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Pat McKeough responds to many personal questions on buying 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. Recently, an Inner Circle member asked about a Canadian stock that is going through a transition period. This printing firm, which has specialized in cheques for many years, is using two acquisitions to help it diversify as electronic transactions become the norm. ...

If you’re always looking for the next market decline, you’re bound to miss out on many good investment opportunities. Specific advice on helping you develop a successful approach to investing in the stock market.

MCCOY CORP. $3.59 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.5 million; Market cap: $95.1 million; Dividend yield: 5.5%) operates through two divisions: Mobile Solutions and Energy Products and Services.

Energy Products and Services sells hydraulic equipment, including power tongs, for drilling rigs. Power tongs are large wrench-like tools that tighten and loosen the pipe in the drill hole.

Mobile Solutions builds heavy-duty trailers for Canadian and U.S. clients in the oil and gas, wind energy, infrastructure and construction industries.

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WAJAX CORP. $45.65 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $762.3 million; Dividend yield: 7.1%) sells and services heavy equipment, including cranes and forklifts. It also sells related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions).

Wajax operates through 117 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries.

In the three months ended June 30, 2012, the company’s revenue rose 15.7%, to $386.6 million from $334.1 million a year earlier. That was largely due to increased sales of mining equipment and record sales of Hitachi construction excavators in western Canada. Those gains offset lower sales of power systems to western Canadian oil and gas drillers.

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BROADRIDGE FINANCIAL SOLUTIONS $22.88 New York symbol BR: TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 124.9 million; Market cap: $2.9 billion; Dividend yield: 3.2%) reports that its earnings rose 12.6% in its 2012 fiscal year, which ended June 30, 2012, to $198.0 million from $175.8 million in 2011. Earnings per share climbed 13.1%, to $1.55 from $1.37, on fewer shares outstanding.

Revenue rose 6.3%, to $2.3 billion from $2.2 billion.

The company continues to do a good job of attracting new clients and holding on to existing ones. Acquisitions also contributed to the gains. Moreover, Broadridge has finished moving its data centre to IBM under an outsourcing contract that expires in June 2022. This deal should save the company roughly $25 million a year.

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ALIMENTATION COUCHE-TARD $50.95 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 179.4 million; Market cap: $9.1 billion; Dividend yield: 0.6%) has agreed to buy 27 Sun Mart convenience stores in Washington State from Sun Pacific Energy for an undisclosed amount.

All but one of these outlets sell fuel. Nineteen of the stores’ gas stations operate under the Shell banner, and seven use the Exxon label. Couche-Tard will convert all 27 stores to its Circle K banner, although they will still sell Shell and Exxon fuel.

Alimentation Couche-Tard is still our #1 buy for 2012.

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FAIRFAX FINANCIAL HOLDINGS $377.50 (Toronto symbol FFH: TSINetwork Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.9 million; Market cap: $8.1 billion; Dividend yield: 2.7%) has increased its stake in Research in Motion, symbol RIM on Toronto. The company now owns 9.9% of RIM, up from 5.12%. RIM is a recommendation of our Successful Investor newsletter.

Fairfax is now RIM’s largest shareholder. The company’s chairman and founder, Prem Watsa, is also on RIM’s board of directors.

Fairfax’s large interest gives Watsa more sway over RIM. He now feels that RIM shares are at or near bottom. But either way, he says he’s taking a three- to five-year time horizon on getting a significant return on his investment.

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DOREL INDUSTRIES $29.65 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.9 million; Market cap: $945.8 million; Dividend yield: 4.0%) has just doubled its quarterly dividend, to $0.30 from $0.15. The shares now yield a high 4.0%. The increase follows the company’s strong 2012 second-quarter results.

In the three months ended June 30, 2012, Dorel’s sales rose 2.4%, to $633.7 million from $619.0 million a year earlier (all figures except share price in U.S. dollars). Revenue increased at all three of the company’s divisions. Earnings per share rose 35.7%, to $0.95 from $0.70 a year earlier. The gain resulted from the higher revenue and increased sales of more profitable products.

The company holds cash of $45.1 million, or $1.44 a share. Its long-term debt of $316.8 million is a reasonable 33.5% of its $945.8-million market cap.

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WYNDHAM WORLDWIDE $50.86 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973-753-6000; www.wyndhamworldwide.com; Shares outstanding: 142.2 million; Market cap: $7.2 billion; Dividend yield: 1.8%) saw its revenue rise 4.5% in the three months ended June 30, 2012, to $1.14 billion from $1.1 billion a year earlier. Its occupancy rate rose 3.6%.

Before one-time items, earnings rose 35.9%, to $0.87 a share from $0.64. To further boost its results, Wyndham is expanding in fast-growing markets like Asia and Latin America.

The company’s outlook is positive, but the shares now trade at a high 19.1 times its latest 12 months of earnings.

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RUBY TUESDAY, INC. $6.76 (New York symbol RT; TSINetwork Rating: Speculative) (865-379-5700; www.rubytuesday.com; Shares outstanding: 63.8 million; Market cap: $429.3 million; No dividends paid) owns 714 casual dining restaurants in the U.S. Franchisees operate 36 outlets in the U.S. and 43 overseas.

In the three months ended June 5, 2012, Ruby Tuesday’s sales rose 2.9%, to $363.2 million from $353.0 million a year earlier. However, same-restaurant sales fell 4.6%, mostly due to stiff competition from other chains.

Ruby Tuesday has developed a number of new restaurant concepts, including Marlin & Ray’s seafood restaurants; Truffles, an upscale cafe; and Lime Fresh Mexican Grills. The company feels these new layouts will help it compete in certain towns and cities. It’s now converting underperforming stores to these banners, and building new ones.

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DOMINO’S PIZZA $34.22 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 56.7 million; Market cap: $1.9 billion; No dividends paid) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 9,924 outlets in the U.S. and over 70 in other countries. Franchisees run most of these stores.

In the quarter ended June 17, 2012, the company’s earnings per share rose 17.5%, to $0.47 from $0.40 a year earlier. Costs fell, including a 12% drop in cheese prices.

Sales declined 2.3%, to $376.1 million from $384.9 million. That’s mainly because of lower sales of ingredients, including cheese, to franchisees. Same-store sales rose 5.7% internationally and 1.7% in the U.S.

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SHERRITT INTERNATIONAL $4.54 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 296.7 million; Market cap: $1.3 billion; Dividend yield: 3.4%) reports that its revenue fell 2.5% in the three months ended June 30, 2012, to $487.9 million from $500.6 million a year earlier. Cash flow fell 10.7%, to $81.6 million, or $0.28 a share, from $91.4 million, or $0.31 a share.

Lower nickel prices and a drop in thermal coal sales were the main reasons for the declines.

The company is Cuba’s largest foreign investor; its Cuban operations account for the majority of its revenue and earnings. The country’s uncertain political and economic situation adds to the stock’s risk. However, Sherritt is diversifying away from Cuba by investing in other countries.

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ZARGON OIL & GAS $8.99 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 29.6 million; Market cap: $266.1 million; Dividend yield: 8.0%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota. Its production is 65% oil and 35% gas.

In the three months ended June 30, 2012, Zargon produced 8,290 barrels of oil equivalent per day, down 4.6% from 8,686 barrels a year earlier. That’s because the company sold some less-important properties and cut back on natural gas drilling in light of low gas prices. The production drop pushed down Zargon’s cash flow per share by 12.5%, to $0.42 from $0.48 a year earlier.

The company continues to successfully drill horizontal wells in the Alberta Plains North area. Horizontal drilling involves drilling development wells sideways or at an angle to reach isolated pockets of gas or to follow a reservoir spread out in a narrow layer. Horizontal drilling can work well in places where conventional drilling is impossible or too expensive.

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BIRCHCLIFF ENERGY $7.00 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 141.4 million; Market cap: $989.8 million; No dividends paid) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 75% of Birchcliff’s production is natural gas. The remaining 25% is oil.

Prominent Toronto investor Seymour Schulich is the company’s largest shareholder; he owns about 28% of its outstanding shares.

In the three months ended June 30, 2012, Birchcliff’s production rose 27.2%, to 22,039 barrels of oil equivalent per day (including natural gas) from 17,324 barrels a year earlier.

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THE CHURCHILL CORP. $8.16 (Toronto symbol CUQ; TSINetwork Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.4 million; Market cap: $199.1 million; Dividend yield: 5.9%) is down 32% from mid-July after it reported a $0.17-a-share loss in the quarter ended June 30, 2012.

The loss is mainly the result of project delays. Higher-than-expected rainfall slowed work on its Calgary Airport runway project and a housing development in Saskatoon. As well, construction of Winnipeg’s new football stadium was stalled because subcontractors failed to deliver steel structures on time.

Despite this setback, Churchill’s long-term prospects remain sound. Meanwhile, its dividend, which yields a high 5.9%, looks safe.

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ENERFLEX LTD., $12.39 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 77.6 million; Market cap: $961.5 million; Dividend yield: 1.9%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration equipment and power generators.

The company has a strong position in three of the world’s fast-growing markets: U.S. and Canadian shale gas production; Australian natural gas from coal beds; and conventional Middle Eastern natural gas, which is converted to liquefied natural gas (LNG) for shipping. Natural gas prices are at 10-year lows, but companies continue to increase their drilling and production.

In the quarter ended June 30, 2012, Enerflex’s revenue jumped 43.9%, to $354.6 million from $246.5 million a year ago. Strong demand from customers in the southern U.S. and South America pushed sales higher.

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TOROMONT INDUSTRIES LTD. $21.10 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 76.4 million; Market cap: $1.6 billion; Dividend yield: 2.3%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. Toromont also makes refrigeration systems through its CIMCO division.

In July 2011, the company completed the spinoff of Enerflex Ltd. (see below). Shareholders received shares of the new Toromont and shares of Enerflex.

In the three months ended June 30, 2012, higher equipment sales and rentals, particularly to mining customers, pushed up Toromont’s revenue by 10.1%, to $379.6 million from $344.6 million a year earlier. Without one-time items, earnings per share rose 9.7% to $0.34 from $0.31, on the higher sales and improved profit margins.

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AEROPOSTALE INC. $13.63 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 81.3 million; Market cap: $1.1 billion; No dividends paid) is down almost 32% since early August after it lowered its forecast for its fiscal 2012 second quarter.

The company now expects to break even, down from its previous forecast of a profit of $0.03 to $0.05 a share. Consensus estimates were for a $0.06-a-share profit.

Aeropostale operates in a highly competitive market. That means it has to constantly refresh its clothing lines with popular new colours and styles. It should be able to repeat its past success at attracting customers, but sales may remain weak in the near term.

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BMTC GROUP $16.90 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 47.5 million; Market cap: $802.8 million; Dividend yield: 1.4%) is one of Quebec’s largest retailers of furniture, electronics and household appliances. It sells these products through its two affiliates: Brault & Martineau Inc. and Ameublements Tanguay.

The company has 20 large stores in the Montreal, Quebec City, Repentigny, Laval, Saint-Georges, Chicoutimi, Sainte-Therese, Trois-Rivieres, Sherbrooke, Rimouski, Riviere-du-Loup and Gatineau areas. It also has six liquidation centres and six Sleep Gallery stores.

In July 2012, BMTC opened a new store in Levis to replace the old one. The company is also building a warehouse-style outlet in St-Hubert that will offer lower-priced products and operate under a new banner—EconoMax.

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LEON’S FURNITURE LTD. $11.50 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 70.0 million; Market cap: $805.0 million; Dividend yield: 3.5%) has built its chain of over 76 furniture stores on its four main strengths: a huge selection of furniture, appliances and electronics; a lowest-price guarantee; strong after-sales service; and aggressive TV, radio and print advertising.

In the three months ended June 30, 2012, Leon’s sales fell 1.1%, to $162.1 million from $163.9 million a year earlier. Weaker consumer spending and a drop in new-housing starts held back sales.

Earnings fell 19.8%, to $9.0 million, or $0.13 a share, from $11.2 million, or $0.16 a share. The slower sales were the main reason for the earnings decline. The company also spent more on advertising.

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ALARMFORCE INDUSTRIES $11.22 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800-267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $136.9 million; Dividend yield: 0.9%) has jumped 26% since the start of August after it announced that it is launching a strategic review of its business, including a possible sale of the company.

AlarmForce is increasing its advertising as it expands into the U.S. It’s also investing more in its VideoRelay system, which it launched in October 2011.

VideoRelay lets subscribers watch their homes through their computers and smartphones. Users can either view live video or receive alerts when the system detects motion. It also lets them establish two-way voice communication through the camera.

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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. (Toronto symbol BEP.UN; brookfieldrenewable.com) owns 170 hydroelectric generating stations, seven wind farms and two natural-gas-fired plants. In all, it has 4,909 megawatts of generating capacity. Roughly 35% of Brookfield Renewable’s generating capacity is in Canada, with another 45% in the U.S. and 20% in Brazil. The company sells virtually all of its power under agreements that are an average of 24 years in length....

We developed our TSINetwork ratings to help investors quickly and easily identify stocks with the asset size and investment quality to weather market downturns and changing industry conditions. Stocks of this quality are the best investments for long-term profits. You will find our TSINetwork ratings (Highest Quality, Above Average, Average and Extra Risk) next to each stock we recommend in our newsletters. Obviously, we take a number of factors into account before we assign these ratings. Many involve a company’s financial profile....

Almost three months ago, on May 18, Facebook issued one of the most highly-publicized Initial Public Offerings (IPO) in the history of Wall Street. A week before, Pat McKeough had already issued his own investment advice on the stock. He advised investors to take a pass. Just as Pat predicted, Facebook shot up briefly, only to reverse course and head into a decline that hasn’t ended yet. This week it disappointed investors again with bad earnings (as did another Internet issue that has taken a beating, games specialist Zynga Inc.). There’s a cautionary message for investors in this and it relates directly to one of Pat’s core principles: Avoid stocks that bask in the broker/media limelight. Stocks like these can cause investor expectations to rise so high that downturns can be brutal—which is exactly what happened in this instance. Here is Pat’s original warning about Facebook from May 11....

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. This week, one question from an Inner Circle member wanted Pat’s input on one of the Canadian commodity stocks that depends heavily on one metal, molybdenum. Thompson Creek has seen a drop-off in both molybdenum prices and its own shares, but it is just possible, Pat says, that this could make it an appealing acquisition for a larger firm. ...