Search

AT&T INC. $35 (New York symbol T; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 5.8 billion; Market cap: $203.0 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.0%; TSINetwork Rating: Average; www.att.com) has 105.2 million wireless subscribers across the U.S. That makes it the country’s second-largest wireless-service provider, after Verizon Wireless. AT&T gets 52% of its revenue and 70% of its earnings from its wireless business.

The wireline division supplies most of the company’s remaining revenue and earnings. This business sells land line services, TV packages and high-speed Internet access to 40.2 million customers.

AT&T’s revenue rose 3.5%, from $119.8 billion in 2007 to $124.0 billion in 2008. Revenue fell 0.8% in 2009, to $123.0 billion, due to weaker demand for traditional phone services. Revenue rebounded to $124.4 billion in 2010, and to $126.7 billion in 2011.

...

ENCANA CORP. (Toronto symbol ECA; www.encana.com) is one of North America’s largest natural gas producers. Its reserves should last over 11 years. The company took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy (Toronto symbol CVE), which specializes in oil sands projects, oil refineries and conventional natural gas....

Pat McKeough responds to many personal questions on specific stocks 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. Our Inner Circle Q&A frequently features questions on tech stocks. This past week, one Inner Circle member asked about a tech stock that has recently had a surge in its share price. Its unique software for submarine networks has helped this stock rise and Pat assesses whether it can sustain its momentum. ...

This is the latest in a series of video interviews in which Pat McKeough will give his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies, and still others will be comments on events that are affecting the markets and the economy. This time, Pat discusses the fact that in his role as investment counsellor, he learns a good deal from his portfolio management clients, Inner Circle members and readers. Successful investors spend a lot of time learning about investments, he adds, and you never know how much you might learn when you start commenting and replying to other investors’ comments.
Investment Counsellor: The Value of Your Comments...

Today’s market volatility and economic uncertainty around the globe is making some investors wonder how much cash they should hold. My investment advice is to look at the longer term and not just at current conditions, or at today’s headlines. Remember, much of what we read today remains speculation....

We think conservative investors could hold up to, say, 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. ISHARES MSCI SOUTH KOREA INDEX FUND (New York Exchange symbol EWY; buy or sell through brokers), is an exchange traded fund that aims to track the MSCI Korea Index....

Pat McKeough responds to many personal questions on specific stocks 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. As the population ages, many consider medical and biotech firms to be a promising stock market investment. This past week, an Inner Circle member asked Pat about one of the giants in the field, the world’s biggest maker of implantable biomedical devices....

TEMPUR-PEDIC $25.53 (New York symbol TPX; TSINetwork Rating: Speculative) (800-878-8889; www.tempurpedic.com; Shares outstanding: 63.5 million; Market cap: $1.6 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.

Tempur-Pedic’s shares are down 70.8% since they hit an all-time high of $87.43 in April 2012.

The decline came despite a strong 2012 first quarter in which Tempur-Pedic’s earnings per share rose 26.5%, to $0.86 from $0.68 a year earlier, and sales rose 18.0%, to $384.4 million from $325.8 million.

...

INTUITIVE SURGICAL $549.36 (Nasdaq symbol ISRG; TSINetwork Rating: Average) (515-507-5000; www.intuitivesurgical.com; Shares outstanding: 39.7 million; Market cap: $21.8 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 March 31, 2012, Intuitive earned $143.5 million, or $3.63 a share. That’s up 37.8% from $104.1 million, or $2.66 a share, a year earlier. Revenue rose 27.6%, to $495.2 million from $388.1 million. Intuitive is debt-free, and holds cash of $2.4 billion, or $60.45 a share.

...

ALIMENTATION COUCHE-TARD $48.37 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 179.4 million; Market cap: $8.7 billion; Dividend yield: 0.6%) has reported sharply higher sales and earnings in the latest quarter.

In the three months ended April 29, 2012, Couche-Tard’s earnings per share rose 88.6%, to $0.66 from $0.35 a year earlier (all figures except share price in U.S. dollars).

Sales rose 28.0%, to $6.1 billion from $4.7 billion. The gains came from higher fuel prices, acquisitions and higher merchandise sales. The company gets about 30% of its sales by selling merchandise.

...

WESTJET AIRLINES $16.47 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 126.2 million; Market cap: $2.1 billion; Dividend yield: 1.5%) has signed a code-sharing agreement with China Eastern Airlines, one of that country’s largest carriers.

Under these agreements, two airlines co-operate on flights and baggage handling. Code-sharing agreements are especially valuable for attracting business passengers. That’s because these agreements let customers seamlessly connect between flights and gain frequent-flyer points for the entire distance travelled.

As well, WestJet currently only has Boeing 737s in its fleet. That limits how far it can fly, so it relies on code-sharing and other agreements to attract international travellers.

...

DUNDEE REIT $39.04 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 96.5 million; Market cap: $3.8 billion; Dividend yield: 5.6%) aims to sell off its industrial properties over the next 18 months, to focus on adding to its office properties.

Right now, Dundee owns 22.5 million square feet of office space across 175 properties and 5.7 million square feet of industrial space across 74 properties. The REIT’s industrial holdings contribute about 8% of its revenue. Dundee spent a total of $1.6 billion on property purchases in 2011, up from $900 million in 2010.

The trust’s growth-by-acquisition strategy adds risk, but it is steadily diversifying its holdings outside western Canada by purchasing more buildings in other parts of the country. At the start of 2010, about 70% of Dundee’s properties were in western Canada. That’s now down to less than 55%.

...

ADOBE SYSTEMS $31.43 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 491.8 million; Market cap: $15.5 billion; No dividends paid) is teaming up with NBC to stream events live from the Olympic Summer Games in London to mobile device users in the U.S. for free. Comcast Corp. owns NBC, which has the U.S. television rights to the London Olympics.

NBC has launched two applications using Adobe technology. Both include software that measures user traffic and offers targeted advertising.

The first app, NBC Olympics Live Extra, will let customers of cable, satellite and telephone companies live-stream competitions and events. The other app, called NBC Olympics, will provide additional information, such as TV and online schedules, live results and highlights.

...

AMAZON.COM $217.47 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206- 266-1000; www.amazon.com; Shares outstanding: 450.5 million; Market cap: $98.0 billion; No dividends paid) has reportedly agreed to buy 3-D mapping company UpNext.

UpNext offers interactive, threedimensional maps. Users can “drop down” into streets and tap objects to bring up information, directions or different viewpoints.

Offering its own mapping capability through UpNext will let Amazon take full advantage of rising demand for mobile ads. As well, the company may be working on a smartphone, and it could use UpNext on that device.

...

FIRSTSERVICE CORP. $27.65 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 28.7 million; Market cap: $793.6 million; No dividends paid) serves the following areas of the real estate market: commercial real estate, residential property management, and property improvement. FirstService has more than 23,000 employees worldwide.

FirstService’s revenue rose 2.4% in the three months ended March 31, 2012, to $490.1 million from $478.4 million a year earlier (all figures except share price in U.S. dollars). Excluding one-time items, the company lost $0.10 a share, compared to a profit of $0.14 a share.

Revenue increased at two of FirstService’s three divisions: commercial real estate (up 9%) and residential property management (up 14%).

...

REITMANS (CANADA) LTD. $11.97 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 65.5 million; Market cap: $784.0 million; Dividend yield: 6.7%) owns 925 women’s clothing stores across Canada.

The chain consists of 364 Reitmans, 154 Penningtons, 153 Smart Set, 114 Addition Elle, 74 Thyme Maternity and 66 RW & Co. stores.

In the three months ended April 28, 2012, Reitmans lost $53,000, or nil per share, compared to a profit of $624,000, or $0.01 a share, a year earlier. The company’s sales were down 1.0%, to $217.1 million from $219.3 million. Same-store sales declined 0.7%.

...

AEROPOSTALE INC. $20.26 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 81.3 million; Market cap: $1.6 billion; No dividends paid) has hired 15-year-old Chloe Grace Moretz as a celebrity endorser.

Ms. Moretz has recently appeared in movies such as Dark Shadows and Hugo. She also starred in the cult hit Kick-Ass.

Over the last few quarters, Aeropostale has focused on more fashionable clothing instead of the basics. The company hopes Ms. Moretz will draw attention to these products and boost its sales.

...

DOREL INDUSTRIES $27.77 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.9 million; Market cap: $885.9 million; Dividend yield: 2.2%) 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; recreational products, including bicycles; and home furnishings. It has 5,000 employees and plants in 22 countries.

In the three months ended March 31, 2012, Dorel’s sales rose 2.2%, to $621.1 million from $607.8 million a year earlier (all figures except share price in U.S. dollars).

Revenue at the company’s recreation/leisure division rose 10.2% on higher sales to U.S., European and Japanese retailers. That offset weaker revenue at the other divisions. Earnings per share fell 4.2%, to $0.91 from $0.95 a year earlier. That was largely due to lower profits in the competitive home furnishing segment.

...

STANTEC INC. $27.36 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 45.7 million; Market cap: $1.3 billion; Dividend yield: 2.2%) sells a range of consulting, project delivery, design/build and technology services. The company’s clients operate in a wide variety of markets, including industry, environment, transportation and construction.

In the three months ended March 31, 2012, Stantec’s revenue rose 7.4%, to $439.1 million from $408.7 million a year earlier. Acquisitions were one reason for the gains. Stantec is also working on several new projects. Earnings rose 4.5%, to $24.9 million, or $0.55 a share, from $23.8 million, or $0.52 a share.

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

...

NEW GOLD $9.84 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315- 9715; www.newgold.com; Shares outstanding: 461.7 million; Market cap: $4.5 billion; No dividends paid) has started up its fourth mine. The $765- million New Afton gold mine in B.C. processed the first ore through its mill on June 28, 2012. New Gold’s target for commercial production at New Afton, defined as 30 days of operation at 60% capacity (or 6,600 tonnes per day) remains August 2012.

New Afton should produce an average of 85,000 ounces of gold and 75 million pounds of copper annually over its 12-year life.

There is still room to expand the mine’s reserves and increase its production through exploration drilling.

...

IAMGOLD $10.71 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 376.1 million; Market cap: $4.0 billion; Dividend yield: 2.4%) owns 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its new Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 100% of the Rosebel mine in Suriname, South America.

In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. Niobium is a rare metal that when used as an additive makes steel stronger, more heat resistant and easier to weld.

In the three months ended March 31, 2012, IAMGold’s revenue fell 2.4%, to $404.2 million from $414.0 million a year earlier. Cash flow per share fell 14.0%, to $0.49 from $0.57. The declines came from lower gold sales, partly because some shipments were delayed until after the quarter ended. That was partially offset by higher gold prices and niobium sales.

...

CAMECO CORP. $22.34 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 395.3 million; Market cap: $8.8 billion; Dividend yield 1.8%) is the world’s largest uranium producer. It supplies roughly 25% of global production and has large, high-grade reserves, low-cost operations, significant market share and a number of uranium mines.

Cameco also holds a 31.6% stake in Ontario’s Bruce Power partnership, which operates four of the eight reactors at the Bruce plant, North America’s largest nuclear power complex.

In the three months ended March 31, 2012, Cameco’s revenue rose 22.1%, to $563 million from $461 million a year earlier. It sold more uranium in the latest quarter, and its selling prices also rose. Earnings per share jumped 47.6%, to $0.31 from $0.21.

...

SASOL LTD. (ADR) $43.01 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082 -883-9697; www.sasol.com; ADRs outstanding: 644.7 million; Market cap: $27.7 billion; Dividend yield: 3.3%) paid $2.2 billion last year for a 50% interest in two major shale gas properties held by Talisman Energy in northeastern B.C.

The partners were investigating whether it would be feasible to build a gas-to-liquids plant that would use this gas. However, Talisman has said that it is not interested in pursuing this project right now. Instead, it will focus on increasing its production.

Talisman and Sasol will continue to develop the two shale gas properties, although they will likely slow work on them while they wait for natural gas prices to recover.

...

DEVON ENERGY CORP. $58.73 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235-3611; www.dvn.com; Shares outstanding: 404.4 million; Market cap: $23.8 billion; Dividend yield: 1.4%) 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 completed the sale of 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 properties, which include conventional production, shale oil in Texas and oil sands in Alberta.

...

CIMAREX ENERGY $58.40 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 85.7 million; Market cap: $5.0 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 March 31, 2012, Cimarex’s production averaged 603.5 million cubic feet of natural gas equivalent per day (including oil). That’s up 2.5%, from 590 million cubic feet a year earlier.

...