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GABRIEL RESOURCES $2.82 (Toronto symbol GBU; TSINetwork Rating: Speculative) (416-955-9200; www.gabrielresources.com; Shares outstanding: 380.1 million; Market cap: $91.1 billion; No dividends paid) aims to develop its 80.46%-owned Rosia Montana gold project in Romania. With an estimated 10 million ounces of gold reserves and 500,000 ounces of projected annual output, Rosia Montana could become Europe’s largest producing gold mine.

However, the proposed mine is near the site of ancient Roman mining tunnels. That has triggered protests from environmentalists, historians and other civic groups.

Gabriel recently won a vote related to its bid to build the mine. A regional referendum on the issue was held on December 9, 2012. Of the voters who participated, 62.45% supported the resolution to permit mining. In the community of Rosia Montana itself, support was even higher, at over 78% in favour.
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ENDEAVOUR SILVER $7.86 (Toronto symbol EDR: TSINetwork Rating: Speculative) (1-877-685-9775; www.edrsilver.com; Shares outstanding: 99.5 million; Market cap: $782.1 million; No dividends paid) operates the Guanacevi and Bolanitos silver/gold mines in Mexico, as well as the recently acquired El Cubo project.

In the three months ended December 31, 2012, Endeavour’s revenue jumped 281% from a year earlier, to $66.7 million (all amounts except share prices in U.S. dollars). The company hasn’t yet released its earnings or cash flow for the latest quarter.

The revenue gain was partly due to higher production and an increase in silver and gold prices. The company also held back on selling silver and gold a year ago in response to lower prices at that time.
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THE CHURCHILL CORP. $8.95 (Toronto symbol CUQ; TSINetwork Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.5 million; Market cap: $219.3 million; Dividend yield: 5.4%) reported earnings of $1.8 million, or $0.07 a share, in the three months ended September 30, 2012. That was down sharply from $6.1 million, or $0.24 a share, a year earlier. Revenue fell 20.0%, to $303.2 million from $379.3 million.

Project delays were part of the reason for the declines. Churchill’s earnings also fell because of less-profitable contracts that should be completed by the end of this year.

Even with these setbacks, the company’s long-term prospects are sound. The stock trades at 17.2 times Churchill’s forecast 2013 earnings of $0.52 a share. Its dividend, which yields a high 5.4%, appears safe.
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GOODYEAR TIRE & RUBBER CO. $13.85 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 245.0 million; Market cap: $3.4 billion; No dividends paid) is the world’s largest tire maker, with 53 plants in 22 countries.

In the three months ended September 30, 2012, the weak global economy pushed down the company’s sales by 13.2%, to $5.26 billion from $6.06 billion a year earlier.

North American sales fell 6.0%, to $2.40 billion from $2.56 billion. Sales also declined by 20.1% in Latin America; 21.5% in Europe, the Middle East and Africa; and 5.7% in Asia. Unfavourable foreign currency moves also lowered Goodyear’s revenue.
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RUSSEL METALS $29.20 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 60.2 million; Market cap: $1.8 billion; Dividend yield: 4.8%) is one of North America’s largest metal distributors. The company serves its roughly 33,000 customers through 51 locations in Canada and 12 in the U.S.

In the three months ended September 30, 2012, Russel’s revenue rose 1.0%, to $712.6 million from $705.4 million a year earlier. Revenue at its steel distribution division fell 12%, and sales at the metal services business declined 2%. That’s because the slower economy pushed down steel demand. However, the energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue rise 12% on higher drilling activity.

Earnings fell 12.5%, to $22.5 million, or $0.37 a share. A year earlier, Russel earned $25.7 million, or $0.43 a share. The company’s earnings fell even with the higher revenue because steel prices declined in the latest quarter. That cuts Russel’s profit margins and causes it to suffer losses on its current inventory.
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ADOBE SYSTEMS $37.88 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536- 6000; www.adobe.com; Shares outstanding: 495.1 million; Market cap: $18.8 billion; No dividends paid) reports that in the fourth quarter of its 2012 fiscal year, which ended November 30, 2012, its earnings fell 7.4%, to $307.9 million from $332.6 million a year earlier.

Before one-time items, earnings per share declined 9.0%, to $0.61 from $0.67, on more shares outstanding. Revenue was flat at $1.15 billion.

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.

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INTACT FINANCIAL CORP. $65.21 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 133.3 million; Market cap: $8.7 billion; Dividend yield: 2.5%) 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 September 30, 2012, Intact’s revenue rose 43.4%, to $1.66 billion from $1.16 billion a year earlier. That was mainly due to the contribution from AXA Canada, which Intact bought from Paris-based ASX Group for $2.6 billion in late 2011.

AXA Canada is the country’s sixth-largest home, auto and commercial insurer. It also gives Intact a presence in Quebec, B.C. and Atlantic Canada.

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BROADRIDGE FINANCIAL SOLUTIONS $22.97 (New York symbol BR: TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 122.2 million; Market cap: $2.8 billion; Dividend yield: 3.1%) serves the investment industry in three main areas: investor communications; securities processing; and transaction clearing. The company processes 85% of all proxy votes in the U.S.

Before one-time items, Broadridge’s earnings fell 2.2% in its fiscal first quarter ended September 30, 2012, to $22.3 million from $22.8 million a year earlier. Earnings per share were unchanged at $0.18 on fewer shares outstanding.

Sales rose 4.1%, to $495.8 million from $476.4 million. Broadridge continues to do a good job of attracting new clients and holding on to existing ones.

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LEON’S FURNITURE LTD. $13.40 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 70.5 million; Market cap: $944.7 million; Dividend yield: 3.0%) has received approval from shareholders of The Brick (symbol BRK on Toronto) for its $700-million takeover of that company.

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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SYMANTEC CORP. $20.71 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 693.9 million; Market cap: $14.4 billion; No dividends paid) sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software that helps its clients meet increasingly strict regulatory and compliance standards.

In the three months ended September 28, 2012, Symantec’s revenue rose 1.0%, $1.70 billion from $1.68 billion a year earlier. The company gets 51% of its sales from overseas. Without the positive impact of exchange rates, revenue would have risen 5% in the latest quarter.

Successful cost cutting pushed up Symantec’s earnings per share by 15.4%, to $0.45 from $0.39, excluding one-time items.

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ACI WORLDWIDE $44.87 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 39.4 million; Market cap: $1.8 billion; No dividends paid) makes software for processing transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. Its products also help cut fraud.

In mid-February 2012, ACI completed its $540- million purchase of S1 Corp. This acquisition has been a good fit: S1 sells transaction software for banks, credit unions, retailers and other payment processors. It has over 3,000 clients worldwide.

In the third quarter of 2012, ACI’s revenue rose 38.3%, to $155.1 million from $112.1 million a year earlier. S1’s $47.8-million contribution was the main reason for the gain.

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CAMECO CORP. $20.79 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956- 6200; www.cameco.com; Shares outstanding: 395.3 million; Market cap: $8.2 billion; Dividend yield 1.9%) has closed its $251-million purchase of Germany-based nuclear fuel broker Nukem Energy GmbH.

Nukem acts as an intermediary between uranium buyers and sellers. It also sells uranium from old Russian weapons and uranium mined in Uzbekistan.

The company’s supply from Russian nuclear weapons will end when the “Megatons to Megawatts” program concludes this year. The program was the result of a historic 20-year agreement signed between the U.S. and Russia in 1993.

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AMERIGO RESOURCES $0.65 (Toronto symbol ARG; TSINetwork Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 172.3 million; Market cap: $112.0 million; Dividend yield: 6.2%) processes copper and molybdenum from the waste rock from Chile’s El Teniente, the world’s largest copper mine. The contract runs at least through 2021. Amerigo also has an agreement to process material from the nearby Colihues tailings pond.

The company gets 94% of revenue by processing copper. The remaining 6% comes from molybdenum.

In the three months ended September 30, 2012, Amerigo’s revenue rose 5.4%, to $44.2 million from $42.0 million a year earlier (all figures except share price in U.S. dollars). The company offset lower copper and molybdenum prices by producing more of both metals.

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One of the keys to successful investing is to avoid costly mistakes that can take months or even years to recover from—that is, to win by not losing. And the best way to avoid investment mistakes is to adopt the habits of successful investors. You can begin very profitably by cultivating these three personal mental strengths:...

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 about a Canadian stock that plays a unique role in the transportation and utilities industries. Stella-Jones has established a niche as a maker of railroad ties and telephone poles, and Pat looks at its ambitious expansion program into the United States and the risks of this growth-by-acquisition strategy. ...

The deal that was cobbled together in Washington to avoid America’s so-called “fiscal cliff” appears to have staved off bad news, at least temporarily. But bad news about an individual stock can crop up any time—and often with far less warning than heavily reported crises like this one. It’s always upsetting, but it’s not necessarily a calamity. When you hear bad news about a stock you own, it’s easy to react impulsively and sell. But all investments come under a bad news cloud from time to time. If you always sell on bad news, you’ll pay lots of brokerage commissions, but you’ll never make money for yourself....

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 advice and insights, such as how we select our top stocks. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “By using our ratings system, investors can make informed stock selections with a much better chance of success.” When subscribers to one of our four investment newsletters read about the stocks we recommend, they see a rating displayed with each stock. These are our TSINetwork ratings: Highest Quality, Above Average, Average, Extra Risk, Speculative and Start-up....

ENBRIDGE INC. $39.81 (Toronto symbol ENB; Shares outstanding: 796.9 million; Market cap: $31.7 billion; TSINetwork Rating: Above A v e r a g e ; D i v i d e n d y i e l d : 2 . 8 % ; www.enbridge.com) has formed a new joint venture with Pennsylvania-based Canopy Prospecting Inc.

This new firm, called Eddystone Rail, will build and operate a $68-million railway and pipeline system. These new joint-venture assets will ship crude from Canopy’s shale oil property in North Dakota’s Bakken region to refineries near Philadelphia.

Enbridge will own 75% of this joint venture, and will operate it. The project is forecast to begin operating in the third quarter of 2013.

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ISHARES DEX UNIVERSE BOND INDEX FUND $31.52 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 719 bonds in the portfolio have an average term to maturity of 9.78 years. The fund’s MER is 0.33%.

The bonds in the index are 71.1% government and 28.9% corporate.

The fund yields 3.2%, compared to the Short-Term Bond Fund’s 2.8%. Its yield to maturity is 2.29%, 0.72% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.

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ISHARES DEX SHORT-TERM BOND INDEX FUND $28.91 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through brokers) mirrors the performance of the DEX Short-Term Bond Index. This index consists of a wide range of investmentgrade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 347 bonds with an average term to maturity of 2.85 years. The bonds in the index are 66.5% government and 33.5% corporate. The fund’s MER is 0.28%.

iShares DEX Short-Term Bond Index Fund yields 2.8%. However, this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, which means the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields.

The key figure when looking at the long-term return of this fund is yield to maturity. This yield takes into account the series of capital losses the fund will experience as its above-market-rate bonds mature. iShares DEX Short-Term Bond Index Fund’s yield to maturity is around 1.57%—less than the 2.8% yield but still higher than the 1.08% you’d earn by investing in, say, a one-year T-bill.

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NEWMONT MINING $47.31 (New York symbol NEM; Shares outstanding: 491.2 million; Market cap: $23.2 billion; TSINetwork Rating: Average; Dividend yield: 3.0%; www.newmont.com) operates gold mines in the U.S., Canada, Mexico, Australia, New Zealand, Peru, Indonesia and Ghana.

The company’s worldwide diversification, plus its strong cash flow and balance sheet, make it our favourite gold stock for safety-conscious investors.

In the three months ended September 30, 2012, Newmont’s cash flow fell 20.4%, to $849 million, or $1.72 a share, from $1.1 billion, or $2.12 a share, a year earlier. Lower gold prices and higher costs were the main reason for the decline. The company holds cash of $1.5 billion, or $3.07 a share.

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ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $24.70 (New York symbol ESR; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Eastern Europe Index. The fund’s geographic breakdown is as follows: Russia, 72.2%; Poland, 18.6%; Czech Republic, 3.7%; and Hungary, 3.7%.

The fund’s top holdings are Gazprom (Russia: gas utility), 16.9%; Lukoil (Russia: oil), 11.0%; Sberbank (Russia: bank), 8.7%; Uralkali (Russia: potash), 3.5%; Rosneft Oil Company (Russia: oil and gas), 3.4%; Novatek (Russia: natural gas), 3.4%; Magnit OJSC (Russia: retailing), 3.3%; Tafneft (Russia: oil and gas), 3.2%; Mobile TeleSystems (Russia: wireless), 3.1%; and PKO Bank Polski SA (Poland: banking), 2.9%.

iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.68%.

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ISHARES S&P INDIA NIFTY 50 INDEX FUND $23.67 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities. The fund’s top holdings are ITC Ltd. (conglomerate), 8.8%; Reliance Industries Ltd. (conglomerate), 7.2%; HDFC Bank, 6.9%; Housing Development Finance, 6.8%; ICICI Bank, 6.7%; Infosys Technologies (software), 6.4%; Larsen & Toubro Ltd. (conglomerate), 4.8%; Tata Consultancy Services (information technology), 3.7%; Hindustan Unilever (consumer goods), 3.1%; and State Bank of India, 3.1%.

The fund’s industry breakdown includes Banks, 20.7%; Computers, 12.2%; Cigarettes, 8.8%; Refineries, 7.6%; Housing, 6.8%; Pharmaceuticals, 5.1%; Engineering, 4.8%; Automobiles, 3.6%; and Oil Exploration/Production, 3.6%. The ETF has an expense ratio of 0.89%.

India’s economy likely slowed to a 5.5% growth rate in the third quarter of 2012 from 6.9% a year earlier. But that could rise to over 7.0% next year.

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RIOCAN REAL ESTATE INVESTMENT TRUST $26.69 (Toronto symbol REI.UN; Units outstanding: 296.3 million; Market cap: $7.9 billion; TSINetwork Rating: Average; Dividend yield: 5.2%; www.riocan.com) recently formed a 50/50 joint venture with ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $30.71 (Toronto symbol AP.UN; Units outstanding: 60.0 million; Market cap: $1.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.3%; www.alliedpropertiesreit.com).

RioCan, Allied and privately held Diamond Corp. have now agreed to buy the headquarters of The Globe and Mail newspaper in downtown Toronto. RioCan and Allied will each own 40%, while Diamond will hold 20%.

The three partners plan to redevelop the site into a complex with residential, retail and office units. RioCan will manage thestores, and Allied will operate the office portion.

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GUGGENHEIM CHINA SMALL CAP ETF $22.33 (New York Exchange symbol HAO; buy or sell through brokers; www.guggenheimfunds.com) aims to track the AlphaShares China Small Cap Index, which is made up of all Chinese stocks that are legal for foreign investors and have market caps between $200 million and $1.5 billion.

The $231.4-millon fund’s top holdings are Great Wall Motor Co., 2.4%, Shimao Property Holdings, 1.8%; Sino-Ocean Land Holdings, 1.8%; Longfor Properties, 1.7%; China Railway Group, 1.6%; Guangdong Investment Ltd., 1.4%; China Railway Construction Corp., 1.3%; Zoomlion Heavy Industry, 1.3%; China State Construction International Holdings, 1.3%; and Agile Property Holdings, 1.2%.

As China’s economy matures and wages rise, domestic spending should continue to increase. As well, China’s leaders will likely need to spend more on programs to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.

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