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SHERWIN-WILLIAMS CO. $159 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 103.1 million; Market cap: $16.4 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.3%; TSINetwork Rating: Above Average; www.sherwin-williams.com) has raised its quarterly dividend by 28.2%, to $0.50 a share from $0.39. The new annual rate of $2.00 yields 1.3%. Sherwin has now raised its dividend for 34 consecutive years.

The company recently agreed to buy privately held Consorcio Comex, Mexico’s largest paint and coating maker. Comex sells its products through 3,300 stores in Mexico, 240 in the U.S. and 78 in Canada.

Sherwin will pay $2.3 billion, including assumed debt, when the sale closes later this year. Expanding by acquisition, particularly in foreign countries, adds risk. The stock is also expensive at 20.7 times Sherwin’s likely 2013 earnings of $7.68 a share.

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TERADATA CORP. $62 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 169.1 million; Market cap: $10.5 billion; Priceto- sales ratio: 4.0; No dividends paid; TSINetwork Rating: Average; www.teradata.com) earned $2.85 a share in 2012. That’s up 22.8% from $2.32 in 2011. Revenue rose 12.8%, to $2.7 billion from $2.4 billion.

However, Teradata expects its revenue to rise by just 6% to 10% in 2013. That’s because the uncertain economy is hurting demand for its analytics services, which help businesses gather and analyze large amounts of data, including customer purchasing patterns. The stock is down 23.5% from its peak of $81 in September 2012. Even so, it trades at a high 19.9 times the company’s likely 2013 earnings of $3.12 a share.

Teradata is a hold.

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INTERNATIONAL FLAVORS & FRAGRANCES INC. $72 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.6 million; Market cap: $5.9 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.iff.com) produces compounds that improve the taste of food and make consumer products smell better.

In 2012, IFF’s sales rose 1.2%, to $2.82 billion from $2.79 billion in 2011. The company gets 75% of its sales from outside the U.S., and the high U.S. dollar is hurting the contribution of these businesses. Without the negative impact of currency exchange rates, sales would have risen 4%. Earnings per share rose 6.4%, to $3.98 from $3.74.

The company continues to expand in fast-growing markets like China, India and Turkey. These investments should push up its earnings to $4.40 a share in 2013, and the stock trades at 16.4 times that estimate. The $1.36 dividend yields 1.9%.

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GOOGLE INC. $792 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 329.7 million; Market cap: $261.1 billion; Price-to-sales ratio: 5.3; No dividends paid; TSINetwork Rating: Above Average; www.google- .com) is thinking about opening its own chain of retail stores in the U.S. These outlets would sell mobile phones and tablet computers powered by the company’s Android operating system, as well as lesser-known products like Chromebook laptop computers, which run on Google’s Chrome operating system.

The company could also use these stores to promote unusual new products it is developing, such as eyeglasses with embedded computer displays.

Google is a buy.

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SYMANTEC CORP. $23 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 689.2 million; Market cap: $15.9 billion; Price-to-sales ratio: 2.3; No dividends paid; TSINetwork Rating: Average; www.symantec.com) reported that its sales rose 4.4% in its fiscal 2013 third quarter, which ended December 28, 2012, to a record $1.8 billion from $1.7 billion a year earlier. That’s mainly because businesses are buying more data-security and storage services.

However, rising labour and other costs caused the company’s earnings to fall 0.3%, to $313 million from $314 million. Symantec spent $200 million on share repurchases in the latest quarter. Due to fewer shares outstanding, earnings per share rose 7.1%, to $0.45 from $0.42. The company spends around 14% of its revenue on research.

Symantec now aims to improve its profitability by streamlining its product lines and marketing. As a result, it will cut 5% of its workforce. The company expects to pay $275 million in severance and other costs in fiscal 2014. Symantec did not say how much these moves would save it, but they should help it reach its profit margin (operating income divided by revenue) target of at least 30.0%. The company’s profit margin was 25.6% in the latest quarter.

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ADOBE SYSTEMS INC. $39 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 498.8 million; Market cap: $19.5 billion; Price-to-sales ratio: 4.4; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) earned $307.9 million in the fourth quarter of its 2012 fiscal year, which ended November 30, 2012. That’s down 7.4% from $332.6 million a year earlier. Earnings per share fell 9.0%, to $0.61 from $0.67, on more shares outstanding. Revenue was flat at $1.15 billion. Adobe continues to spend a high 17% of its revenue on research.

Adobe is doing a good job of selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription service instead of a one-time purchase. It sold 10,000 Creative Cloud subscriptions a week in the fourth quarter, up from 8,000 in the third quarter. As a result, subscription revenue jumped 51.5% from a year earlier and now accounts for 17% of Adobe’s total revenue. The company still gets 74% of its revenue from direct sales of software. Services and support supply the remaining 9%.

Moving to a subscription model will slow Adobe’s short-term revenue and earnings growth, but it should give the company steadier revenue streams.

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PROCTER & GAMBLE CO. $77 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.7 billion; Market cap: $207.9 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.pg.com) is one of the world’s largest makers of household and personal-care products. Its top brands include Tide detergent, Crest toothpaste, Head & Shoulders shampoo and Pampers diapers.

The company faces rising competition from generic brands. Last year, it responded with a major restructuring plan, which mainly involves cutting 5% of its workforce and closing plants.

The company expects severance and other costs to total $3.5 billion over the next five years. However, these moves should cut its costs by $10 billion over the same period.

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MONDELEZ INTERNATIONAL INC. $27 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.8 billion; Market cap: $48.6 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.mondelezinternational.com) makes cookies and biscuits (Oreo, Chips Ahoy and Ritz); chocolate bars (Cadbury, Toblerone) and gum and candy (Trident, Chiclets and Halls cough drops).

On October 1, 2012, the old Kraft Foods broke itself into two publicly traded companies: Mondelez and Kraft Foods Group (Nasdaq symbol KRFT).

In its first quarter as a separate company, which ended December 31, 2012, Mondelez’s revenue fell 1.9%, to $9.5 billion from $9.7 billion a year earlier. If you disregard currency exchange rates and businesses the company sold, revenue would have risen 3.7%, mainly due to stronger sales in developing markets. That offset lower gum sales. Before unusual items, earnings fell 7.7%, to $0.36 a share from $0.39.

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APACHE CORP. $75 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 392.0 million; Market cap: $29.4 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.1%; TSINetwork Rating: Average; www.apachecorp.com) spent $16 billion buying oil and gas properties in the past three years, which helped increase its long-term debt to $11.4 billion. It now plans to sell $2 billion of land to help pay down its debt.

Thanks to these purchases, Apache’s average daily production rose 5.4% in 2012, to 779,000 barrels (51% oil and 49% gas). That pushed up its revenue by 1.1%, to a record $16.9 billion from $16.8 billion in 2011. However, higher depletion charges (the cost of replenishing its reserves) cut earnings by 19.0%, to $3.8 billion, or $9.48 a share. In 2011, it earned $4.7 billion, or $11.83 a share.

The company’s production will likely rise 3% to 5% in 2013. The stock trades at just 8.0 times its forecast earnings of $9.39 a share.

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QUAKER CHEMICAL CORP. $57 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 13.1 million; Market cap: $746.7 million; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.quakerchem.com) makes lubricants and chemicals that keep mechanical parts from rusting.

Quaker has bought five other companies in the past two years. Expanding by acquisition adds risk, but these were all smaller firms that added to Quaker’s technical expertise. They also expanded its overseas operations, which now supply 65% of its revenue.

For example, in July 2012, Quaker paid $2.7 million for Italy-based NP Coil Dexter Industries, which makes chemicals that carmakers and other industrial clients use to prepare metal surfaces before applying paint or other coatings. This helps paint form a stronger bond, which prevents rust. NP Coil Dexter will add $11 million to Quaker’s annual revenue.

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MTS SYSTEMS CORP. $54 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 15.7 million; Market cap: $847.8 million; Priceto- sales ratio: 1.6; Dividend yield: 2.2%; TSINetwork Rating: Average; www.mts.com) makes equipment and software that manufacturers use to test the behaviour of materials, machines and structures. This helps them reduce errors and costs.

The stock has moved up from $37 in June 2012. That’s mainly because rising car sales have prompted automakers to spend more on testing systems. Increasingly strict car emission and safety regulations are also fuelling MTS’s sales.

In its fiscal 2013 first quarter, which ended December 29, 2012, MTS’s revenue rose 6.7%, to $142.7 million from $133.7 million a year earlier.

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TENNANT CORP. $47 (New York symbol TNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 18.5 million; Market cap: $869.5 million; Price-to-sales ratio: 1.2; Dividend yield: 1.5%; TSINetwork Rating: Average; www.tennantco.com) makes industrial floor-cleaning equipment, including scrubbers, sweepers and polishers. It also manufactures cleaning gear for garages, stadiums, parking lots and city streets.

The company continues to develop floor cleaners and related products that use its ec-H2O technology, which uses electricity to make tap water act like a detergent. That eliminates the need for soaps and cleaning agents, and lowers the machine’s operating costs.

Even so, Tennant’s sales fell 2.0% in 2012, to $739.0 million from $754.0 million in 2011. Overseas markets supply around 35% of Tennant’s sales, and the high U.S. dollar hurts the contribution of its foreign operations. On a constant-currency basis, sales were flat. The company sold $141 million worth of ec-H20 scrubbers in 2012 (or 19.1% of total sales). That’s up 0.7% from $140 million (18.6% of sales) in 2011.

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YUM! BRANDS INC. $65 (New York symbol YUM; Aggressive Growth Portfolio; Consumer sector; Shares outstanding: 451.0 million; Market cap: $29.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.yum- .com) was the first fast-food chain to enter China, in 1987. Its 5,726 restaurants in China, including its KFC and Pizza Hut chains, now supply 50% of its sales and 45% of its earnings.

The company’s huge success in China is the main reason why the stock has jumped 448% in the past 10 years. However, recent allegations that Yum’s KFC outlets in that country bought raw chicken with higherthan- permitted levels of antibiotics have hurt its Chinese sales.

Following an investigation, Chinese regulators did not charge the company with violating food-safety standards.

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MCDONALD’S CORP. $94 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.0 billion; Market cap: $94.0 billion; Price-to-sales ratio: 3.4; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.mcdonalds.com) operated 34,480 fast food restaurants in 119 countries at the end of 2012. These outlets serve a wide variety of foods, including items tailored to local tastes, but they are best known for their hamburgers and french fries.

The company’s biggest market is now Europe, which provides 39% of its revenue and 37% of its earnings. McDonald’s other main markets are the U.S. (32% of revenue and 44% of earnings); Asia- Pacific (23%, 18%); and other countries, mainly Canada and Latin America (6%, 1%).

McDonald’s growing international operations increase its exposure to foreign exchange rates, which at times can fluctuate wildly. Unfavourable currency rates cut its revenue by 3.3%, from $23.5 billion in 2008 to $22.7 billion in 2009. However, revenue rebounded and rose 21.2%, to $27.6 billion, in 2012.

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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.

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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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