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J.C. PENNEY CO. INC. $13 (New York symbol JCP; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 220.4 million; Market cap: $2.9 billion; Price-to-sales ratio: 0.2; Dividend suspended in May 2012; TSINetwork Rating: Extra Risk; www. jcpenney.com) operates more than 1,100 department stores in the U.S. and Puerto Rico. It also sells goods online.

Over a year ago, the company switched to an everyday low prices strategy. It felt the move would entice shoppers to come into its stores more often and not wait for clearance sales.

However, the plan alienated Penney’s regular customers. In response to a sharp drop in its sales, the company switched back to its original marketing strategy.
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NORDSTROM INC. $57 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 195.5 million; Market cap: $11.1 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.1%; TSINetwork Rating: Average; www.nordstrom.com) mainly sells clothing, accessories and footwear. The company owns and operates 248 stores in 33 states.

In the second quarter of its 2014 fiscal year, which ended August 3, 2013, Nordstrom’s sales rose 6.3%, to $3.2 billion from $3.0 billion a year earlier. Samestore sales rose 4.2% on strong demand for men’s apparel, men’s shoes and children’s clothing. Online sales jumped 37%.

Earnings gained 17.9%, to $184 million from $156 million. Per-share earnings rose 24.0%, to $0.93 from $0.75, on fewer shares outstanding.
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MACY’S INC. $44 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 377.9 million; Market cap: $16.6 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.3%; TSINetwork Rating: Average; www.macysinc.com) operates 840 Macy’s and Bloomingdale’s department stores in 45 states.

The company continues to benefit from strong online sales. That’s largely because it is offering free shipping and letting customers pick up their orders at its stores. Macy’s recent move to tailor its merchandise to local tastes is also helping it compete.

Even so, Macy’s sales fell 0.8% in the second quarter of its 2014 fiscal year, which ended August 3, 2013, to $6.07 billion from $6.12 billion a year earlier. Same-store sales, which include online orders, also declined 0.8%.
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PEPSICO INC. $79 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $118.5 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.pepsico.com) earned $2.05 billion in the three months ended June 15, 2013, up 16.1% from $1.8 billion a year earlier. Earnings per share rose 17.0%, to $1.31 from $1.12, on fewer shares outstanding. The latest earnings included a $0.09-a-share gain on a deal to refranchise PepsiCo’s bottling operations in Vietnam. Revenue rose 2.1%, to $16.8 billion from $16.5 billion.

The company expects to save $900 million this year, mainly by closing plants and cutting jobs. PepsiCo will use some of these savings to develop and promote new products, particularly healthier snack foods. The savings will also help the company offset higher ingredient costs. However, soft drink sales continue to decline, particularly in North America.

PepsiCo is a hold....

MICROSOFT CORP. $33 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.3 billion; Market cap: $273.9 billion; Price-to-sales ratio: 3.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www. microsoft.com) jumped 8% after it announced that Steve Ballmer, its chief executive officer since 2000, will soon retire. Microsoft expects to name a replacement within the next 12 months.

The company continues to generate strong cash flows from its business products, such as server software, particularly as more companies move to a cloud computing model. However, weak sales of its new consumer devices, such as the Surface tablet computer, have held back its earnings. Investors feel a new CEO from outside the company may sell these struggling businesses.

Microsoft is still a buy....

FAIR ISAAC CORP. $51 .(New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.2 million; Market cap: $1.8 billion; Price-to-sales ratio: 2.5; Dividend yield: 0.2%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. The company also produces software that helps credit card issuers control fraud and analyze cardholders’spending patterns.

In the company’s fiscal 2013 third quarter, which ended June 30, 2013, its earnings per share before one-time items rose 9.6% from a year ago, to $0.80 from $0.73.

Revenue gained 14.5%, to $183.8 million from $160.5 million. That’s largely because the company recently acquired Adeptra, which makes systems that let businesses communicate with customers through various channels, including voice, text messaging, mobile applications and email.
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BROADRIDGE FINANCIAL SERVICES INC. $30 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 119.1 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.8%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 85% of all proxy votes in the U.S.

In its 2013 fiscal year, which ended June 30, 2013, Broadridge’s earnings rose 10.6%, to $236.0 million from $213.4 million in fiscal 2012. Earnings per share rose 12.6%, to $1.88 from $1.67. These figures exclude unusual items, such as writedowns and costs to integrate recent acquisitions.

Revenue rose 5.5%, to $2.4 billion from $2.3 billion. Revenue from the company’s Investor Communications division (which supplies 73% of the total) rose 7.7%. Broadridge held on to 99% of its existing customers. It also continues to do a good job of signing clients to long-term deals that generate recurring revenue.
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DUN & BRADSTREET CORP. $100 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 38.8 million; Market cap: $3.9 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.dnb.com) is the world’s largest provider of credit reports on individual companies. Its customers use these reports to make buying and lending decisions.

Credit reports supply two-thirds of Dun & Bradstreet’s revenue. The remaining third comes from other information products, including software that helps businesses manage websites and customer data.

In the quarter ended June 30, 2013, Dun & Bradstreet’s revenue rose just 0.7%, to $386.4 million from $383.7 million a year earlier. Stronger demand for its credit reports and other products in Europe (which accounts for 15% of its revenue) and Asia (13%) offset weaker sales in North America (72%).
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NEWELL RUBBERMAID INC. $25 (New York symbol NWL; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 288.0 million; Market cap: $7.2 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.4%; TSINetwork Rating: Average; www.newellrubbermaid.com), like Stanley (see left), is a good example of an out-of-the-limelight stock with long-term appeal.

Also like Stanley, Newell is selling its less profitable operations and focusing on products with greater growth potential, such as pens and tools for industrial users.

For example, it recently agreed to sell some of its hardware businesses, which make a variety of hooks, hinges, door knobs and paint brushes. Newell will receive $175 million after taxes when the sale closes in the new few weeks.
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STANLEY BLACK & DECKER INC. $85 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 160.1 million; Market cap: $13.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.4%; TSINetwork Rating: Average; www.stanleyblackanddecker.com) began operating in 1843 and is now one of the world’s largest makers of hand and power tools for consumers. Its top-selling brands include Stanley, Black & Decker, FatMax and Powerlock. In 2012, this business supplied 51% of Stanley’s sales and 50% of its earnings.

The company also makes specialized tools for industrial users, such as auto mechanics and construction firms. This division accounts for 25% of Stanley’s sales and 29% of its earnings.

The remaining 24% of the company’s sales and 21% of its earnings come from making building-security products, such as locks, automatic doors and gates. It also monitors properties for its clients, typically by closed-circuit audio and TV systems.
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THE BOEING CO. (New York symbol BA; www.boeing.com) is a leading maker of passenger jets....

ALGONQUIN POWER & UTILITIES CORP. (Toronto symbol AQN; www.algonquinpower.com) has nearly tripled in size over the last year through a series of acquisitions....

BELLATRIX EXPLORATION (Toronto symbol BXE; www.bellatrixexploration.com) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 69% of its output; the remaining 31% is oil....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice on Canadian stocks and other investments 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....

GOOGLE INC. (Nasdaq symbol GOOG; www.google.com) is the world’s top Internet search engine, with about two-thirds of this market. It makes money by selling advertising on its websites. Google charges advertisers every time a user clicks on one of their ads. The company gets 93% of its revenue from advertising....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you specific investment tips and stock market advice. Each Investor Toolkit update gives you a fundamental piece of investment advice, and shows you how you can put it into practice right away....

EMERA INC. (Toronto symbol EMA; www.emera.com) is Nova Scotia’s main power supplier. It also holds interests in electrical utilities in the U.S. and the Caribbean. Other operations include the Brunswick pipeline, which pumps natural gas from the U.S. to a liquefied natural gas plant in New Brunswick....

Every industry and group has its own special jargon. This specialized language always has the same purpose. It simplifies communications within the industry, and helps make insiders feel they are part of a tightly knit community. It also helps the group pursue its goals. It does that by shaping concepts so that they facilitate lines of thought and discussions that match the industry’s view of the world....

HECLA MINING COMPANY $3.61 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769- 4100; www.hecla-mining.com; Shares outstanding: 342.2 million; Market cap: $1.3 billion) explores for, mines and processes silver and gold in the U.S. and Mexico. Most of its silver output comes from its Greens Creek mine in Alaska and its Lucky Friday mine in Idaho.

In the three months ended June 30, 2013, Hecla’s revenue rose 27.3%, to $85.3 million from $67.0 million a year earlier. The company lost $0.03 a share, compared to a profit of $0.01. The loss mostly came from lower silver prices and costs related to its recent acquisition of Aurizon Mines.


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SHERRITT INTERNATIONAL $3.70 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 296.9 million; Market cap: $1.1 billion; Dividend yield: 4.7%) is a diversified natural resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 356 megawatts of power generation capacity in Cuba, with an additional 150 megawatts starting up this year.

The company is a major nickel producer, with operations in Cuba and Canada. As well, it has started up its 40%-owned Ambatovy mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and is Canada’s largest thermal coal producer.

In the three months ended June 30, 2013, Sherritt’s revenue fell 10.2%, to $338.5 million from $377.1 million a year earlier. Lower nickel, cobalt and coal prices were the main reasons for the drop. Cash flow per share declined 10.0%, to $0.18 from $0.20.
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AIMIA INC. $15.80 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 172.5 million; Market cap: $2.7 billion; Dividend yield: 4.3%) has finalized its deal for TD Bank to become the primary credit card issuer for Aeroplan, Aimia’s main loyalty program.

TD and Aimia are also negotiating a new agreement with Canadian Imperial Bank of Commerce, which has been Aimia’s banking partner in the Aeroplan program for the past 22 years.

This agreement would let CIBC sell around half of its existing Aeroplan accounts to TD. That would cut the risk of these clients switching to other loyalty plans or banks.
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NISSAN MOTOR CO. (ADR) $20.32 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310-771-3111; www.nissan-global.com; Shares outstanding: 2.3 billion; Market cap: $46.6 billion; No dividends paid) is reviving its dormant Datsun brand with the launch of an under-$6,700 hatchback in India. Other Datsun models will follow over the next three years.

The company will use the Datsun name to compete for sales of lower-cost cars in emerging markets, partly to avoid tarnishing its Nissan brand’s reputation for higher-quality vehicles.

The reintroduction also puts Nissan in a good position to profit from rising car demand in other emerging markets, such as Russia, Southeast Asia, Latin America, the Middle East and Africa.
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WYNDHAM WORLDWIDE $58.84 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 133.0 million; Market cap: $8.0 billion; Dividend yield: 2.0%) reported higher revenue and earnings in the latest quarter.

In the three months ended June 30, 2013, the hotel and resort operator’s revenue rose 10.0%, to $1.25 billion from $1.14 billion a year earlier. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped push up Wyndham’s average occupancy rate slightly, to 55.2%.

Before one-time items, earnings rose 12.6%, to $0.98 a share from $0.87. The company continues to buy back its stock. In the latest quarter, it repurchased 2.9 million shares for $175 million. In 2012, it bought back 12.9 million shares for $623 million.
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ALARMFORCE $10.01 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800-267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $122.7 million; Div. yield: 1.0%) has fired Joel Matlin, its long-time and high-profile president and CEO.

AlarmForce recently completed the strategic review of business opportunities that it launched in August 2012. That review included a possible sale of the company. The process did not result in a takeover offer that AlarmForce was willing to accept.

The firing may be related to the company’s failure to find a buyer. Or it may reflect the fact that AlarmForce’s growth in Canada has slowed—it added just 700 new subscribers in the last six months.
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DELPHI ENERGY $1.39 (Toronto symbol DEE; TSINetwork Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 153.1 million; Market cap: $211.3 million; No dividends paid) explores for oil and natural gas in Alberta and B.C. Gas makes up 72% of Delphi’s daily output; the remaining 28% is oil.

In the three months ended June 30, 2013, Delphi’s average daily output fell 11.6%, to 7,635 barrels of oil equivalent (including gas) from 8,636 barrels a year earlier. Disruptions at third-party processing facilities, which cut the company’s output by 1,495 barrels a day, were the main reason for the decline. Those issues are now resolved.

Higher oil and prices offset the lower output, and that kept cash flow unchanged at $0.05 a share.
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