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Pat McKeough responds to many personal questions about stock market investments 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, we had a question from an Inner Circle member on one of the world’s best known companies, Johnson & Johnson. The company continues to grow, acquiring a Swiss medical device maker in the past year, and it is working on new treatments to strengthen its drug pipeline. Pat takes a detailed look at the company’s financial strength and assesses its prospects for growth in the coming year. ...

Heavy equipment distributor Toromont Industries Ltd. completed the spinoff of its natural gas equipment division, Enerflex Ltd., in July 2011. Shareholders received shares of the new Toromont and shares of Enerflex. Here is our latest report on these two Canadian stocks which we follow in our advisory for more aggressive investing, Stock Pickers Digest....

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 investment advice on a wide range of topics. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away....

DUN & BRADSTREET CORP. (New York symbol DNB; www.dnb.com) began operating in 1841 and is now the world’s largest provider of credit reports on individual companies. Its database contains information on 220 million businesses in over 200 countries. Companies use these reports to make lending and purchasing decisions and to cut their credit losses....

PRECISION DRILLING CORP. (Toronto symbol PD; www.precisiondrilling.com) sells contract drilling services to oil and gas producers, mainly in North America. It ended 2012 with 321 active rigs....

Pat McKeough responds to many personal questions about specific stocks 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....

LOBLAW COMPANIES $40.37 (Toronto symbol L; Shares outstanding: 281.7 million; Market cap: $11.4 billion; TSINetwork Rating: Above Average; Dividend yield: 2.2%; www.loblaw.ca) has risen 20% since it announced its plan to hold the bulk of its properties in a real estate investment trust in December 2012.

Even so, the stock still trades at a reasonable 16.3 times the $2.47 a share that Loblaw earned in 2012. The company’s earnings could rise to $2.65 a share in 2013. The stock trades at 15.2 times that forecast.

As well, the company recently raised its quarterly dividend by 4.8%, to $0.22 a share from $0.21. The stock now yields 2.2%.

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ENCANA CORPORATION $18.67 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $13.6 billion; TSINetwork Rating: A v e r a g e ; D i v i d e n d y i e l d : 4 . 3 % ; www.encana.com) had cash flow per share of $4.80 in 2012, down 16.1%, from $5.72 in 2011. Revenue declined 39.1%, to $5.2 billion from $8.5 billion. That’s partly because the company sold $4.0 billion of assets in 2012, including major stakes in its shale gas properties in B.C. and Alberta.

Encana continues to benefit from its hedging program, which has shielded it from falling natural gas prices. In 2012, the company sold its natural gas at an average price of $4.82 per thousand cubic feet, compared to today’s price of $3.16. For 2013, Encana has hedged 52% of its forecast production at $4.39 per thousand cubic feet.

Even with low natural gas prices, Encana’s balance sheet remains sound. It ended 2012 with cash of $3.2 billion, or $4.32 a share. Its long-term debt of $7.2 billion is a manageable 53% of its market cap.
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ENERPLUS CORP. $13.64 (Toronto symbol ERF; Shares outstanding: 198.2 million; Market cap: $2.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.9%) produces an average of 85,490 barrels of oil equivalent per day (weighted 51% to gas and 49% to oil). Its properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia.

In the three months ended December 31, 2012, Enerplus’s cash flow per share rose 16.1%, to $1.01 from $0.87 a year earlier. Gas prices fell 11.7%, but that was offset by a 10.7% production increase and lower operating costs.

The company’s shares now yield a very high 7.9%. Enerplus plans to cut its 2013 exploration and development budget by 19.7%, to $685 million from $853 million in 2012. The reduction will slow the company’s production growth, but it will help it maintain its high dividend.
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ARC RESOURCES $25.67 (Toronto symbol ARX; Shares outstanding: 308.9 million; Market cap: $7.9 billion; TSINetwork Rating: Speculative; Dividend yield: 4.7%; www.arcresources.com) produces oil and gas in western Canada. Its average daily production of 95,725 barrels of oil equivalent is weighted 61% to gas and 39% to oil.

In the three months ended December 31, 2012, ARC’s cash flow per share fell 13.9%, to $0.68 from $0.79. Production rose 4.0%, but that was offset by a 3.2% decline in gas prices.

The company’s long-term debt is $747.7 million, or a low 9.5% of its market cap. ARC trades at 11.1 times its forecast 2012 cash flow of $2.32 a share.
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ISHARES AUSTRALIA INDEX FUND $26.91 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 71 largest Australian stocks. Its MER is 0.51%.

The fund’s top holdings include BHP Billiton, 11.6%; Commonwealth Bank of Australia, 10.2%; Westpac Banking Corp., 9.0%; Australia and New Zealand Banking Group, 7.5%; National Australia Bank, 6.6%; Woolworths, 4.1%; Wesfarmers, 3.9%; CSL Ltd., 2.9%; Rio Tinto, 2.8%; and Woodside Petroleum, 2.4%.

Australia benefits from its stable banking and political systems. It is also rich in natural resources, and it’s close to key Asian markets with vast potential, including India and China.

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LOBLAW COMPANIES $40.37 (Toronto symbol L; Shares outstanding: 281.7 million; Market cap: $11.4 billion; TSINetwork Rating: Above Average; Dividend yield: 2.2%; www.loblaw.ca) has risen 20% since it announced its plan to hold the bulk of its properties in a real estate investment trust in December 2012.

Even so, the stock still trades at a reasonable 16.3 times the $2.47 a share that Loblaw earned in 2012. The company’s earnings could rise to $2.65 a share in 2013. The stock trades at 15.2 times that forecast.

As well, the company recently raised its quarterly dividend by 4.8%, to $0.22 a share from $0.21. The stock now yields 2.2%.

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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $65.88 (New York Exchange symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that are mainly traded on the Santiago Stock Exchange.

The fund’s top holdings are Empresas Copec SA (conglomerate), 8.0%; LATAM Airlines SA, 7.2%; Cencosud SA (retailer), 6.4%; Empresa Nacional de Electricidad (electricity), 6.2%; S.A.C.I. Falabella (retail), 5.7%; Quimica y Minera de Chile (mining), 5.4%; Banco Santander Chile (banking), 5.4%; Enersis AS (electricity), 4.8%; and Empresas CMPC (pulp and paper), 4.5%.

The fund’s industry breakdown is: Utilities, 21.6%; Financials, 17.7%; Materials, 13.7%; Consumer Staples, 12.4%; Industrials, 10.7%; Energy, 8.0%; Consumer Discretionary, 7.2%; Telecommunications, 3.1%; and Information Technology, 2.0%.

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ISHARES MSCI GERMANY FUND $24.74 (New York Exchange symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index.

This index aims to replicate 85% of the total market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.

The ETF’s top holdings are BASF (chemicals), 9.2%; Siemens (engineering conglomerate), 8.8%; Bayer (diversified chemicals), 8.2%; SAP (software), 7.5%; Allianz (insurance), 6.5%; Daimler (autos), 5.5%; Deutsche Bank, 4.5%; Linde AG (industrial gases), 3.4%; and Volkswagen AG (autos), 3.2%.

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ISHARES MSCI SOUTH KOREA INDEX FUND $62.18 (New York Exchange symbol EWY; buy or sell through brokers) is an exchange traded fund that aims to track the MSCI Korea Index.

The ETF’s top holdings are Samsung Electronics, 21.9%; Hyundai Motor Co., 5.3%; Posco (steel), 3.8%; Hyundai Mobis (auto parts), 3.4%; SK Hynix Semiconductor, 2.7%; Shinhan Financial, 2.5%; Kia Motors, 2.4%; KB Financial, 2.3%; LG Chemical, 2.2%; and NHN (Internet content), 1.8%.

The fund’s industry breakdown is as follows: Information Technology, 32.1%; Consumer Discretionary, 17.4%; Financials, 13.6%; Industrials, 13.2%; Materials, 10.5%; Consumer Staples, 5.6%; Energy, 3.2%; Utilities, 1.6%; Telecommunication Services, 1.2%; and Health Care, 0.9%.

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ISHARES MSCI EMERGING MARKETS INDEX FUND $43.41 (New York symbol EEM; buy or sell through brokers) is an exchange traded fund that aims to track the MSCI Emerging Markets Index. Its geographic breakdown includes China, 17.6%; South Korea, 15.1%; Brazil, 12.6%; Taiwan, 10.7%; South Africa, 7.3%; India, 6.7%; Russia, 6.1%; Mexico, 5.2%; Malaysia, 3.4%; and Indonesia, 2.9%.

The fund’s top holdings are Samsung Electronics (South Korea), 4.1%; Taiwan Semiconductor (computer chips), 2.3%; China Mobile, 1.8%; China Construction Bank, 1.5%; Gazprom (Russia: gas utility), 1.2%; Industrial & Commercial Bank of China, 1.2%; America Movil (Brazil: wireless), 1.1%; and Itau Unibanco (Brazil: banking), 1.1%.

The fund’s industry breakdown is as follows: Financials, 26.9%; Information Technology, 14.0%; Energy, 12.1%; Materials, 11.2%; Consumer Staples, 9.0%; Consumer Discretionary, 8.0%; Telecommunication Services, 7.4%; and Industrials, 6.5%.

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ISHARES MSCI JAPAN INDEX FUND $10.17 (New York Exchange symbol EWJ; buy or sell through brokers; us.ishares.com) is an exchange traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index.

The ETF’s top holdings include Toyota, 6.1%; Mitsubishi UFJ Financial, 3.1%; Honda Motor, 2.7%; Sumitomo Mitsui Financial, 2.4%; Mizuho Financial Group, 2.2%; Canon, 1.8%; Takeda Pharmaceutical, 1.8%; Softbank Corp., 1.5%; Fanuc Corp., 1.3%; and Japan Tobacco Inc., 1.2%.

The fund’s industry breakdown is as follows: Consumer Discretionary, 20.7%; Financials, 20.1%; Industrials, 20.0%; Information Technology, 10.8%; Health Care, 6.9%; Materials, 6.6%; Consumer Staples, 6.3%; Telecommunication Services, 4.4%; Utilities, 2.6%; and Energy, 1.6%.

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TRANSCANADA CORP. $47.90 (Toronto symbol TRP; Shares outstanding: 705.1 million; Market cap: $33.5 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.transcanada.com) reports that its earnings fell 14.7% in 2012, to $1.3 billion, or $1.89 a share, from $1.6 billion, or $2.22 a share, in 2011.

Earnings benefited from the start-up of sections of the Keystone pipeline and contributions from new power projects. However, the company experienced unplanned outages at other power plants, and pumped less gas through its Canadian Mainline pipeline. Revenue rose 2.1%, to $8.0 billion from $7.8 billion.

The company also raised its dividend for the 13th consecutive year. The new annual rate of $1.84 a share, up 4.5% from $1.76, yields 3.8%. TransCanada is a buy.

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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $30.60 (Toronto symbol BEP.UN; Units outstanding: 262.5 million; Market cap: $8.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.7%; www.brpfund.com) owns over 183 hydroelectric generating stations, seven wind farms and two natural-gas-fired plants. In all, it has 5,300 megawatts of generating capacity.

Roughly 33% of Brookfield Renewable’s generating capacity is in Canada, with another 45% in the U.S. and 22% in Brazil.

In the three months ended December 31, 2012, Brookfield’s revenue rose 7.5%, to $317 million from $295 million a year earlier. Cash flow per unit jumped 40%, to $0.28 from $0.20, although both quarters were well under long-term averages. That’s because below-average rainfall amounts and lighterthan- usual winds held back electricity production.

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BELL ALIANT INC. $26.63 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $6.1 billion; TSINetwork Rating: Average; Dividend yield: 7.1%; www.aliant.ca) sells phone and Internet services to 2.5 million customers in Atlantic Canada and rural Ontario and Quebec. It also sells wireless services through an alliance with BCE, which owns 45% of Bell Aliant.

The company continues to replace copper wires with fibre optic cable. That’s attracting more highspeed Internet and digital TV customers. Strong demand for these services is also helping offset lower revenue from traditional phone services.

Bell Aliant’s high-speed fibre optic systems now reach 650,000 homes. The company plans to increase that to 800,000 by the end of 2012.

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GREAT-WEST LIFECO $27.18 (Toronto symbol GWO; Shares outstanding: 950.6 million; Market cap: $25.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.5%) has agreed to buy Irish Life Group Ltd., Ireland’s largest pension manager and life insurance provider.

Irish Life has over one million clients and $50 billion of assets under management.

The government of Ireland nationalized Irish Life in June 2012, after its former parent company, Irish Life & Permanent, ran into financial difficulty.
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BCE INC. $46.26 (Toronto symbol BCE; Shares outstanding: 775.4 million; Market cap: $35.4 billion; TSINetwork Rating: Above Average; Dividend yield: 5.0%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also sells satellite and Internet TV services across the country.

In the three months ended December 31, 2012, BCE’s earnings per share rose 4.8%, to $0.65 from $0.62 a year earlier. Revenue was unchanged at $5.2 billion. Revenue at the traditional telephone business, which supplies 51% of BCE’s overall revenue, fell 3.7%, partly due to strong competition from cable companies.

However, many of BCE’s land-line clients are switching to mobile phones, which are more profitable for the company. That helped fuel a 6.8% revenue increase at the wireless division (28% of total revenue). Revenue at BCE’s media division (11%) rose 2.2%.
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SYMANTEC CORP. (Nasdaq symbol SYMC; www.symantec.com) sells computer security technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software....

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 investing advice on the widest possible variety of topics. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice....

THE BOEING CO. (New York symbol BA; www.boeing.com grounded all of its new 787 Dreamliner passenger planes in January 2013 after a battery problem forced one to make an emergency landing in Japan....