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SONY CORP. ADRs $21 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.0 billion; Market cap: $21.0 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.3%; TSINetwork Rating: Average; www.sony.com) has rejected a plan from Dan Loeb, an activist investor who owns 7% of the company’s shares. Loeb wants Sony to sell 15% to 20% of its entertainment division, which makes movies, TV shows and music recordings and accounts for 16% of Sony’s revenue.

The company feels that owning media content gives it an edge over other electronics makers.

Meanwhile, Sony’s revenue fell 9.8% in its fiscal 2014 first quarter, which ended June 30, 2013, to $17.3 billion from $19.2 billion a year earlier. That’s partly because the company sold its chemical operations in September 2012. Weak camera demand also hurt its revenue.
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IDEXX LABORATORIES INC. $98 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 52.5 million; Market cap: $5.1 billion; Price-to-sales ratio: 4.1; No dividends paid; TSINetwork Rating: Average; www.idexx.com) gets 85% of its sales by making equipment that veterinarians use to detect diseases in pets. The remaining 15% comes from sales of systems that detect contaminants in livestock, water and dairy products.

Idexx is benefiting as the improving economy encourages people to take their pets to the vet more often. That has pushed up sales of Idexx’s equipment, such as its Pro-Cyte Dx hematology analyzer, which processes animal blood tests in just two minutes.

Rising equipment sales have also spurred higher demand for consumables, such as test tubes and slides, that veterinarians must constantly replenish.
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CINTAS CORP. $51 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 120.8 million; Market cap: $6.2 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.3%; TSINetwork Rating: Average; www.cintas- .com) designs and makes uniforms, which it sells to over 900,000 businesses, mainly in North America. It also offers related services, including office cleaning and document shredding.

In the first quarter of its 2014 fiscal year, which ended August 31, 2013, Cintas’s sales rose 6.6%, to $1.12 billion from $1.05 billion a year earlier. Sales at the uniform business, which supplied 71% of Cintas’s overall revenue, rose 5.0%, while sales at its other divisions (29% of the total) gained 10.5%. Earnings increased 1.3%, to $77.8 million from $76.7 million. Cintas spent $107.0 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share rose 5.0%, to $0.63 from $0.60.

In fiscal 2014, Cintas expects to earn $2.70 to $2.79 a share. It trades at a reasonable 18.6 times the midpoint of that range.
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J.P. MORGAN CHASE & CO. $52 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.8 billion; Market cap: $197.6 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.9%; TSINetwork Rating: Average; www.jpmorganchase.com) has agreed to pay a total of $920 million in fines to U.S. and U.K. securities regulators.

That’s because the bank failed to disclose the true amount of losses it incurred in 2012 on complex trades it used to hedge its portfolio of corporate bonds. These losses ultimately amounted to $6 billion. Morgan has since strengthened oversight over its trading operations.

The fine is equal to 14% of the $6.5 billion, or $1.60 a share, that Morgan earned in the second quarter of 2013. Unlike similar settlements, Morgan admitted that it broke the law. That will probably spur class-action lawsuits by shareholders who lost money in the wake of Morgan’s hedging losses. However, proving that the bank deliberately misinformed investors would be difficult.
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QUAKER CHEMICAL CORP. $72 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 13.2 million; Market cap: $950.4 million; Price-to-sales ratio: 1.3; Dividend yield: 1.4%; TSINetwork Rating: Average; www.quakerchem.com) makes lubricants and chemicals that keep mechanical parts from rusting.

Quaker continues to benefit from recent acquisitions that have expanded its international operations: it now gets 60% of its sales from overseas. The company has also cut its costs and raised its prices, which has improved its profitability.

In the three months ended June 30, 2013, earnings jumped 43.5%, to $1.22 a share from $0.85 a year earlier. Without several unusual items, including a tax refund and charges related to a client’s bankruptcy, per-share earnings rose 11.1%, to $1.00 from $0.90.
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BRIGGS & STRATTON CORP. $21 (New York symbol BGG; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 47.9 million; Market cap: $1.0 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.briggsandstratton.com) is the world’s largest maker of lawn mower engines. The company also makes other home and garden equipment, such as portable generators, pressure washers and snow blowers.

In Briggs’s 2013 fiscal year, which ended June 30, 2013, its sales fell 9.9%, to $1.9 billion from $2.1 billion in fiscal 2012. That’s mainly because inventories remain high following last year’s droughts in North America and Australia, hurting demand for new lawn mowers and other equipment.

As well, Briggs recently stopped selling its products through mass retailers in the U.S. That’s because big chains demand lower prices from suppliers like Briggs, which hurts its profit margins.
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MTS SYSTEMS CORP. $64 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 15.6 million; Market cap: $998.4 million; Price-to-sales ratio: 1.9; Dividend yield: 1.9%; TSINetwork Rating: Average; www.mts.com) makes equipment and software that manufacturers use to test the behaviour of materials, machines and structures. This helps its clients reduce errors and costs.

The uncertain economy is prompting manufacturers to hold off on buying the company’s gear. In its fiscal 2013 third quarter, which ended June 29, 2013, MTS’s revenue fell 4.7%, to $135.1 million from $141.7 million a year earlier.

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TENNANT CO. $62 (New York symbol TNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 18.4 million; Market cap: $1.1 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.2%; TSINetwork Rating: Average; www.tennantco.com) makes industrial floor-cleaning equipment, including scrubbers, sweepers and polishers. It also manufactures cleaning gear for garages, stadiums, parking lots and city streets.

The company continues to enjoy strong demand for floor cleaners that use its ec-H2O technology, which uses electricity to make tap water act like a detergent. That eliminates the need for soaps and lowers the machine’s operating costs.

However, municipal governments, particularly in Europe, are spending less on cleaning equipment. As a result, Tennant’s sales rose just 0.4% in the three months ended June 30, 2013, to $200.2 million from $199.5 million a year earlier. If you exclude the negative impact of foreign exchange rates and contributions from acquisitions, sales would have risen 0.9%.
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CONAGRA FOODS INC. $30 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 419.5 million; Market cap: $12.6 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.conagrafoods.com) reported that its sales rose 27.2% in its fiscal 2014 first quarter, which ended August 25, 2013, to $4.2 billion from $3.3 billion a year earlier.

That’s mainly due to private-label food maker Ralcorp, which it bought for $4.75 billion in January 2013. Ralcorp contributed $942.0 million to ConAgra’s sales in the latest quarter.

However, strong price competition is hurting sales of ConAgra’s branded foods. It also spent $26 million on developing new products.
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VERIZON COMMUNICATIONS INC. $47 (New York symbol VZ, Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 2.9 billion; Market cap: $136.3 billion; Priceto- sales ratio: 1.2; Dividend yield: 4.5%; TSINetwork Rating: Average; www.verizon.com) is the second-largest wireless service provider in the U.S., with 100.1 million subscribers. Market leader AT&T has 107.9 million wireless customers.

Wireless now supplies 67% of Verizon’s revenue and 80% of its earnings. The remaining 33% of revenue and 20% of earnings comes from its 21.8 million phone and Internet customers.

Verizon’s revenue rose 10.7%, from $97.4 billion in 2008 to $107.8 billion in 2009. Revenue dipped to $106.6 billion in 2010 but then rebounded to $115.8 billion in 2012.
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Pat McKeough responds to many requests from members of his Inner Circle for specific advice on 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....

DOMINO’S PIZZA (New York symbol DPZ; www.dominos.com) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 10,440 outlets in the U.S. and over 70 other countries. Franchisees run most of these stores....

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. Today’s tip: “You may learn quite a bit about investing in an investment club, but keep in mind that some of what you learn may be things you should avoid in future.”...

Most precious metals stocks dropped when gold fell to $1,200 U.S. an ounce and silver declined to $18.50 U.S. an ounce in June 2013. Both metals have rebounded somewhat lately, with gold now at $1,371 and silver at $22.92. Here are two low-fee exchange traded funds that offer global gold and silver miners....

MAPLE LEAF FOODS INC. (Toronto symbol MFI; www.mapleleaf.ca) is Canada’s largest food processing company. It mainly sells its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. Though 90.0%-owned Canada Bread the company also makes fresh and frozen bread, pastries and pasta....

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

PENGROWTH ENERGY CORP. (Toronto symbol PGF; www.pengrowth.com) produces oil and natural gas in Western Canada and off the Nova Scotia coast. Gas accounts for about 60% of its production; the other 40% is oil....

ENERFLEX LTD. $14.07 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 78.0 million; Market cap: $1.1 billion; Dividend yield: 2.0%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration equipment and power generators.

The company has a strong position in three expanding markets: U.S. and Canadian shale gas; Australian natural gas from coal beds; and conventional Middle Eastern natural gas, most of which gets converted to liquefied natural gas (LNG) for shipping worldwide.

In the quarter ended June 30, 2013, Enerflex’s revenue fell 12.3%, to $311.0 million from $354.6 million a year ago. That’s because the company saw lower sales across all of its markets. Earnings per share fell 4.0%, to $0.24 from $0.25.
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TOROMONT INDUSTRIES LTD. $22.86 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 76.6 million; Market cap: $1.8 billion; Dividend yield: 2.3%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. It also makes refrigeration systems through its CIMCO division.

The company completed the spinoff of Enerflex Ltd. (see right) in July 2011. Shareholders received shares of the new Toromont and shares of Enerflex.

In the three months ended June 30, 2013, Toromont’s revenue fell 1.3%, to $374.7 million from $379.6 million a year earlier. Record sales at the CIMCO division failed to offset lower equipment sales and rentals, particularly to mining customers.
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ALIMENTATION COUCHE-TARD $63.74 (Toronto symbol ATD.B; TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 179.4 million; Market cap: $11.8 billion; Dividend yield: 0.6%) reports that its sales jumped 48.0% in the three months ended July 21, 2013, to $8.9 billion from $6.0 billion a year earlier.

The gain mostly came from Norway’s Statoil Fuel & Retail ASA, which Couche-Tard bought for $2.7 billion in June 2012 (all figures except share price and market cap in U.S. dollars). It also benefited from higher fuel volumes and merchandise sales.

Excluding one-time items, earnings rose 20.9%, to $220.0 million from $182.0 million. Earnings per share rose 16.0%, to $1.16 from $1.00, on more shares outstanding. The latest earnings beat the consensus estimate of $0.95 a share.
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TIM HORTONS $59.06 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 151.0 million; Market cap: $9.0 billion; Dividend yield: 1.8%) has opened its first coffee-and-donut store in Kuwait under its franchise deal with Dubai-based Apparel Group. This is the company’s 32nd store in the Persian Gulf.

In February 2011, Tim Hortons signed a master license agreement with the Apparel Group to open 120 outlets in the United Arab Emirates (UAE), Qatar, Bahrain, Kuwait and Oman over a five-year period.

So far, the company has focused on growing in the key UAE cities of Dubai and Abu Dhabi. But it also entered Oman with two locations in 2012.
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GOODYEAR TIRE & RUBBER CO. $22.17 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 245.5 million; Market cap: $5.4 billion; No dividends paid) has signed an important new labour contract with the United Steelworkers. The four-year deal covers about 8,000 workers at its six U.S. plants.

The agreement provides Goodyear with flexibility to reduce staffing and continues medical-benefit cost sharing.

Wages and benefits remain in line with the prior agreement. The contract protects Goodyear against strikes over its four-year term, but it also protects workers against closures at the six plants.
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CARFINCO FINANCIAL GROUP $10.10 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888- 486-4356; www.carfinco.com; Shares outstanding: 26.4 million; Market cap: $266.6 million; Dividend yield: 4.8%) has now expanded into the U.S. through its $9.5-million purchase of Persian Acceptance Corp., an automotive lender that also caters to less affluent borrowers.

Persian operates in Massachusetts, New Hampshire, Maine, Connecticut and Vermont. It works with about 362 car dealers who use the company to get loans for their customers. Persian currently has $42.7 million U.S. in outstanding loans. To put that in perspective, Carfinco has $195.0 million of loans.

Growth by acquisition, especially into the U.S., adds risk. However, Carfinco is cutting that risk by keeping key members of Persian’s management in place, including Peter Miller, its founder and president. Miller sold the company to Carfinco and can receive an additional $2 million on the purchase price if Persian reaches certain performance targets over the next two years.
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AMERIGO RESOURCES $0.43 (Toronto symbol ARG; TSINetwork Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 172.3 million; Market cap: $72.4 million; No dividends paid) processes copper and molybdenum from waste rock at Chile’s El Teniente, the world’s largest copper mine. The contract runs at least through 2037. Amerigo also has an agreement to process material from the nearby Cauquenes tailings pond.

Amerigo gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum.

In the three months ended June 30, 2013, Amerigo’s revenue fell 22.0%, to $31.4 million from $40.0 million a year earlier (all figures except share price and market cap in U.S. dollars). That’s because Amerigo’s copper production fell 17.5%, and molybdenum output declined 23.1%.
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MART RESOURCES $1.19 (Toronto symbol MMT; TSINetwork Rating: Speculative) (403-270-1841; www.martresources.com; Shares outstanding: 356.6 million; Market cap: $449.3 million; Dividend yield: 16.8%) produces oil at its 50%-held Umusadege field in the Niger Delta region of southern Nigeria.

The company recently completed construction of a new central processing facility at the Umusadege field. This plant can process 35,000 barrels of oil a day, enough to handle the field’s current output of 10,140 barrels a day, in addition to all future production increases.

Meanwhile, the company is reporting steady cash flow and continues to pay quarterly dividends of $0.05 a share. The stock yields 16.8%.
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