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HILLSHIRE BRANDS CO. $35 (New York symbol HSH; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 122.9 million; Market cap: $4.3 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.4%; TSINetwork Rating: Average; www.hillshirebrands.com) makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats.

In its 2013 second quarter, which ended December 31, 2012, Hillshire’s sales rose 0.7%, to $1.06 billion from $1.05 billion a year earlier. If you disregard the contribution of a business that the company sold, sales would have risen 2.5%. Without unusual items, earnings per share rose 29.2%, to $0.62 from $0.48.

The earnings increase is partly due to savings from plant closures and layoffs. These moves should cut its costs by $100 million a year by the end of fiscal 2015.
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GENERAL MILLS INC. $49 (New York symbol GIS, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 644.3 million; Market cap: $31.6 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.1%; TSINetwork Rating: Above Average; www.generalmills.com) is one of the world’s largest food makers. Its top brands include Big G (cereal), Green Giant (canned and frozen vegetables), Pillsbury (baking dough), Old El Paso (tacos) and Progresso (soups and sauces).

In its fiscal 2013 third quarter, which ended February 24, 2013, General Mills’sales rose 7.5%, to $4.4 billion from $4.1 billion a year earlier. That’s mainly due to Yoki, a Brazilian snack food and seasoning maker that General Mills bought in August 2012. Without acquisitions, sales would have risen 2%.

Earnings rose 14.9%, to $420.9 million from $366.4 million. Earnings per share rose 16.4%, to $0.64 from $0.55, on fewer shares outstanding. These figures exclude a number of unusual items, such as costs to integrate new operations, and gains and losses on hedging contracts that General Mills uses to lock in prices of certain ingredients.
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KRAFT FOODS GROUP INC. $51 (Nasdaq symbol KRFT; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 593.4 million; Market cap: $30.3 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www.kraftfoodsgroup.com) makes a variety of grocery products, including Kraft macaroni and cheese, Oscar Mayer meats, Philadelphia cream cheese, Maxwell House coffee, Jell-O desserts and Miracle Whip salad dressing.

Unlike Mondelez, Kraft prefers to focus on North America. That limits its growth but also cuts its risk.

As a stand-alone company, Kraft earned $1.6 billion, or $2.75 a share, in 2012. That’s down 7.5% from $1.8 billion, or $3.00 a share, in 2011. The decline is mainly due to costs related to a restructuring, which includes closing plants and making its remaining operations more efficient. Kraft expects to spend $650 million on this plan by the end of 2014.
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MONDELEZ INTERNATIONAL INC. $31 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.8 billion; Market cap: $55.8 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.mondelezinternational.com) makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone) and gum and candy (Trident, Chiclets, Halls cough drops). It also makes beverages, including coffee (Tassimo) and powdered fruit drinks (Tang), as well as grocery and cheese products for overseas markets. Mondelez gets 46% of its sales from developing countries, 35% from Europe and 19% from North America.

Mondelez aims to improve its efficiency by shutting less profitable plants and offices. Severance and other costs will total $925 million. The company didn’t say how much it expects the restructuring will save it after it is completed in 2014. However, Mondelez will probably use these savings to cut its long-term debt of $15.6 billion, which is equal to 28% of its market cap.

If you assume the October 2012 breakup of the old Kraft Foods Inc. into Mondelez and Kraft Foods Group (see right) occurred at the start of 2011, Mondelez would have earned $1.6 billion, or $0.86 a share, in 2012. That’s down 9.8% from $1.7 billion, or $0.97 a share, in 2011. If you exclude restructuring costs and other unusual items, per-share earnings would have risen by 0.7%, to $1.39 from $1.38,
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CONAGRA FOODS INC. $35 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 416.8 million; Market cap: $14.6 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www. conagrafoods.com) makes a variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter, Orville Redenbacher popcorn and Reddiwip whipped cream.

The company recently completed its $4.75-billion acquisition of Ralcorp Holdings, the largest maker of private-label food in the U.S.

The purchase helped push up ConAgra’s sales by 13.4% in its 2013 third quarter, which ended February 24, 2013, to $3.85 billion from $3.4 billion a year earlier. Ralcorp contributed $291.8 million to the latest sales. In addition, ConAgra raised its prices on its branded products to offset higher ingredient costs.
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HEWLETT-PACKARD CO. $20 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.9 billion; Market cap: $38.0 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.7%; TSINetwork Rating: Average; www.hp.com), like IBM (see left), wants to cut its reliance on selling computer hardware. However, it has faced some setbacks.

In 2011, the company considered spinning off its personal computer and printer operations, which together account for 50% of its revenue. It eventually decided to hang onto these businesses and make them more profitable instead.

Hewlett also wants to expand its software division, which supplies just 3% of its revenue. That’s why it paid $11.0 billion for U.K.-based Autonomy in October 2011. This company’s software helps businesses organize information in different formats, including email and web pages.
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INTERNATIONAL BUSINESS MACHINES CORP. $192 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $211.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.ibm.com) started up in 1911, which makes it the world’s oldest computer company. Today, it operates in over 170 countries.

IBM continues to shift out of less profitable businesses, like making personal computers, and toward more promising activities, such as designing computer systems and managing them for clients. Long-term maintenance contracts give IBM more dependable revenue streams; services now supply 56% of its sales.

The company is also expanding its software business. It’s particularly interested in developing analytics software, which helps businesses and governments gather and analyze a wide variety of data. For example, IBM’s Smarter Planet initiative combines advanced hardware and software to help clients solve complex problems, such as traffic congestion. Software supplies 24% of IBM’s revenue.
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SNC-LAVALIN GROUP INC. (Toronto symbol SNC; www.snclavalin.com) has held up well in the face of negative press coverage, beginning with $56 million U.S. in unusual payments it made in 2011 to help win Libyan construction contracts. Lately, the company has come under scrutiny over allegations of widespread corruption in the Quebec construction industry. SNC’s quick response to these situations, including replacing its chief executive officer and other executives, helped prevent permanent damage to its 102-year-old reputation. It has also brought in stronger oversight and compliance procedures....

These two leading mining stocks reported lower earnings for 2012. But they’re both working on important projects that they expect to boost their earnings in 2013 and beyond. Here’s our report from the latest edition of Wall Street Stock Forecaster. NEWMONT MINING (New York symbol NEM; www.newmont.com) gets 90% of its revenue from gold mines in the U.S., Australia and Peru. Copper, zinc and other metals supply the remaining 10%....

Pat McKeough responds to many personal questions for stock investing advice and to other questions 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....

Low interest rates continue to spur demand for dividend-paying stocks, such as these two electrical utilities. In the latest issue of The Successful Investor we examine the outlook for each of these Canadian dividend stocks. Both of these companies plan to split their shares on a 2-for-1 basis in May 2013. CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] and CU.X [class B voting]; www.canadianutilities.com) distributes electricity and natural gas in Alberta. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see below) owns 52.9% of the company....

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 advice. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away....

Encana took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy, which specializes in oil sands. Lower gas prices have pushed Encana’s shares down by about 36% since the split. Oil prices have weakened lately, but Cenovus’s stock is still up about 12%. Here is our latest report on these two energy stocks....

An American Depositary Receipt (ADR) is an investment unit for foreign companies that trade on U.S. stock markets. One ADR typically represents one or more shares of the overseas firm....

GOODYEAR TIRE & RUBBER CO. $12.02 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 245.5 million; Market cap: $3.0 billion; No dividends paid) is the world’s largest tire maker, with 52 plants in 22 countries.

In the quarter ended December 31, 2012, the weak global economy lowered Goodyear’s sales by 11.2%, to $5.05 billion from $5.68 billion a year earlier.

North American sales fell 10.4%, to $2.31 billion from $2.58 billion. As well, sales declined by 9.2% in Latin America; 16.2% in Europe, the Middle East and Africa; and 0.5% in Asia. Unfavourable foreign currency moves also lowered Goodyear’s revenue.
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CARFINCO FINANCIAL GROUP $9.32 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 24.6 million; Market cap: $229.3 million; Dividend yield: 5.2%) provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks.

In the three months ended December 31, 2012, Carfinco’s revenue rose 16.1%, to $19.2 million from $16.5 million a year earlier. The company loaned $40.1 million in the quarter, up 24.4% from $32.2 million.

Earnings rose 13.6%, to $5.0 million, or $0.21 a share, from $4.4 million, or $0.18 a share.
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ZARGON OIL & GAS $6.44 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 29.9 million; Market cap: $192.6 million; Dividend yield: 11.2%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota. The company’s output is 67% oil and 33% natural gas.

In the three months ended December 31, 2012, Zargon produced 7,720 barrels of oil equivalent per day, down 17.0% from 9,278 barrels a year earlier. That’s because the company sold some less important properties and cut back on natural gas drilling in light of low gas prices. The production drop pushed down Zargon’s cash flow per share by 5.2%, to $0.55 from $0.58 a year earlier.

The company expects cash flow of $1.89 a share in 2013. It trades at 3.4 times that estimate.
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LEON’S FURNITURE LTD. $12.66 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243- 7880; www.leons.ca; Shares outstanding: 70.6 million; Market cap: $893.8 million; Dividend yield: 3.2%) has received notice that the Canadian Commissioner of Competition will not challenge the company’s $700-million acquisition of The Brick (symbol BRK on Toronto) before the Competition Tribunal. Brick shareholders have already approved the takeover.

Leon’s is still a buy.

ADOBE SYSTEMS $44.90 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 495.1 million; Market cap: $22.2 billion; No dividends paid) reports that its earnings excluding one-time items fell 37.5% in its fiscal 2013 first quarter, which ended March 1, 2013, to $177.9 million, or $0.35 a share. A year earlier, it earned $284.5 million, or $0.57 a share. Revenue declined 3.6%, to $1.01 billion from $1.05 billion.

Adobe is doing a good job of selling its Creative Cloud package of photo-editing and desktoppublishing programs as a subscription service instead of a one-time purchase. The company added 153,000 Creative Cloud subscribers during the quarter, to bring its total to 479,000.

As a result, its subscription revenue jumped 53.4% from a year earlier and now accounts for 22% of its overall revenue. Adobe still gets 67% of its revenue from direct software sales. Services and support supply the remaining 11%.
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FIRSTSERVICE CORP. $33.92 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 28.8 million; Market cap: $976.9 million; No dividends paid) serves the following areas of the real estate market: commercial real estate, residential property management and property improvement. FirstService has more than 23,000 employees worldwide.

In the three months ended December 31, 2012, the company’s revenue rose 6.3%, to $632.5 million from $594.9 million a year earlier (all figures except share prices in U.S. dollars). Excluding one-time items, earnings per share jumped 30.8%, to $0.68 from $0.52.

Revenue rose at two of FirstService’s three divisions: commercial real estate (up 23%) and residential property management (up 10%).
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trong>AIMIA INC. $15.40 (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: 4.2%) is buying the 25% of Nectar Italia that it doesn’t already own for $9 million.

The Nectar Italia loyalty program has signed up over 9.5 million members since its launch in March 2010. Its partners include a range of Italian retailers and participating shopping websites. As well, Nectar offers a credit card that lets holders earn points.

Aimia continues to diversify its operations geographically. That’s offsetting the risk of its Canadian business: Air Canada, a major Aeroplan partner, is vulnerable to labour disputes that can disrupt its service.
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ALARMFORCE INDUSTRIES $10.54 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800- 267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $128.6 million; Dividend yield: 0.9%) sells twoway voice alarm systems and monitoring services in Canada and increasingly in the U.S. It’s also adding to its prospects with its VideoRelay system, which it launched in October 2011.

In the three months ended January 31, 2013, AlarmForce’s sales rose 9.1%, to $11.9 million from $10.9 million a year earlier. Earnings almost doubled, to $1.4 million, or $0.11 a share, from $699,000, or $0.06.

AlarmForce’s revenue rose along with its subscriber base. Earnings were sharply higher because the company spent a lot less on marketing than in the yearearlier quarter, when it increased its advertising spending as it expanded into the U.S.
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BIRCHCLIFF ENERGY $7.96 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy. com; Units outstanding: 141.8 million; Market cap: $1.1 billion; No dividends paid) produced an average of 26,655 barrels of oil equivalent a day (82% natural gas and 18% oil) in the quarter ended December 31, 2013. That was up 34.5% from 19,812 barrels a year earlier.

The production increase pushed up Birchcliff’s cash flow per share by 16.7%, to $0.28 from $0.24 a year earlier.

The stock trades at 7.1 times the company’s annual cash flow, based on the latest quarter.
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IMPERIAL METALS $11.27 (Toronto symbol III; TSINetwork Rating: Speculative) (604-669-8959; www.imperialmetals.com; Shares outstanding: 74.4 million; Market cap: $838.5 million) is a Vancouver-based mining firm that produces and explores for base and precious metals. Its producing assets include two B.C. mines: 100%-owned Mount Polley (copper and gold) and 50% of Huckleberry (copper and molybdenum). Japan’s Mitsubishi Materials owns 31.1% of Huckleberry, and Furukawa Co., Dowa Holdings and Marubeni Corp. own 6.3% each.

Imperial restarted Mount Polley in 2005 and continues to explore around the known deposit to increase the mine’s reserves and lengthen its life. Right now, Imperial expects Mount Polley to produce until mid- 2023.

The company is also developing its Red Chris copper/ gold property in northwestern B.C, where it could start up an open-pit mine as early as late 2014. The property holds as much as 9 billion pounds of copper and 13.8 million ounces of gold.
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SHERRITT INTERNATIONAL $4.33 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 296.9 million; Market cap: $1.3 billion; Dividend yield: 4.0%) is a diversified natural resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 356 megawatts of power generation capacity in Cuba, with an additional 150 megawatts starting up this year.

The company is a major nickel producer, with operations in Cuba and Canada. As well, it is now starting up its 40%-owned Ambatovy mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and is Canada’s largest thermal coal producer.

In the three months ended December 31, 2012, Sherritt’s revenue fell 12.8%, to $467.9 million from $536.8 million a year earlier. Lower nickel and cobalt prices and a decline in thermal coal sales were the main reasons for the drop. Cash flow fell 56.4%, to $39.5 million, or $0.13 a share, from $90.7 million, or $0.31. That was due to the lower revenue and higher production costs.
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