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FAIR ISAAC CORP. $45.42 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 35.5 million; Market cap: $1.6 billion; Dividend yield: 0.2%) makes FICO Scores, the computer program that dominates the market for software that businesses use to evaluate customer creditworthiness. The company is also profiting by selling software that helps credit card issuers control fraud and analyze their clients’ spending patterns.

In the three months ended December 31, 2012, Fair Isaac’s earnings per share before one-time items fell 6.4%, to $0.88 from $0.94. But that still beat the consensus estimate of $0.73. Revenue rose 11.5%, to $190.0 million from $170.3 million.

Revenue rose thanks to the contribution of recently acquired Adeptra, which makes systems that let businesses communicate with customers through a range of channels, including voice, instant messaging, mobile applications and email. However, Fair Isaac earned lower profit margins on Adeptra’s products, which depressed its earnings.
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TRILOGY ENERGY CORP. $30.03 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogy.com; Shares outstanding: 116.7 million; Market cap: $3.5 billion; Dividend yield: 1.4%) is up over 18% since it reported improved production and cash flow.

In the three months ended December 31, 2012, Trilogy produced an average of 35,014 barrels of oil equivalent per day (including natural gas). That was up 23.8% from 28,288 barrels a day a year earlier. Trilogy’s daily production should rise to an average of 41,000 barrels for all of 2013.

Cash flow per share rose 31.4%, to $0.67 from $0.51 a year earlier, due to the increased production and higher oil prices.
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CIMAREX ENERGY $74.03 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 86.4 million; Market cap: $6.2 billion; Dividend yield: 0.8%) produces and explores for oil and natural gas. Gas makes up 49% of its output.

Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas (52% of production); the Permian Basin of western Texas and southeastern New Mexico (43%); and the Texas Gulf Coast (5%).

In the three months ended December 31, 2012, Cimarex’s production averaged 676.7 million cubic feet of natural gas equivalent per day (including oil). That’s up 12.5%, from 601.4 million cubic feet a year earlier. Thanks to the higher production, Cimarex’s cash flow per share fell just 4.2%, to $3.46 from $3.61, despite lower oil and gas prices.
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DEVON ENERGY CORP. $55.69 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 406.0 million; Market cap: $22.7 billion; Dividend yield: 1.6%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 61% gas and 39% oil.

In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company is now focused on its North American projects, which include conventional production, shale oil in Texas and oil sands in Alberta.

Devon has formed joint ventures to cut the risk of its big development projects. Last year, it sold a onethird stake in five shale oil and gas fields to giant Chinese state-owned petroleum and chemical company Sinopec for $2.2 billion. As well, Japan’s Sumitomo Corp. bought 30% of the Cline and Wolfcamp shales in Texas for $1.4 billion.
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DOMINO’S PIZZA $49.82 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 56.4 million; Market cap: $2.8 billion; Dividend yield: 1.6%) continues to expand internationally.

It just opened its first store in Thailand, in the city of Bangkok, and plans to add more outlets in the country in the next few years.

Domino’s now operates in over 70 markets worldwide. Its international stores supply almost half of its sales and about a third of its earnings.
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SYMANTEC CORP. $24.54 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 689.2 million; Market cap: $16.9 billion; No dividends paid) sells computersecurity technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software.

Symantec’s shares continue to rise on better-than-expected earnings and a new restructuring plan that should improve the company’s longterm profitability.

In its fiscal 2013 third quarter, which ended December 28, 2012, Symantec’s revenue rose 4.4%, to a record $1.8 billion from $1.7 billion a year earlier. That’s mainly because its business clients are buying more of its data-security and storage services.
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PROCTER & GAMBLE CO. (New York symbol PG; www.pg.com) is one of the world’s largest makers of household and personal-care products. Its top brands include Tide detergent, Crest toothpaste, Head & Shoulders shampoo and Pampers diapers. The company faces rising competition from generic brands. Last year, it responded with a major restructuring plan, which mainly involves cutting 5% of its workforce and closing plants....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on a wide range of investing topics, including trading stocks online. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Tip of the week: “Online trading seems like an easy and convenient way to invest, but that can also make it an easy way to lose money.”...

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of high-quality stocks. ISHARES MSCI SOUTH KOREA INDEX FUND (New York Exchange symbol EWY; buy or sell) is an exchange traded fund that aims to track the MSCI Korea Index....

AMAZON.COM (Nasdaq symbol AMZN; www.amazon.com) is a major online retailer. It gets about 33% of its sales from books, music and videos. Other products, including electronics, computer games and toys, make up the other 67%. Amazon Marketplace lets other companies sell their products through Amazon’s websites....

Pat McKeough responds to many personal questions about the best stocks to invest in and other topics on investment 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, one Inner Circle member in search of a U.S. stock asked us about one of the most iconic brands on the American market, Coca-Cola. Pat looks at the company’s penetration of international markets and its efforts to broaden its market with healthier products, while taking into account the increasing appeal of private-label beverages to price-conscious consumers. ...

Hidden value is one of the key factors we examine when we look for top stocks. A company’s brand name is one good example of an underappreciated asset. Balance sheets often fail to assign any value to brands, even household names that have built up multitudes of loyal customers over the years. Two weeks ago we looked at the value of the brand of Canada’s best known tech company. (View the article here.) Today we examine another company whose strong brand is helping it grow internationally. THOMSON REUTERS CORP. (Toronto symbol TRI; www.thomsonreuters.com) gets 57% of its revenue and 50% of its earnings by selling news and information to professionals in the banking industry. It also sells specialized information products to clients in the legal, accounting and scientific research fields....

ALGONQUIN POWER & UTILITIES CORP. $7.63 (Toronto symbol AQN; Shares outstanding: 175.0 million; Market cap: $1.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.2%; www.algonquinpower.com) has received approval from regulators to complete its purchase of a natural gas distribution utility in Georgia for $147.0 million U.S.

This utility serves 64,000 consumers. The purchase is scheduled to close on April 1, 2013.

Algonquin will borrow funds to pay for 50% of this business and will issue shares for the other 50%. Emera which is a recommendation of The Successful Investor, our conservative growth advisory, will buy enough of these new shares to keep its interest in Algonquin at 19.9%.

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ISHARES MSCI BRAZIL INDEX FUND $55.03 (New York Exchange symbol EWZ; buy or sell through brokers) is an exchange traded fund that is designed to track the Brazilian stock market. The fund’s top holdings are Cia Itau Unibanco Holding (banking), 8.1%; Vale do Rio Doce (mining) preferred, 7.2%; Petrobras common, 7.2%; Banco Brandesco (banking) preferred, 6.7%; Cia de Bebidas das Americas (beer and beverages), 6.7%; and Vale SA, 3.8%.

The fund’s focus on the resource sector and its concentration in certain stocks, such as Petrobras and Vale do Rio Doce, add risk. However, both are high-quality stocks.

Brazil’s economy is forecast to grow at a rate of 3.1% this year. Domestic consumption is recovering, although exports remain slow. Growth could be as high as 3.7% next year.

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PENGROWTH ENERGY $4.49 (Toronto symbol PGF; Shares outstanding: 509.0 million; Market cap: $2.3 billion; TSINetwork Rating: Average; Dividend yield: 10.7%; www.pengrowth.com) plans to spend $770 million on upgrades to its oil and natural gas properties in 2013. That’s up 46.7% from the $525 million it probably spent in 2012.

Of this total, $300 million will go toward its Lindbergh oil sands project in Alberta. As a result, Lindbergh’s first phase will start in 2015, one year earlier than planned.

The company expects its cash flow to rise 14% in 2013, to $680 million. However, that’s 11.7% less than its spending plans. To make up the difference, Pengrowth plans to raise $700 million by selling certain properties. The cash from these sales should also help it maintain its monthly dividend of $0.04 a share. The annual rate of $0.48 yields 10.7%.

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PEYTO EXPLORATION & DEVELOPMENT CORP. $23.06 (Toronto symbol PEY; Shares outstanding: 148.5 million; Market cap: $3.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.1%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Peyto’s average daily production of 46,033 barrels of oil equivalent is 89% gas and 11% oil.

In the three months ended September 30, 2012, the company’s cash flow was $0.54 a share, down 12.9% from $0.62 a share a year earlier. Lower gas prices offset a 26.5% rise in production.

The shares trade at 7.3 times Peyto’s forecast 2013 cash flow of $3.14 a share. The company’s long-term debt of $615 million is a low 18.1% of its $3.4-billion market cap.

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BONAVISTA ENERGY $13.57 (Toronto symbol BNP; Shares outstanding: 176.9 million; Market cap: $2.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.1%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and B.C. Bonavista’s production is weighted 61% to gas and 39% to oil.

In the three months ended September 30, 2012, the company’s cash flow per share fell 42.9%, to $0.48 from $0.84 a year earlier. Gas prices declined by 38.0%, to $2.56 per thousand cubic feet from $4.13. Production also dropped 8.6%, to 65,464 barrels of oil equivalent per day (including gas) from 71,636 barrels.

Bonavista has cut its monthly dividend by 41.7%, to $0.07 from $0.12. That will help the company conserve cash to invest in its exploration and development program. The new annual rate of $0.84 a share still yields a high 6.1%. As well, Bonavista will now pay out just 39% of its cash flow as dividends, so further dividend cuts are unlikely.

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PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST $27.02 (Toronto symbol PMZ.UN; Units outstanding: 97.8 million; Market cap: $2.6 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.7%; www.primarisreit.com) has received a friendly $28-a-share takeover bid.

The offer is from H&R REAL ESTATE INVESTMENT TRUST $23.73 (Toronto symbol HR.UN; Units outstanding: 194.2 million; Market cap: $4.6 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.7%; www.hr-reit.com).

The H&R bids tops the $26-a-share in-cash hostile takeover bid from a consortium led by Canadian private equity firm Kingsett Capital. This group includes RioCan REIT $26.67.

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TRANSCANADA CORP. $48.17 (Toronto symbol TRP; Shares outstanding: 705.1 million; Market cap: $34.0 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.transcanada.com) has won a contract from Progress Energy Canada to build and operate a new $5-billion, 750-kilometre pipeline that will pump natural gas from northeastern B.C.’s Montney region to Prince Rupert, B.C.

Progress is a wholly owned subsidiary of Petronas, Malaysia’s state-owned oil company. Progress plans to build a facility near Prince Rupert that will liquefy the gas and ship it by tanker to customers in Asia.

The Prince Rupert line should begin operating in 2018.

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POWERSHARES QQQ ETF $67.02 (Nasdaq symbol QQQQ; buy or sell through brokers; www.invescopowershares. com), formerly called Nasdaq 100 Trust Shares, holds stocks that represent the Nasdaq 100 Index. That index consists of the 100 largest shares on the Nasdaq exchange, based on market cap.

The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets.

The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Oracle Corp., Comcast Corp. and eBay.

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SPDR DOW JONES INDUSTRIAL AVERAGE ETF $138.76 (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average.

The fund’s top holdings are IBM, ExxonMobil, Chevron Corp., 3M, Travelers Companies, Mc- Donald’s Corp., Johnson & Johnson, Caterpillar Inc., United Technologies and Boeing. The fund’s expenses are about 0.18% of its assets.

SPDR Dow Jones ETF is a buy.

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ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $22.24 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.50%. It yields 4.2%.

The fund’s top holdings are CIBC, 6.7%; Bonterra Energy, 6.0%; National Bank, 6.0%; TD Bank, 5.5%; Bank of Montreal, 5.4%; Royal Bank, 4.4%; Telus Corp., 4.4%; Bank of Nova Scotia, 4.1%; BCE Inc., 4.1%; and IGM Financial, 3.9%.

The fund holds 51.5% of its assets in financial stocks. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.

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ISHARES S&P/TSX 60 INDEX FUND $18.50 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets.

The index mostly consists of high-quality companies. However, as the fund must ensure that all sectors are represented, it holds a few stocks we wouldn’t include.

The index’s top holdings are Royal Bank, 7.8%; TD Bank, 6.7%; Bank of Nova Scotia, 6.0%; Suncor Energy, 4.6%; Bank of Montreal, 3.6%; CN Railway, 3.6%; Potash Corp., 3.3%; Enbridge, 3.1%; Trans- Canada Corp., 3.0%; BCE Inc., 3.0%; CIBC, 2.9%; Canadian Natural Resources, 2.9%; Barrick Gold, 2.9%; Goldcorp, 2.6%; Manulife Financial, 2.3%; Cenovus Energy, 2.2%; and Telus Corp., 1.9%.

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ENCANA CORPORATION $19.79 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $14.6 billion; TSINetwork Rating: A v e r a g e ; D i v i d e n d y i e l d : 4 . 0 % ; www.encana.com) is selling its 30% stake in a proposed liquefied natural gas (LNG) terminal in Kitimat, B.C., to Chevron Corp. (New York symbol CVX).

LNG plants are not Encana’s area of expertise, so it has decided to let Chevron focus on building and operating the facility.

Chevron’s experience with similar LNG plants in Australia should help speed up the Kitimat project and let it conclude contract negotiations with Asian LNG buyers.

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INNERGEX RENEWABLE ENERGY $10.16 (Toronto symbol INE; Shares outstanding: 93.7 million; Market cap: $952.0 million; TSINetwork Rating: Extra Risk; Dividend yield 5.7%; www.innergex.com) operates 22 hydroelectric facilities, five wind farms and one solar-power plant in Quebec, Ontario, B.C. and Idaho. Innergex gets 55% of its power from hydroelectric plants. Wind farms supply 39% and solar generates 6%.

Like Algonquin, Innergex makes sure it has firm long-term power-purchase contracts in place before it makes acquisitions or starts building new facilities.

Innergex aims to keep increasing its hydroelectric and wind-power capacity; right now, it is developing or building eight projects.

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