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GENUINE PARTS CO. $69 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing sector; Shares outstanding: 155.1 million; Market cap: $10.7 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.1%; TSINetwork Rating: Average; www.genpt.com) gets 49% of its sales and 50% of its 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 (34% of sales, 33% of earnings), office furniture (13%, 12%) and electrical equipment (4%, 5%).

The company’s sales rose 4.5% in 2012, to $13.0 billion from $12.5 billion in 2011. Sales of auto parts rose 4%, partly due to an acquisition, while sales at the industrial products division gained 7%. Electrical equipment sales rose 5%. Sales of office products were flat.

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Pat McKeough responds to many personal questions about specific stock market advice and other investment topics 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 asked us about one of the best known of the big-box warehouse stores. Low prices and an annual membership fee have helped Costco remain profitable. Pat sums up the company’s financial picture and assesses its ability to continue to compete against intense and increasing competition....

ARCHER DANIELS MIDLAND CO. (New York symbol ADM; www.adm.com) processes corn, wheat, soybeans, canola, flax seed, peanuts, cocoa and other crops into a variety of food ingredients, such as flour, oils and sweeteners. It is also the largest maker of ethanol from corn in the U.S. In its fiscal 2013 first quarter, which ended September 30, 2012, the company earned $182 million, or $0.28 a share. That’s down 60.4% from $460 million, or $0.68 a share, a year earlier. Lower profits from its ethanol business offset higher earnings from its oilseeds operations. Revenue fell 0.4%, to $21.8 billion from $21.9 billion....

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 successful investing, and on successful retirement planning. 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: “When you’re planning your retirement, make sure that you haven’t based your future income on over-optimistic calculations that will leave you short.”...

Hidden value is a key factor we look for in our stock recommendations. A good example of an underappreciated asset is a company’s brand name. Balance sheets often fail to assign any value to brands, even household names that have built up multitudes of loyal customers over the years. The strength of the brands of certain companies can help them expand beyond Canada. That’s where one of Canada’s best-known tech stocks, now under a new name, aims to grow.
BLACKBERRY (Toronto symbol BB; www.blackberry.com) is the new name of Research in Motion Ltd. (old symbol RIM). (Note: The company’s legal name will remain Research in Motion until shareholders approve the name change at the next annual meeting.)...

In our newsletter for the aggressive portion of your portfolio, Stock Pickers Digest, we select a Pick of the Month. In the most recent issue, our choice was one of the penny stocks we cover, a copper company that is active in Chile....

Weak natural gas prices have hurt oil and gas producers with a high gas component. In June 2012, the price of gas dropped below $2 U.S. per million British thermal units (BTUs). That was the lowest price in over 10 years, and down 87% from an all-time high of $15.40 in December 2005. High inventories and record-warm temperatures were the main reasons for the price decline. Gas has since risen to around $3.37. The long-term outlook for natural gas is positive, although in the short term, shale gas discoveries continue to rapidly increase supply. That’s keeping prices low. Shale gas is natural gas that is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the natural gas....

TEMPUR-PEDIC $39.70 (New York symbol TPX; TSINetwork Rating: Speculative) (800-878-8889; www.tempurpedic.com; Shares outstanding: 59.6 million; Market cap: $2.4 billion; No dividends paid) makes and distributes Swedish mattresses and neck pillows made from its proprietary Tempur material, which conforms to the body to provide support and help alleviate pressure points.

The stock is down 54.6% since it hit an all-time high of $87.43 in April 2012. However, it is still up 91.8% from the low of $20.70 that it dropped to in June 2012.

Competitors move into memory foam

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INTUITIVE SURGICAL $574 (Nasdaq symbol ISRG; TSINetwork Rating: Average) (515-507-5000; www.intuitivesurgical.com; Shares outstanding: 39.8 million; Market cap: $22.8 billion; No dividends paid) makes the da Vinci, a computerized surgical system.

Guided by a miniature camera connected to a 3-D monitor, surgeons use the da Vinci to operate by remotely manipulating tiny robotic arms. This process is safer and much less invasive than regular surgery and helps cut a patient’s recovery time and post-operative discomfort. It also reduces scarring and infection risk.

In the three months ended December 31, 2012, Intuitive earned $174.9 million, or $4.37 a share. That’s up 15.7% from $151.2 million, or $3.86 a share, a year earlier. Revenue rose 22.6%, to $609.3 million from $496.8 million. Intuitive is debt-free and holds cash of $2.9 billion, or $72.86 a share.

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FAIR ISAAC CORP. $45.03 (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%) will now provide credit analysis software to Yooli.com, a popular Chinese crowdfunding website.

Crowdfunding is a relatively new way for small or start-up businesses to secure debt or equity financing over the Internet, by attracting small commitments from hundreds of individual investors, without the need for costly and time-consuming securities registrations and intermediaries like brokers.

The U.S. Securities and Exchange Commission (SEC). is still determining the rules for crowdfunding in the U.S. because of the risk of fraud and manipulation. It is likely to issue final guidelines sometime this year.

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INTACT FINANCIAL CORP. $63.01 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 133.3 million; Market cap: $8.4 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 December 31, 2012, Intact’s revenue rose 7.2%, to $1.69 billion from $1.58 billion a year earlier.

Part of the gain came from Jevco Insurance, which Intact bought from the Westaim Corporation for $530 million in early 2012. Jevco sells insurance to highrisk drivers, as well as owners of motorcycles, snowmobiles, recreational vehicles and tow trucks. It operates in Ontario, Quebec and Alberta.

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p>ATLANTIC TELE-NETWORK $43.57 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340- 777-8000; www.atni.com; Shares outstanding: 15.6 million; Market cap: $676.7 million; Yield: 2.3%) has agreed to sell its Alltel wireless business to AT&T (symbol T on New York) for cash of $780 million. In April 2010, Atlantic bought Alltel from Verizon Wireless for $223 million. AT&T is paying a big premium for Alltel (the sale price amounts to a profit of 250% for Atlantic in under three years) because it not only includes 585,000 subscribers but also considerable wireless spectrum. AT&T needs this spectrum to keep expanding its 4G long-term evolution (LTE) wireless networks. LTE networks are up to five times faster than those in use today, but they use up much more spectrum.

After the sale, Atlantic Tele-Network will still have telecom operations in the U.S. southwest, New England, New York State, Guyana, Bermuda and portions of the Caribbean islands.

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NEW GOLD $9.93 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315- 9715; www.newgold.com; Shares outstanding: 476.0 million; Market cap: $4.7 billion; No dividends paid) produced 411,892 ounces of gold in 2012, up 6.4% from 387,155 ounces in 2011.

New Gold now has four operating mines. The company also owns 30% of the El Morro copper/gold project in Chile and 100% of the Blackwater gold project in B.C.

There is still room to increase production at New Gold’s mines and expand their reserves through exploration drilling. But even if the company doesn’t expand its operations or make acquisitions, its production could still top 1 million ounces within six years. Most of that rise will come from the successful development of the Blackwater project, which could hold up to 8.4 million ounces of gold.

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AMAZON.COM $269.47 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 454.6 million; Market cap: $122.5 billion; No dividends paid) 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.

In the three months ended December 31, 2012, Amazon’s earnings fell 45.2%, to $97.0 million, or $0.21 a share. A year earlier, it earned $177.0 million, or $0.38 a share. The profit decline came despite a 22.0% jump in sales, to $21.3 billion from $17.4 billion.

In the latest quarter, the company spent $1.3 billion on “technology and content,” up 56.0% from $862 million a year earlier. That was a major reason for the lower earnings. This additional spending included investments in new models of its Kindle reader, including the Kindle Fire tablet computer. It also invested in cloud computing services and expanded its digital content business to compete with rival Apple Inc.

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WYNDHAM WORLDWIDE $59.05 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 140.3 million; Market cap: $8.3 billion; Dividend yield: 1.6%) is one of the world’s largest hospitality companies, with 7,340 franchised hotels worldwide.

In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has 100,000 vacation rental properties worldwide.

In the three months ended December 31, 2012, Wyndham’s revenue rose 9.4%, to $1.09 billion from $1.0 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 occupancy rate by 2.6%.

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SYMANTEC CORP. $22.62 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408- 517-8000; www.symantec.com; Shares outstanding: 689.2 million; Market cap: $15.6 billion; No dividends paid) has reported better-than-expected quarterly earnings. The company has also launched a restructuring plan that should make it more profitable.

In its fiscal 2013 third quarter, which ended December 28, 2012, Symantec’s earnings per share rose 7.1%, to $0.45 from $0.42. That easily beat the consensus estimate of $0.38 a share.

Symantec’s restructuring plan mainly involves streamlining its product lines and marketing operations. The company will also pay a quarterly dividend starting in the quarter ending June 30, 2013. The annual rate, probably $0.52 a share, would yield 2.3% based on today’s price.

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CALIAN TECHNOLOGIES $20.80 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613- 599-8600; www.calian.com; Shares outstanding: 7.6 million; Market cap: $158.1 million; Dividend yield: 5.4%) operates in two areas: the business and technology services division (which supplies 70% of Calian’s revenue) provides engineers, health care workers and other skilled professionals to clients on a contract basis. The systems engineering division (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems.

In the three months ended December 31, 2012, Calian’s revenue rose 1.9%, to $57.9 million from $56.8 million a year earlier. Earnings fell 5.3%, to $3.4 million, or $0.45 a share, from $3.6 million, or $0.47 a share.

The Business and Technology Services division continues to benefit from steady orders from various Canadian federal government departments, including the Department of National Defence. However, these clients placed fewer orders in the latest quarter, which pushed down the division’s revenue by 1%. That hurt Calian’s profit margins, which lowered its earnings.

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TIM HORTONS $49.70 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons- .com; Shares outstanding: 153.4 million; Market cap: $7.6 billion; Dividend yield: 1.7%) operates 3,365 coffee-and-donut shops in Canada, 755 in the U.S. and 18 in the Middle East.

The company’s new menu items, such as lattes and panini sandwiches, continue to sell well. In addition, Tim Hortons now offers free Wi-Fi Internet access at its Canadian outlets. That’s helping it compete with bigger fast-food chains like McDonald’s, which is aggressively promoting its coffee in Canada.

These factors pushed up Tim Hortons’ sales by 10.3% in the three months ended September 30, 2012, to $802.0 million from $726.9 million a year earlier. Same-store sales rose 2.3% at its U.S. outlets and 1.9% in Canada.

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CHESAPEAKE ENERGY $20.57 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 664.7 million; Market cap: $13.7 billion; Dividend yield: 1.7%) reports that its controversial co-founder, CEO and chairman, Aubrey K. McClendon, has agreed to retire.

McClendon is under investigation by the U.S. Securities and Exchange Commission for taking out $1.1 billion of loans from EIG Global Energy Partners that may have put him in a conflict of interest.

The potential for further conflicts of interest could have slowed the company’s restructuring and eroded investor confidence.

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BELLATRIX EXPLORATION $5.17 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266- 8670; www.bellatrixexploration.com; Shares outstanding: 107.9 million; Market cap: $557.8 million; No dividends paid) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 66% of its output; the remaining 34% is oil.

In the three months ended September 30, 2012, Bellatrix’s production rose 31.0%, to 15,503 barrels of oil equivalent per day (including natural gas) from 11,837 barrels.

Cash flow per share rose 13.6%, to $0.25 from $0.22. Bellatrix’s selling price for gas fell 37.3%, to $2.45 U.S. per thousand cubic feet from $3.91 U.S. a year ago. However, the big production increase offset that decline. The company’s long-term debt is $154.9 million, or a low 28% of its market cap.

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BIRCHCLIFF ENERGY $7.52 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 141.6 million; Market cap: $1.1 billion; No dividends paid) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 75% of Birchcliff’s production is natural gas. The remaining 25% is oil.

In the three months ended September 30, 2012, Birchcliff’s production rose 21.4%, to 21,426 barrels of oil equivalent per day (including natural gas) from 17,648 barrels a year earlier. Even so, cash flow per share fell 25.9%, to $0.20 from $0.27. The production increase was offset by a 37.0% decline in gas prices.

The company’s exploration efforts continue to be successful, and its production keeps rising as it starts up the resulting new wells. In addition, Birchcliff has completed Phase III of its gas-plant expansion in Pouce Coupe, Alberta.

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ACI WORLDWIDE $48.38 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402- 334-5101; www.tsainc.com; Shares outstanding: 39.4 million; Market cap: $1.9 billion; No dividends paid) is buying Online Resources for $126.6 million. The move will help ACI further expand into online banking and bill payments.

Online Resources processes more than 245 million bill payments a year. It will also add 1,000 banks, credit unions, billers, credit card issuers and other credit and payment service providers to ACI’s customer base.

ACI’s outlook is positive. However, the stock is up 35% in the past year and now trades at a high 31.0 times the company’s forecast 2013 earnings of $1.56 a share.

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Alimentation Couche-Tard $53.33, symbol ATD.B on Toronto, was our #1 pick for 2012 in Stock Pickers Digest at $30.55. Its shares are now up 74.6%.

WestJet, our #1 pick for this year (see left), was trading at $14.10 when we made it our #1 Stock of the Year for 2011. It was a year late getting started, but it’s now up 58.1% since then.

Even with that jump, we think WestJet has big gains ahead. In an industry that thrives on passenger satisfaction and trust, the company’s non-unionized workforce is a huge plus.

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AIMIA INC. $15.93 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 172.3 million; Market cap: $2.7 billion; Dividend yield: 4.0%) owns and operates Aeroplan, Canada’s largest loyalty program, and Nectar, the U.K.’s biggest loyalty program. In addition, Aimia has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico.

In the nine months ended September 30, 2012, Aimia’s revenue rose 1.0%, to $1.63 billion from $1.61 billion a year earlier. Excluding one-time items, earnings per share rose 33.8%, to $1.03 from $0.77. The company’s cost per mile awarded dropped significantly, partly because it is making better use of its computer systems. Redemptions also fell.

… but it faces three risks in 2013

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WESTJET AIRLINES $22.29 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 132.3 million; Market cap: $2.9 billion; Divd. yield: 1.8%) serves 81 destinations in North America, Central America and the Caribbean. Its fleet of 100 modern Boeing 737s are 30% more fuel efficient than older jets. WestJet plans to take delivery of 35 more 737s through 2018.

In the three months ended December 31, 2012, the company’s revenue rose 10.1%, to $860.6 million from $781.5 million a year earlier. Demand for its flights remains high. Earnings per share rose 76.9%, to $0.46 from $0.26. WestJet has also raised its quarterly dividend by 25%, to $0.10 from $0.08. The shares now yield 1.9%.

WestJet continues to add ticketing and baggage-transfer alliances with other airlines, including Cathay Pacific, British Airways, Delta Airlines and American Airlines. This lets it reach new markets while limiting its risk. WestJet has also invested heavily in a state-of-the-art computer reservation system.

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