’s sales rose 6.2% in its 2013 fiscal year, which ended June 30, 2013, to 11.4 billion British pounds from 10.8 billion pounds in 2012 (1 pound = $1.68 Canadian). Gains in Latin America (up 15%), Africa (up 10%), North America (up 5%) and Asia (up 3%) offset a 4% drop in European sales.

Thanks to the higher sales and a successful costcutting plan, earnings rose 28.0%, to 2.5 billion pounds from 1.9 billion. Earnings per ADR gained 21.9% to 3.97 pounds from 3.11 pounds (each American Depositary Receipt represents four common shares).
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WAL-MART STORES INC. $76 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.3 billion; Market cap: $250.8 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart. com) is ending its joint venture in India with Bharti Enterprises.

Under the terms of the breakup, Wal-Mart will own 100% of 20 Best Price Modern Wholesale stores, which sell a wide variety of food and other goods to restaurants and other businesses. Bharti will gain full control of 212 Wal-Mart-style stores.

India has opened up its retail market to foreign companies in the past few years. However, many restrictions remain, such as requiring foreign supermarkets to buy 30% of their products from small Indian firms. That hurts these stores’profits.
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