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FORTRESS PAPER $7.00 (Toronto symbol FTP; TSINetwork Rating: Extra Risk) (1-888- 820-3888; www.fortresspaper.com; Shares outstanding: 14.5 million; Market cap: $101.5 million; No dividends paid) lost $18.1 million, or $1.26 a share, in the three months ended September 30, 2012. A year earlier, it lost $7.7 million, or $0.54. Cash flow was negative $9.5 million, or $0.66 a share, in the latest quarter, compared to negative $3.7 million, or $0.26 a share.

The company’s Dresden wallpaperproducts plant is profitable, but the Landqart security-paper operation is losing money because of the high Swiss franc. Increased competition is also making it difficult for Fortress to attract customers. As well, the Thurso dissolving pulp plant is having startup problems, and rising global production has pushed down selling prices sharply.

Fortress holds cash of $83.8 million or $5.88 a share, but its long-term debt of $245 million is a very high 241% of its $101.5- million market cap. That’s a big risk factor, especially in a company that’s reporting negative cash flow.

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TIM HORTONS $45.75 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 154.4 million; Market cap: $7.1 billion; Dividend yield: 1.8%) operates 3,365 coffee and donut stores in Canada and 755 in the U.S. It also has 16 outlets in the Persian Gulf.

New menu items, such as lattes and panini sandwiches, are selling well. In addition, the company now offers free Wi-Fi Internet at its Canadian outlets. That’s helping it compete with fast-food chains like McDonald’s, which is aggressively expanding its coffee sales in Canada. Sales of Tim Hortons singleserve cups for Tassimo coffee machines are also rising.

These factors pushed up Tim Hortons sales by 10.3% in the three months ended September 30, 2012, to $802.0 million from $726.9 million a year earlier. Same-store sales rose 2.3% at its U.S. outlets and 1.9% in Canada. Earnings per share rose 4.6%, to $0.68 from $0.65.
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SYMANTEC CORP. $17.53 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 693.9 million; Market cap: $12.2 billion; No dividends paid) sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers.

In the company’s 2013 second quarter, which ended September 28, 2012, its earnings per share rose 15.4%, to $0.45 from $0.39. Revenue rose 1.1%, to $1.70 billion from $1.68 billion.

Symantec is selling more of its products to businesses, partly because it is now offering its salespeople higher incentives for bringing in new contracts than for renewals.
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ATLANTIC TELE-NETWORK $36.75 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340- 777-8000; www.atni.com; Shares outstanding: 15.6 million; Market cap: $573.3 million; Yield: 2.7%) reported strong earnings in the latest quarter, even though revenue declined.

In the three months ended September 30, 2012, Atlantic’s revenue fell 2.9%, to $188.8 million from $194.3 million a year earlier. However, earnings jumped 40.8%, to $16.0 million, or $1.03 a share, from $11.3 million, or $0.74 a share.

The company stands to make further gains as it sells more smartphones, which generate higher fees than regular cellphones. As well, it is upgrading its wireless networks to 4G long-term evolution (LTE) standards. LTE is up to five times faster than current networks, and should help it attract new subscribers.
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AIMIA INC. $14.80 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 172.3 million; Market cap: $2.6 billion; Dividend yield: 4.3%) has agreed to raise its stake in Club Premier Loyalty & Marketing, the loyalty program of Grupo Aeromexico, Mexico’s biggest airline. This move is part of Aimia’s plan to diversify its operations geographically.

Aimia will pay $88 million U.S. to increase its interest to 49% from 29%. Grupo Aeromexico will continue to own 51%.

Club Premier is Mexico’s leading loyalty program, with more than 2.8 million members and 50 partners. Club Premier members can earn and redeem points on Aeromexico, which offers 550 daily flights throughout the Americas and to Europe and Asia. As well, members can earn points on 14 other airlines, including Delta and Air France-KLM.

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ALARMFORCE INDUSTRIES $11.23 (Toronto symbol AF TSINetwork Rating: Speculative) (1-800- 267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $137.0 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 July 31, 2012, Alarm- Force’s sales rose 10.9%, to $11.4 million from $10.3 million a year earlier. Even so, AlarmForce lost $6,589, or nil per share, compared to a profit of $831,342, or $0.07.

AlarmForce’s earnings fell because it increased its advertising spending as it expanded into Florida. It also invested more in its VideoRelay system, which lets subscribers watch their homes through their computers and smartphones. Users can either view live video or receive alerts when the system detects motion. VideoRelay also lets you establish two-way voice communication through the camera.

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STANTEC INC. $36.68 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 45.9 million; Market cap: $1.7 billion; Dividend yield: 1.6%) sells a range of consulting, project delivery, design and technology services. Stantec’s clients operate in a variety of industries, including transportation, construction and oil and gas.

In the three months ended September 30, 2012, Stantec’s revenue rose 12.4%, to $483.7 million from $430.4 million a year earlier. Acquisitions were one reason for the gains. Stantec is also working on several new projects. Earnings rose 17.9%, to $34.1 million, or $0.74 a share, from $28.9 million, or $0.63.

Stantec continues to grow by acquisition. In 2011, it bought five companies. Its purchases this year include engineering-consulting firm Cimarron Engineering, which develops, designs, installs and maintains oil and gas pipeline systems and station facilities. Demand for these services is growing quickly.

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WESTJET AIRLINES $18.55 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1- 877-493-7853; www.westjet.com; Shares outstanding: 126.9 million; Market cap: $2.4 billion; Dividend yield: 1.7%) reports that its revenue rose 11.8% in the three months ended September 30, 2012, to $866.5 million from $775.3 million a year earlier.

Earnings jumped 79.9%, to $70.6 million from $39.3 million. That’s a new record for the second quarter. The higher revenue pushed up the company’s earnings.

WestJet aims to start up its new shorthaul Canadian regional airline, which it has now named WestJet Encore, by the end of 2013. Encore will serve smaller centres with Bombardier turboprop planes.

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FIRSTSERVICE CORP. $28.69 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 28.7 million; Market cap: $823.4 million; No dividends paid) provides services to the real estate industry. It sells and manages commercial real estate, manages residential buildings such as condos and rental apartments and provides property services like inspections, maintenance and repairs.

The company’s revenue rose slightly in the three months ended September 30, 2012, to $589.8 million from $585.4 million a year earlier (all figures except share price in U.S. dollars). Excluding one-time items, earnings per share fell 1.6%, to $0.60 from $0.61.

Revenue rose at two of FirstService’s three divisions: commercial real estate (up 17%) and residential property management (up 9%).

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REITMANS (CANADA) LTD. $11.98 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514- 384-1140; www.reitmans.com; Shares outstanding: 65.5 million; Market cap: $784.7 million; Dividend yield: 6.7%) owns 918 women’s clothing stores across Canada.

The chain consists of 360 Reitmans, 154 Penningtons, 152 Smart Set, 110 Addition Elle, 74 Thyme Maternity and 68 RW & Co. stores.

In the three months ended July 28, 2012, Reitmans earned $27.4 million, or $0.42 a share. That was down 12.5% from $31.7 million, or $0.48 a share, a year earlier. Revenue was down 2.2%, to $279.5 million from $286.1 million. Same-store sales declined 1.3%.

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IAMGOLD $11.98 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464- 9999; www.iamgold.com; Shares outstanding: 376.5 million; Market cap: $4.5 billion; Dividend yield: 2.1%) fell 23% after it reported cash flow of $0.30 a share in the three months ended September 30, 2012. That was down sharply from $0.46 a share a year earlier.

Gold prices remained steady, but production fell 7.7%, to 205,000 ounces from 225,000 ounces. IAMGold gets 85% of its production from mines it owns and operates, but output continues to lag at its other mines.

IAMGold’s longer-term prospects are strong—new mines will double its production within five years. It also holds cash of $1.1 billion. However, its short-term growth prospects have slowed.

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DUNDEE REIT $34.37 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 97.0 million; Market cap: $3.3 billion; Dividend yield: 6.4%) owns and manages 22.9 million square feet of office and retail space. The trust has a 95.1% occupancy rate.

In the three months ended September 30, 2012, Dundee REIT’s revenue jumped 71.6%, to $187.3 million from $109.2 million a year earlier. Most of the increase came from properties the trust recently purchased.

Cash flow jumped 67.5%, to $61.3 million from $36.6 million. Cash flow per unit rose 5.2%, to $0.61 from $0.58, on more units outstanding (the trust issued new units to pay for the acquired properties). The units yield 6.4%.

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CHEMTRADE LOGISTICS INCOME FUND $15.49 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics. com; Units outstanding: 41.7 million; Market cap: $645.9 million; Dividend yield: 7.8%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors. These companies create sulphur, acid and other by-products as part of their activities. Chemtrade converts these substances into useful chemicals, like sulphuric acid.

In June 2011, Chemtrade bought Marsulex Inc. for $419.5 million. Marsulex provides a range of environmental services, including improving air quality and treating and handling industrial waste.

In the three months ended September 30, 2012, Chemtrade’s revenue fell 10.3%, to $240.9 million from $268.5 million a year earlier. Cash flow per unit fell 25.0%, to $0.72 from $0.96. However, the decline was mostly due to a one-time accounting charge. The 2011 quarter was also particularly strong.

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DELPHI ENERGY $1.16 (Toronto symbol DEE; TSINetwork Rating: Speculative) (403- 265-6171; www.delphienergy.ca; Shares outstanding: 131.2 million; Market cap: $152.2 million; No dividends paid) has raised $33 million in two share issues: the company sold 17.2 million shares at $1.45 each and 4.6 million shares for $1.75 each.

The company produces and explores for oil (about 75% of production) and natural gas (25% of production).

Delphi plans to use the proceeds from the share issues to pay down debt. As of June 30, 2012, its long-term debt was $134.4 million. That’s a high 88% of its $152.2-million market cap (or the value of all of its outstanding shares). However, that mainly reflects the drop in the company’s share price due to lower natural gas prices.

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CIMAREX ENERGY $60.76 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 86.0 million; Market cap: $5.2 billion; Dividend yield: 0.8%) produces and explores for oil and natural gas. Gas makes up 53% of its output.

Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas; the Permian Basin of western Texas and southeastern New Mexico; and the Texas Gulf Coast.

In the three months ended September 30, 2012, Cimarex’s production averaged 635.1 million cubic feet of natural gas equivalent per day (including oil). That’s up 7.3%, from 592.0 million cubic feet a year earlier.

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DEVON ENERGY CORP. $53.06 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 404.5 million; Market cap: $21.5 billion; Dividend yield: 1.5%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 63% gas and 37% oil.

Last year, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company is now focused on its North American projects, which include conventional production, shale oil in Texas and oil sands in Alberta.

Devon is forming joint ventures to cut the risk of its big development projects. Earlier this year, it sold a one-third stake in shale oil and gas fields in five U.S. states to giant Chinese state-owned petroleum and chemical firm Sinopec for $2.2 billion. More recently, Japan’s Sumitomo Corp. agreed to buy 30% of the Cline and Wolfcamp shales in Texas for $1.4 billion.

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LEON’S FURNITURE LTD. $11.30 (Toronto symbol LNF; TSINetwork Rating: Average) (416 -243-7880; www.leons.ca; Shares outstanding: 70.0 million; Market cap: $791.0 million; Dividend yield: 3.5%) is nearly doubling its market cap by acquiring rival furniture chain The Brick (Toronto symbol BRK) for $700 million.

The Brick operates 230 stores across Canada, while Leon’s has 76 outlets in every province except B.C. Leon’s and The Brick will continue to operate as separate chains.

Growth by acquisition can be risky, especially with a deal this big. But the Brick looks like a good fit with Leon’s.

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DOREL INDUSTRIES $37.83 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.5 million; Market cap: $1.2 billion; Dividend yield: 3.2%) makes a wide range of products, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational products, mostly bicycles.

In the three months ended September 30, 2012, Dorel’s sales rose 6.5%, to $613.3 million from $575.8 million a year earlier (all figures except share price and market cap in U.S. dollars). Excluding one-time items, earnings per share jumped 37.0%, to $0.63 from $0.46.

The company’s juvenile products division reported steadily rising sales of infant and children’s merchandise in North America and Europe, as well as strong gains in Chile. Sales of Schwinn and Mongoose bicycles also rose.

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PEYTO EXPLORATION & DEVELOPMENT CORP. $24.65 (Toronto symbol PEY; Shares outstanding: 143.9 million; Market cap: $3.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 2.9%; www.peyto.com) produces and explores for oil and natural gas in Alberta.

Peyto’s average daily production of 41,343 barrels of oil equivalent is 89% gas and 11% oil.

In the three months ended June 30, 2012, the company’s cash flow was $0.47 a share, down 16.1% from $0.56 a share a year earlier. Lower gas prices offset a 20.0% rise in production.

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