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WESTJET AIRLINES $24.93 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 124.1 million; Market cap: $3.1 billion; Dividend yield: 1.6%) is upgrading its interline agreement with Air France to a full codesharing arrangement.

Through code-sharing deals, airlines sell seats on one another’s planes using the same two-letter code.

Code-sharing agreements are especially valuable for attracting business passengers, because they let customers seamlessly connect between flights, and gain frequent-flyer points for the entire distance travelled.

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MCCOY CORP. $4.29 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.6 million; Market cap: $114.1 million; Dividend yield: 4.7%) operates through two divisions: Mobile Solutions and Energy Products and Services.

Energy Products and Services sells hydraulic equipment for drilling rigs. This equipment includes power tongs, which 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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WAJAX CORP. $35.88 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $599.2 million; Dividend yield: 9.0%) sells and services heavy equipment, including cranes and forklifts. It also sells related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions).

Wajax operates through 128 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries.

In the three months ended December 31, 2012, Wajax’s revenue fell 3.2%, to $364.9 million from $377.2 million a year earlier. Earnings declined 14.3%, to $14.2 million, or $0.85 a share, from $16.6 million, or $1.00 a share.
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BMTC GROUP $13.70 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514- 648-5757; No website; Shares outstanding: 47.5 million; Market cap: $650.8 million; Dividend yield: 1.8%) is one of Quebec’s largest retailers of furniture, electronics and household appliances.

In the three months ended December 31, 2012, the company’s sales fell 6.9%, to $180.7 million from $194.2 million a year earlier. Earnings per share fell 15.6%, to $0.27 from $0.32.

The company’s near-term outlook is uncertain, and the shares trade at 14.6 times BMTC’s latest 12 months of earnings. That’s on the high side for a retailer with limited near-term growth prospects.
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ALIMENTATION COUCHE-TARD $58.75 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 179.4 million; Market cap: $10.5 billion; Dividend yield: 0.6%) is the largest convenience store operator in Canada, with over 2,000 outlets. It also has nearly 3,700 U.S. stores. The Canadian stores operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand.

In the three months ended February 3, 2013, Couche-Tard’s sales jumped 75.2%, to $11.6 billion from $6.6 billion a year earlier. The gain mostly came from Norway’s Statoil Fuel & Retail ASA, which Couche-Tard bought for $2.7 billion in June 2012 (all figures except share price in U.S. dollars). Excluding one-time items, earnings rose 72.3%, to $153.2 million, or $0.81 a share, from $88.9 million, or $0.49 a share.

Couche-Tard’s outlook is positive. It continues to introduce more-profitable products at its North American stores, including new drinks and improved fresh and takeout food. There is lots of potential for it to sell similar items at the Statoil gas station chain.
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AEROPOSTALE INC. $12.76 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 78.3 million; Market cap: $999.1 million; No dividends paid) is a mall-based retailer of casual clothing and accessories. It now has 984 stores in the U.S., Canada and Puerto Rico that mainly target 14- to 17-year-old women and men. Aeropostale’s 103 P.S. from Aeropostale stores in the U.S. are aimed at seven- to 12-year-olds.

In the three months ended February 2, 2013, Aeropostale’s sales fell 1.3%, to $797.7 million from $808.4 million a year earlier. Same-store sales declined 8%, compared with a 7% decline a year ago.

Aeropostale’s earnings before one-time items fell 46.6%, to $19.0 million, or $0.24 a share, from $35.6 million, or $0.44 a share, a year earlier.
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The price of natural gas has doubled in the past year. However, natural gas stocks have largely ignored that rise and either remained depressed or lagged behind gas prices.

Maybe that’s because investors take it for granted that winters will remain warm, thanks to global warming. But if that’s how things turn out, rising temperatures will raise demand for air conditioning, which runs on gaspowered electricity plants.

At the same time, environmentalists mostly oppose expanding facilities for liquefied natural gas. These projects would let producers ship more of their surplus gas overseas, where natural gas prices are much higher.
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BELLATRIX EXPLORATION $5.93 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266-8670; www.bellatrixexploration- .com; Shares outstanding: 107.9 million; Market cap: $639.8 million; No dividends paid) produces natural gas (70% of output) and oil (30%) in Alberta, B.C. and Saskatchewan.

In the three months ended December 31, 2012, Bellatrix’s production rose 32.1%, to 18,763 barrels of oil equivalent per day (including gas) from 14,209 a year earlier. Cash flow per share increased 7.1%, to $0.30 from $0.28.

Bellatrix continues to have considerable exploration success thanks to its expertise in horizontal drilling (or drilling down and “across” to oil and gas deposits) and fracturing, which involves pumping water, chemicals and other materials into rock to allow oil and gas to flow upward.
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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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