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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $79 and CU.X [class B voting] $79; Income Portfolio, Utilities sector; Shares outstanding: 128.6 million; Market cap: $10.1 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.5%; TSINetwork Rating: Above A v e r a g e ; 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 right) owns 52.9% of the company.

In July 2011, Canadian Utilities bought an Australian natural gas distributor for $1.1 billion. This move, along with an expansion of its power transmission grid in Alberta, continues to benefit the company. These new assets have also helped offset lower revenue from its Alberta power plants due to planned maintenance shutdowns.

As a result, the company’s earnings rose 13.1% in 2012, to a record $561 million, or $4.11 a share. The new Australian business contributed $26 million to that total. In 2011, Canadian Utilities earned $496 million, or $3.65 a share. Revenue rose 4.7%, to $3.1 billion from $3.0 billion.
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TORSTAR CORP. $7.00 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.7 million; Market cap: $557.9 million; Price-to-sales ratio: 0.4; Dividend yield: 7.5%; TSINetwork Rating: Above Average; www- .torstar.com) continues to struggle with falling newspaper ad sales, particularly at The Toronto Star, its flagship paper. Strong competition and unfavourable foreign exchange rates are also hurting profits at wholly owned Harlequin Enterprises, the world’s leading romance novel publisher.

In 2012, Torstar’s revenue fell 4.1%, to $1.49 billion from $1.55 billion in 2011. Earnings fell 52.6%, to $103.2 million, or $1.29 a share, from $217.7 million, or $2.72 a share. If you disregard writedowns and other unusual items, earnings per share would have declined 25.0%, to $1.35 from $1.80.

To improve its profitability, Torstar continues to cut jobs and sell surplus real estate. Since 2010, these moves have cut its annual costs by $34.4 million. In 2013, annual savings should rise to $50.0 million.
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ENBRIDGE INC. $46 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 806.5 million; Market cap: $37.1 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.enbridge.com) operates pipelines that pump crude oil and natural gas from western Canada to customers in eastern Canada and the U.S. The company’s pipelines handle around 65% of all western Canadian crude oil exports.

Pipelines supply 90% of Enbridge’s revenue. The remaining 10% mainly comes from distributing gas to 2 million consumers in Ontario, Quebec, New Brunswick and New York State.

Enbridge’s revenue fell 22.7%, from $16.1 billion in 2008 to $12.5 billion in 2009, as the recession cut gas sales and prices. In 2010, the company started up the $3.5-billion Alberta Clipper pipeline, which pumps oil from Alberta to refineries in Illinois. That helped push up Enbridge’s revenue by 103.0% in 2012, to $25.3 billion.

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GREAT-WEST LIFECO (Toronto symbol GWO; www.greatwestlifeco.com) is Canada’s largest insurance company, with $545.8 billion in assets under administration. It recently agreed to buy Irish Life Group Ltd., Ireland’s largest pension manager and life insurance provider....

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. This week, we had a question on one of the Canadian stocks that is making a transition to the Internet age. Cheque printer Davis + Henderson has moved aggressively to acquire software that performs vital functions for financial institutions. Pat looks at the potential risks and rewards of the company’s growth by acquisition strategy. ...

RIOCAN REAL ESTATE INVESTMENT TRUST (Toronto symbol REI.UN; www.riocan.com) is Canada largest real estate investment trust (REIT), with 294 retail properties, including 11 under development. It also owns 52 malls in the U.S. RioCan continues to expand beyond suburban big-box-style malls. It recently formed a joint venture with Allied Properties Real Estate Investment Trust (Toronto symbol AP.UN) to redevelop certain properties in Toronto as mixed-use office, retail and residential complexes....

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. 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: “The fact that the share price has gone up or down is one of the least important reasons for selling a stock.”...

DEVON ENERGY CORP. (New York symbol DVN; www.dvn.com) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 61% gas and 39% oil....

If you were about to begin your investing career, you might want to have a list of the most important things you could do to be successful....

DUN & BRADSTREET CORP. $82 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 40.9 million; Market cap: $3.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.0%; TSINetwork Rating: Average; 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.

The company gets 63% of its revenue from credit reports. The remaining 37% comes from other information products, including software to help businesses manage customer data and websites.


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MCCORMICK & CO. INC. $72 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 132.7 million; Market cap: $9.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.9%; TSINetwork Rating: Average; www.mccormick.com) earned $407.8 million, or $3.04 a share, in its 2012 fiscal year, which ended November 30, 2012. That’s up 9.0% from $374.2 million, or $2.79 a share, in 2011. Sales rose 8.6%, to $4.0 billion from $3.7 billion.

The company is benefiting from its recent purchases of spice makers and food companies in India and Eastern Europe. As well, its ongoing cost-cutting plan saved it $56 million in 2012.

Earnings should rise to between $3.15 and $3.23 a share in 2013. The stock trades at a high but still reasonable 22.6 times the midpoint of that range.
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GENUINE PARTS CO. $77 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing sector; Shares outstanding: 154.9 million; Market cap: $11.9 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.8%; TSINetwork Rating: Average; www.genpt.com) has exercised its option to buy full control of privately held Exego Group, which sells auto parts through 290 stores in Australia and 92 in New Zealand.

Genuine Parts paid $150 million for 30% of Exego in January 2012. It will pay $800 million for the remaining 70% when the deal closes in April 2013.

This is a big purchase for Genuine Parts, which earned $648.0 million, or $4.14 a share, in 2012. However, Exego is profitable, and this purchase will cut the company’s reliance on North America, which accounts for nearly all of its sales.
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TEXAS INSTRUMENTS INC. $35 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $38.5 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.2%; TSINetwork Rating: Average; www.ti.com) is receiving more orders for its analog chips, which convert sounds and temperatures into digital signals that computers can understand. Manufacturers use analog chips in a wide variety of products, including cars, medical devices and home appliances.

Texas Instruments now expects revenue of $2.80 billion to $2.91 billion in the first quarter of 2013. That’s up from its earlier forecast of $2.69 billion to $2.91 billion. It also expects to earn $0.28 to $0.32 a share in the quarter, up from its prior forecast of $0.24 to $0.32.

As well, Texas Instruments has raised its quarterly dividend by 33.3%, to $0.28 a share from $0.21. The new annual rate of $1.12 yields 3.2%. The company also added $5 billion to its share repurchase authorization. It can now buy back up to $8.4 billion of its shares, or 22% of its market cap. There is no time limit for these purchases.
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AMERICAN EXPRESS CO. $66 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $72.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.4%; TSINetwork Rating: Average; www.- americanexpress.com) has passed the Federal Reserve’s latest “stress test,” which measures how well banks and other financial firms would cope with a sharp jump in unemployment, falling stock prices and other unfavourable economic conditions.

As a result, the company raised its quarterly dividend by 15.0%, to $0.23 a share from $0.20. The new annual rate of $0.92 yields 1.4%. Amex also announced that it would buy back $4.0 billion worth of its shares in 2013, and $1 billion more in the first quarter of 2014.

American Express is a buy.
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ARCHER DANIELS MIDLAND CO. $33 (New York symbol ADM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 658.6 million; Market cap: $21.7 billion; Priceto- sales ratio: 0.2; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.adm.com) has moved up nearly 20% in the past three months. That’s partly because Berkshire Hathaway, the holding company controlled by billionaire investor Warren Buffett, now owns 1% of Archer Daniel’s shares.

The company is also profiting from strong demand for sweeteners and soybean products. That let it raise its its dividend by 8.6%. The new annual rate of $0.76 a share yields 2.3%.

Archer Daniels Midland is a buy....

NEWMONT MINING CORP. $40 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 496.7 million; Market cap: $19.9 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.3%; TSINetwork Rating: Average; 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%.

In 2012, Newmont sold its gold for an average of $1,662 an ounce, up 6.4% from $1,562 in 2011. But production fell 4.9%, to 5.6 million ounces from 5.9 million. That’s because it had to cut production at its 31.5%-owned Batu Hijau gold/copper project in Indonesia as the mine prepares to open a new phase in 2014.

As a result of the lower production, Newmont’s revenue fell 4.7% to $9.9 billion from $10.4 billion. Rising operating costs and higher royalty payments have also pushed up Newmont’s cost per ounce by 14.6%, to $677 from $591. That cut its 2012 earnings by 14.7%, to $1.85 billion, or $3.73 a share. In 2011, it earned $2.2 billion, or $4.39 a share.
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NORDSTROM INC. $53 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 195.9 million; Market cap: $10.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.3%; TSINetwork Rating: Average; www.nordstrom.com) plans to invest $240 million to expand its online operations, which supply about 10% of its sales. This cost is equal to a third of the $735 million, or $3.56 a share, that Nordstrom earned in the fiscal year ended February 2, 2013.

These upgrades will help the department-store operator handle an increase in purchases from customers using mobile devices. In the past year, mobile sales accounted for 20% of its online orders.

Nordstrom is a buy....

JONES GROUP INC. $13 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 81.0 million; Market cap: $1.1 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.jonesgroupinc- .com) designs clothing, accessories and footwear for men and women. Major brands include Jones New York, Gloria Vanderbilt, Rachel Roy, Anne Klein and Nine West. Jones sells its products through department stores and 594 company-owned outlets.

As part of an ongoing restructuring, Jones closed 103 stores in 2012, and plans to close more in 2013. It’s also improving the quality of its products and making acquisitions. For example, in June 2012 it paid $5.5 million for the rights to upscale shoes by designer Brain Atwood.

Even with these new businesses, Jones’s sales rose just 0.3% in 2012, to $3.80 billion from $3.79 billion in 2011. Higher costs for cotton and labour caused its earnings to fall 11.3%, to $93.7 million from $105.6 million. Due to fewer shares outstanding, earnings per share fell just 4.6%, to $1.24 from $1.30.
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LIMITED BRANDS INC. $44 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 288.4 million; Market cap: $12.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.7%; TSINetwork Rating: Average; www.- limitedbrands.com) owns the Victoria’s Secret lingerie chain and the Bath & Body Works personalcare products stores.

Limited is restructuring the La Senza lingerie chain in Canada, including closing a third of its stores (it now has 158 outlets) and shifting its focus to younger shoppers.

In its 2013 fiscal year, which ended February 2, 2013, Limited’s sales rose just 0.9%, to $10.5 billion from $10.4 billion in 2012. That’s mainly because it closed 65 stores, bringing its total down to 2,876. However, same-store sales rose 6%, including 7% gains at both the Victoria’s Secret division, which includes La Senza, and Bath & Body Works.
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STANLEY BLACK & DECKER INC. $82 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 160.3 million; Market cap: $13.1 billion; Priceto- sales ratio: 1.3; Dividend yield: 2.4%; TSINetwork Rating: Average; www.stanleyblackanddecker.com) has completed its purchase of Infastech, a Hong Kong-based fastener maker that serves the automotive, electronic, construction and aerospace markets. The purchase price of $850 million is equal to 1.1 times the $778.7 million, or $4.67 a share, that Stanley earned in 2012. Infastech should add $0.20 a share to Stanley’s 2013 earnings.

Thanks to this new business, Stanley now gets 16% of its revenue from emerging markets like Asia and Latin America. It aims to raise this to 20% by 2015.

Stanley Black & Decker is a buy....

APPLE INC. $451 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 939.1 million; Market cap: $423.5 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.4%; TSINetwork Rating: Average; www.apple.com) is down 36% from its all-time high of $705.07 in September 2012.

Thanks to the huge success of the iPhone and iPad, as well as the star power of the late Steve Jobs, Apple’s co-founder and CEO, the company became a media and broker favourite. However, increasing competition from devices powered by Google’s Android software have hurt Apple’s appeal.

The company still has a loyal customer base and will probably use some of its $137.1 billion in cash and investments to increase is dividend and buy back shares. Even so, the stock will continue to have trouble living up to investors’high expectations.
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PHILIPS ELECTRONICS N.V. ADRs $31 (New York symbol PHG; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 914.6 million; Market cap: $28.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.0%; TSINetwork Rating: Average; www.philips.com) gets about 50% of its revenue by making health care products, such as Xray and magnetic resonance imaging (MRI) scanners. It also makes lighting (30% of revenue) and consumer electronics, such as appliances and electric razors (20%).

The company recently agreed to sell its video and audio products business to Japan’s Funai Electronics for 150 million euros (1 euro = $1.32 Canadian). As part of the deal, it will receive royalties on sales of Philipsbranded products for at least the next five years.

Philips also continues to make progress with a major restructuring plan, which includes making its plants more efficient and cutting 4% of its workforce. Moreover, Philips is expanding sales in emerging markets like Turkey, Russia and China.
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ABB LTD. ADRs $23 (New York symbol ABB; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 2.3 billion; Market cap: $52.9 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.abb.com) is a leading maker of power technologies for utilities, including transformers, transmission systems and circuit breakers. The Switzerland-based company also makes automation systems and robotics that industrial clients use to make their facilities more productive.

ABB is taking advantage of the slow economy to make acquisitions. In May 2012, it paid $3.7 billion for Thomas & Betts Corp., which makes a number of industrial products, including heating and air condi- tioning equipment, electrical connectors and transmission towers for power companies. Combining some of its functions with those of Thomas & Betts could save ABB $200 million a year by 2016.

These new operations pushed up ABB’s revenue by 3.5% in 2012, to $39.3 billion from $38.0 billion in 2011. Without the negative impact of the high U.S. dollar, which hurts the contribution of its overseas operations, revenue would have risen 7% in 2012.
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BHP BILLITON LTD. ADRs $70 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.7 billion; Market cap: $189.0 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.3%; TSINetwork Rating: Average; www.bhpbilliton.com) is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. Its main products include iron ore, coal, aluminum, manganese, titanium, oil and natural gas.

In the six months ended December 31, 2012, BHP earned $5.7 billion, or $2.14 per ADR. (BHP’s fiscal year ends June 30; each ADR represents two BHP common shares.) That’s down 43.4% from $10.0 billion, or $3.77 per ADR, a year earlier. Lower prices for commodities, particularly iron ore, cut BHP’s gross profits by $5.4 billion in the latest period. Unfavourable exchange rates also lowered earnings by $574 million. Revenue fell 14.1%, to $32.2 billion from $37.5 billion.

In response to weak commodity prices, BHP has agreed to sell $4.3 billion of less-important projects. That includes a deal to sell its remaining diamond operations in Canada for $500 million.
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THE BOEING CO. $85 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 756.2 million; Market cap: $64.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.boeing.com) had to ground all of its new 787 Dreamliner passenger planes in January 2013 after a battery problem forced one to make an emergency landing in Japan.

The 787 uses advanced rechargeable lithium-ion batteries to power its electrical systems. These batteries were overheating, which increases the risk of a fire. The company has redesigned the battery and feels flights will resume in the next few weeks.

The stock fell to $75 after the grounding but has rebounded strongly. That’s mainly due to Boeing’s quick response. Demand for the company’s other planes also remains strong.
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