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DOMINO’S PIZZA $61.50 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 55.7 million; Market cap: $3.5 billion; Dividend yield: 1.3%) 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.

The company’s earnings per share rose 21.3% in the quarter ended June 16, 2013, to $0.57 from $0.47 a year earlier. The latest figure beat the consensus estimate of $0.56. Sales gained 10.0%, to $414.0 million from $376.1 million. That also exceeded the consensus estimate of $405.1 million. Same-store sales rose 5.8% internationally and 6.7% in the U.S.

Domino’s continues to boost its sales by aggressively promoting its new pizza recipes. It’s also profiting by moving into ordering online and through software applications, or apps, on smartphones. In addition, it still has lots of growth potential overseas.
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CARFINCO FINANCIAL GROUP $9.45 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.4 million; Market cap: $250.2 million; Dividend yield: 5.1%) provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks.

In the three months ended June 30, 2013, Carfinco’s revenue rose 10.6%, to $19.5 million from $17.7 million a year earlier. Earnings rose 7.0%, to $5.8 million from $5.4 million. Earnings per share were unchanged at $0.22 on more shares outstanding.

The stock is up 19% since we first recommended it in our July 2012 issue at $7.93. The company’s outlook remains positive, and the shares trade at just 11.1 times Carfinco’s latest 12 months of earnings.
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INTACT FINANCIAL CORP. $61.99 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 132.0 million; Market cap: $8.2 billion; Dividend yield: 2.8%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.

In the three months ended June 30, 2013, Intact’s revenue rose 10.4%, to $2.18 billion from $1.98 billion a year earlier. The company earned $0.89 a share, down sharply from $1.35. However, the latest results include a one-time loss of $0.79 a share related to storms and flooding in Alberta.

Earlier this year, Ontario’s minority Liberal government agreed to meet an NDP demand for a 15% cut to auto insurance premiums. This was in exchange for NDP support on the June 2013 provincial budget, which avoided triggering an election.
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BROADRIDGE FINANCIAL SOLUTIONS $30.69 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 121.2 million; Market cap: $3.7 billion; Dividend yield: 2.7%) 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 fiscal 2013 fourth quarter, which ended June 30, 2013, Broadridge’s earnings jumped 61.4%, to $134.6 million from $83.4 million a year earlier. Pershare earnings rose 67.2%, to $1.12 from $0.67, on fewer shares outstanding.

If you disregard unusual items, such as writedowns and costs to integrate recent acquisitions, Broadridge’s per-share earnings would have risen 12.7%, to $1.15 from $1.02. On that basis, the company’s latest earnings beat the consensus estimate of $1.09 a share.
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THE CHURCHILL CORP. $9.11 (Toronto symbol CUQ; TSINetwork Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.6 million; Market cap: $224.1 million; Dividend yield: 5.3%) has reported earnings of just $485,000, or $0.02 a share, in the three months ended June 30, 2013. However, that’s a big improvement from a loss of $4.3 million, or $0.18 a share, a year earlier.

Churchill’s long-term prospects are sound, and the stock has rebounded from its low of $7 earlier this year. The company’s order backlog stood at $1.81 billion at the end of June 2013, up 15.2% from $1.57 billion a year previous. Meanwhile, its dividend, which yields a high 5.3%, appears safe.

However, the stock trades at a high 31.4 times the company’s forecast 2013 earnings of $0.29 a share, and its long-term debt of $150.2 million, which is a high 67% of its market cap, adds risk.
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WAJAX CORP. $36.32 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $601.0 million; Dividend yield: 6.6%) sells and services cranes, forklifts and other heavy equipment. It also sells related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions).

In the three months ended June 30, 2013, Wajax’s revenue declined 6.4%, to $362.1 million from $386.6 million a year earlier. Earnings fell 26.8%, to $13.5 million, or $0.81 a share, from $18.5 million, or $1.11.

The declines mostly came from reduced activity in the Western Canadian oil and gas industry, which hurt results at Wajax’s power systems business. Lower mining equipment and construction sales more than offset strength in the materials-handling market.
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MCCOY CORP. $6.25 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.8 million; Market cap: $167.6 million; Dividend yield: 3.2%) operates through two divisions: Mobile Solutions and Energy Products and Services.

Energy Products and Services sells hydraulic equipment, including power tongs, for drilling rigs. Power tongs are large wrench-like tools that tighten and loosen the pipe in the drill hole.

Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries.
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LEON’S FURNITURE LTD. $13.30 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243- 7880; www.leons.ca; Shares outstanding: 70.6 million; Market cap: $930.0 million; Dividend yield: 3.0%) reports that its sales jumped to $480.6 million in the three months ended June 30, 2013, from $162.1 million a year earlier. Earnings rose 60.4%, to $14.4 million, or $0.20 a share, from $9.0 million, or $0.13.

The latest three months was the first full quarter in which the furniture chain owned former rival The Brick. Its $700-million purchase of The Brick closed on March 28, 2013.

The Brick operates 234 stores across Canada, while Leon’s has 76 outlets in every province except B.C. Leon’s and The Brick will continue to operate as separate chains.
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TIM HORTONS $58.56 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 153.1 million; Market cap: $8.8 billion; Dividend yield: 1.8%) operates 3,468 coffee-anddonut shops in Canada, 807 in the U.S. and 29 in the Persian Gulf.

In the three months ended June 30, 2013, Tim Hortons’ sales rose 1.9%, to $800.1 million from $785.6 million a year earlier. Same-store sales increased 1.5% at its Canadian outlets and 1.4% in the U.S. Earnings per share rose 17.4%, to $0.81 from $0.69.

The company continues to benefit from new menu items it has recently introduced, such as panini sandwiches. It also raised its prices to cover higher ingredient costs.
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Pat McKeough responds to many requests for specific advice on what stocks to buy and other questions on investment strategy and the economy from the members of his Inner Circle. 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. This week an Inner Circle member asked us about the popular online movie and TV service Netflix. A pioneer in sending DVD’s by mail and offering online entertainment at a low monthly fee, the company has seen its share price rocket by over 360% in less than a year. Pat examines the company’s aggressive thrust into producing original content as it seeks to maintain its dominant position in an increasingly competitive industry. ...

CHEMTRADE LOGISTICS INCOME FUND (Toronto symbol CHE.UN; www.chemtradelogistics.com) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors. These companies create sulphur, acid and other by-products as part of their activities. Chemtrade converts these substances into useful chemicals, like sulphuric acid. Chemtrade’s Marsulex subsidiary provides a range of environmental services, including improving air quality and treating and handling industrial waste....

Every Wednesday, we publish our “Investor Toolkit” series. Whether you’re a new or experienced investor, these weekly updates are designed to give you our specific advice on successful investing. Each Investor Toolkit update gives you a fundamental piece of investing advice and shows you how you can put it into practice right away. Tip of the week: “Index-linked GICs are one of the newer investment products that promise safety but usually deliver more in fees and commissions than in profits for investors.”...

FEDEX CORP. (New York symbol FDX; www.fedex.com) delivers packages and documents in the U.S. and over 220 other countries and territories. The stock has moved up in the past few weeks, partly due to speculation that activist investment firm Pershing Square Capital Management will soon make a significant investment in FedEx....

DUNDEE CORP. $22 (www.dundeecorp.com) has completed the spinoff of subsidiary DREAM Unlimited Corp. $12 (Toronto symbol DRM) as a separate, publicly traded firm. DREAM, which was formerly 70%-owned Dundee Realty Corp., develops and manages commercial and residential real estate in North America and Europe. Insiders still control 50% of DREAM.

DREAM gets half of its revenue from selling land, mainly in western Canada, to housing developers. It also develops its own housing and condominium properties, and holds stakes in Toronto’s King Edward Hotel and the Arapahoe Basin ski area in Colorado.

Dundee shareholders received one share of DREAM for each Dundee share they held. That’s why Dundee’s stock dropped from over $36 after the spinoff.
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POTASH CORP. OF SASKATCHEWAN $41 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 865.1 million; Market cap: $35.5 billion; Price-to-sales ratio: 4.3; Dividend yield: 3.6%; TSINetwork Rating: Average; www.potashcorp.com) is the world’s largest fertilizer producer. Its five potash mines in Saskatchewan and one in New Brunswick account for 20% of global potash capacity. Five of its mines have reserves of between 65 and 84 years. It also makes fertilizers from nitrogen and phosphate.




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ROYAL BANK OF CANADA $61 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $85.4 billion; Price-to-sales ratio: 2.4; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) is part of a consortium that plans to set up a new Canadian stock exchange. Other investors include pension funds and mutual fund company IGM Financial (see page 76).

A new company called Aequitas Innovations Inc. will operate this exchange, which will be mainly aimed at institutional investors. It will also limit high-frequency computer trading, which can distort stock prices. Aequitas plans to begin operating in late 2014.

IGM and Royal did not say how much they are contributing to this new business or how much they will own. Still, this new exchange aims to capture 20% of Canada’s stock-trading volumes over the next few years.
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SHAWCOR LTD. $45 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.8 million; Market cap: $2.6 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.1%; TSINetwork Rating: Average; www.shawcor.com) continues to win new contracts for its underwater pipeline coating services....

TELUS CORP. $31 (Toronto symbol T; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 654.1 million; Market cap: $20.3 billion; Priceto- sales ratio: 2.0; Dividend yield: 4.4%; TSINetwork Rating: Above Average; www.telus.com) plans to build a new 58-storey office tower, called Telus Sky, in downtown Calgary. In addition to offices, the building will include retail stores and residential units. Telus will be the main tenant, occupying 20% of the building’s overall floor space.

This project will cost $400 million. That’s equal to 1.1 times the $362 million, or $0.56 a share, that Telus earned in the three months ended March 31, 2013. The company expects to finish construction in the fall of 2017.

Telus is a buy....

CAE INC. $11 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 259.7 million; Market cap: $2.9 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.8%; TSINetwork Rating: Average; www.cae.com) has won several new contracts with 15 countries’ defence forces. Under these deals, CAE will build helicopter flight simulators and train pilots and aircraftsupport personnel.

In all, these deals are worth $100 million, or 5% of CAE’s annual revenue of $2.1 billion.

CAE is a buy....

CANADIAN TIRE CORP. $83 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.9 million; Market cap: $6.7 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.canadiantire.ca) has a new four-year deal to sell Olympic-branded shoes and other sports equipment made by Adidas Group. The company will feature this merchandise in its main Canadian Tire stores and its SportChek and Sports Experts sporting good chains.

Offering exclusive products is a good way for retailers to draw customers to their stores. This new deal also builds on Canadian Tire’s current eightyear sponsorship agreement with the Canadian Olympic Committee.

Canadian Tire is a buy....

HOME CAPITAL GROUP INC. $57 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.6 million; Market cap; $2.0 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.8%; TSINetwork Rating: Average; www.homecapital.com) caters to borrowers who don’t meet the stricter standards of larger banks.

Even so, the company continues to do a good job of identifying problem loans before borrowers fall behind on their payments. In the latest quarter, loan-loss provisions rose just 3.8% from a year earlier. Home Capital also limits its risk by keeping its mortgage loans below 80% of a property’s market value.

Home Capital Group is a buy....

IGM FINANCIAL INC. $46 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 255.1 million; Market cap: $11.7 billion; Price-to-sales ratio: 3.7; Dividend yield: 4.7%; TSINetwork Rating: Above Average; www. igmfinancial.com) is Canada’s largest independent mutual fund company. Power Financial owns 58.7% of IGM.

As of June 30, 2013, the company had $124.8 billion of assets under management, including mutual funds. That’s down 1.8% from $127.1 billion on May 31, 2013. Recent volatility in world stock markets is the main reason for the decline. However, IGM’s assets under administration are still up 5.8% from a year earlier.

IGM’s fee income rises and falls with the value of the securities it manages, so its revenue and earnings gain when the value of these assets rises.
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GREAT-WEST LIFECO INC. $31 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 951.4 million; Market cap: $29.5 billion; Price-to-sales ratio: 1.0; Dividend Yield: 4.0%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest insurance company after Manulife, with $581.9 billion of assets under administration. It also sells mutual funds and retirement planning and wealth management services. Power Financial (Toronto symbol PFC) owns 68.2% of Great-West.

The company expects to complete its $1.75- billion purchase of Irish Life Group in the next few weeks. This business is Ireland’s largest pension manager and life insurance provider.

Meanwhile, Great-West continues to benefit from rising equity markets, which have raised the value of the assets it manages. Mutual fund sales at U.S. subsidiary Putnam Investments are also improving.
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CGI GROUP INC. $31 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 309.3 million; Market cap: $9.6 billion; Price-to-sales ratio: 1.5; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is Canada’s largest provider of computer outsourcing services. CGI helps its clients automate routine functions, like accounting and buying supplies. That makes them more efficient and lets them focus on their main businesses.

CGI continues to profit from its August 2012 acquisition of Logica plc, a U.K.-based firm that provides computer-outsourcing services in 36 countries.

Thanks to this $2.7-billion purchase, CGI’s earnings rose 66.3% in its 2013 second quarter, which ended March 31, 2013, to $175.9 million from $105.7 million a year earlier. Due to more shares outstanding, earnings per share rose at a slower rate of 40.0%, to $0.56 from $0.40. These figures exclude unusual items, such as costs to integrate Logica.
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BCE INC. $43 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 775.9 million; Market cap: $33.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.4%; TSINetwork Rating: Above Average; www.bce.ca) has completed its $3.2-billion purchase of Astral Media, which owns 22 TV stations, 84 radio stations and several pay TV and specialty channels, such as the Movie Network, Family Channel and Teletoon.

To win approval for the takeover, BCE agreed to sell several of Astral’s specialty TV channels and radio stations. Still, the new operations should immediately add to the company’s earnings.

BCE is a buy.

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