Search

ADOBE SYSTEMS INC. $33 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 491.8 million; Market cap: $16.2 billion; Price-to-sales ratio: 3.7; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) reported that its revenue rose 6.6% in the three months ended August 31, 2012, to $1.08 billion from $1.01 billion a year earlier.

The company 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. Subscription revenue jumped 50.9% in the quarter, and now accounts for 16% of its overall revenue, up from 11% a year earlier. Adobe still gets 75% of its revenue from direct software sales. The remaining 9% comes from services and support.

Earnings rose 6.7%, to $291.2 million from $272.8 million. Earnings per share rose 5.5%, to $0.58 from $0.55, on more shares outstanding. These figures exclude several unusual items, such as restructuring charges and gains on investment sales.

...

EBAY INC. $48 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $62.4 billion; Price-to-sales ratio: 4.8; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) launched its online auction site in September 1995. It now has 104.8 million users worldwide. The company charges users fees to list and sell their goods through its websites.

On top of used goods, the company is also selling more merchandise from retailers. That’s helping it compete with Amazon.com. Right now, sales of new items at fixed prices account for over 60% of eBay’s total transactions.

The company also operates several other highly popular websites, including StubHub (live event ticket sales), Shopping.com (comparison shopping) and Rent.com (apartment and house rentals). In addition, it has local websites that sell classified advertising in over 1,000 cities. In all, eBay’s websites provide 54% of its revenue.

...

VERIZON COMMUNICATIONS INC. $46 (New York symbol VZ, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 2.9 billion; Market cap: $133.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 4.5%; TSINetwork Rating: Average; www.verizon.com) is close to completing its $3.9- billion purchase of wireless spectrum from a group of cable companies. This will help Verizon profit from rising wireless data use: the Federal Communications Commission estimates mobile data demand will be 25 to 50 times greater by 2015 than it was in 2010.

The company also increased its quarterly dividend by 3.0%, to $0.515 a share from $0.50. The new annual rate of $2.06 yields 4.5%.

Verizon is a buy.

...

TEXAS INSTRUMENTS INC. $28 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $30.8 billion; Priceto- sales ratio: 2.4; Dividend yield: 3.0%; TSINetwork Rating: Average; www.ti.com) is selling more chips to tablet computer makers. However, its sales to smartphone manufacturers are declining. That’s because these clients are making more of their own chips instead of relying on outside suppliers.

Even so, Texas Instruments continues to do a good job of controlling its costs. That let the company raise its quarterly dividend by 23.5%, to $0.21 a share from $0.17. The new annual rate of $0.84 yields 3.0%.

Texas Instruments is a buy.

...

TERADATA CORP. $73 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 168.6 million; Market cap: $12.3 billion; Price-to-sales ratio: 4.9; No dividends paid; TSINetwork Rating: Average; ww.teradata.com) continues to see strong demand for its analytics services, which help businesses gather and analyze large amounts of data, including customer purchasing patterns. The company’s revenue rose 14.5% in the three months ended June 30, 2012, to $665 million from $581 million a year earlier. Earnings per share rose 28.3%, to $0.77 from $0.60.

However, the company is facing stronger competition from bigger companies like IBM and Oracle. That could force it to lower its prices, which would hurt its profit margins.

Teradata is a hold.

...

SHERWIN-WILLIAMS CO. $146 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 102.6 million; Market cap: $15.0 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.1%; TSINetwork Rating: Above Average; www. sherwin-williams.com) earned $227.8 million in the quarter ended June 30, 2012, up 27.2% from $179.1 million a year earlier. Earnings per share rose 30.7%, to $2.17 from $1.66, on fewer shares outstanding. Sales rose 9.3%, to $2.6 billion from $2.4 billion.

Demand for the company’s paints has moved up as the U.S. housing market continues to recover. That’s making it easier for Sherwin to increase its prices to cover its rising raw material costs (the company uses oil to make its paint). However, the stock has gained 92% in the past year, and now trades at a high 22.9 times Sherwin’s projected 2012 earnings of $6.38 a share.

Sherwin-Williams is a hold.

...

DIEBOLD INC. $33 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 63.2 million; Market cap: $2.1 billion; Price-to-sales ratio: 0.7; Dividend yield: 3.4%; TSINetwork Rating: Average; www.diebold.com) makes ATMs, safes, vaults and building security systems.

In the three months ended June 30, 2012, the company’s earnings rose 30.7%, to $26.5 million from $20.3 million a year earlier. Earnings per share rose 32.3%, to $0.41 from $0.31, on fewer shares outstanding. If you exclude unusual items, such as a writedown of obsolete computer software, Diebold’s earnings per share would have risen 11.4%, to $0.49 from $0.44.

Revenue rose 12.2%, to $743.2 million from $662.4 million. That’s mainly because the company continues to see strong demand for ATMs from banks in North and South America. That’s helping it offset weaker sales in Europe. Sales in Asia were flat.

...

NCR CORP. $23 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 159.1 million; Market cap: $3.7 billion; Price-to-sales ratio: 0.6; No dividends paid; TSINetwork Rating: Average; www.ncr.com) is a leading maker of ATMs, checkout scanners, cash registers and self-serve kiosks.

NCR is benefiting from its $1.2-billion purchase of Radiant Systems Inc. in August 2011. Radiant makes point-of-sale terminals and self-serve kiosks for hotels, restaurants and gas stations. NCR also sold its struggling DVD-rental kiosk business for $100 million. These moves pushed up NCR’s revenue by 10.8% in the second quarter of 2012, to $1.4 billion from $1.3 billion a year earlier. Earnings jumped 48.9%, to $67 million, or $0.41 a share, from $45 million, or $0.28.

The stock is up nearly 40% since the start of 2012. Even so, it trades at just 9.4 times the $2.46 a share that NCR will probably earn in 2012.

...

CEDAR FAIR L.P. $33 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.5 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.8%; TSINetwork Rating: Average; www.cedarfair.com) reported revenue of $881 million from the beginning of the year through the Labour Day holiday weekend. That’s up 4.8%, from the same period in 2011.

New rides and attractions are helping Cedar Fair draw more visitors to its 11 amusement parks and seven water parks. Overall attendance rose 1%, while average spending per guest gained 4%. The partnership still plans to raise its annual distribution rate from $1.60 a unit (4.8% yield) in 2012 to $2.00 (6.1% yield) in 2013.

Cedar Fair is a buy.

...

DUN & BRADSTREET CORP. $80 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 44.9 million; Market cap: $3.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.9%; TSINetwork Rating: Average; www.dnb.com) shot up from around $70 in late July 2012 on reports that the company may be trying to sell itself.

Dun & Bradstreet recently cut its full-year revenue outlook for 2012 because the slowing global economy is hurting demand for its credit reports. It now expects revenue to rise between 0% and 3%, down from its earlier forecast of 3% to 5%. However, an ongoing cost-cutting plan should continue to push up its earnings.

Until the company provides more information, we see the stock as a hold.

...

CAMPBELL SOUP CO. $35 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 316.0 million; Market cap: $11.1 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.campbellsoupcompany.com) is the world’s largest maker of canned soups. It also makes Prego canned pasta and sauces, Pepperidge Farm cookies and V8 vegetable juices.

In its 2012 fiscal year, which ended July 29, 2012, Campbell’s earnings fell 7.4%, to $783 million from $846 million in fiscal 2011. The company spent $412 million on share buybacks in fiscal 2012. Because of fewer shares outstanding, earnings per share fell 3.9%, to $2.44 from $2.54.

These figures exclude costs related to a recent restructuring plan, under which the company cut jobs and closed its Russian operations.

...

CONAGRA FOODS INC. $28 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 406.1 million; Market cap: $11.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www. conagrafoods.com) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter, Orville Redenbacher popcorn and Reddiwip whipped cream.

In its fiscal 2013 first quarter, which ended August 26, 2012, ConAgra’s earnings soared 166.6%, to $250.1 million, or $0.61 a share. A year earlier, it earned $93.8 million, or $0.23 a share.

If you exclude all unusual items, including gains and losses on hedging contracts that ConAgra uses to lock in prices for wheat, corn and other ingredients, earnings per share would have risen 41.9%, to $0.44 from $0.31.

...

H.J. HEINZ CO. $56 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 320.2 million; Market cap: $17.9 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.heinz.com) makes a wide variety of processed foods, including condiments, sauces, soups, baked beans, pastas and baby food. Its flagship product, Heinz ketchup, accounts for about 60% of U.S. ketchup sales.

The company continues to target fast-growing markets like China, Russia and Brazil for new growth. For example, in April 2011 it bought 80% of Brazil’s leading maker of tomato pastes, sauces and condiments for $493.5 million.

Even with these new operations, Heinz’s sales fell 1.5% in its fiscal 2013 first quarter, which ended July 29, 2012, to $2.79 billion from $2.83 billion a year earlier. However, the company gets 60% of its revenue from outside North America, and the higher U.S. dollar is hurting the value of its overseas sales.

...

GENERAL MILLS INC. $40 (New York symbol GIS, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 645.2 million; Market cap: $25.8 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.generalmills.com) is one of the world’s largest food makers. Its top brands include Big G (cereal), Green Giant (canned and frozen vegetables), Pillsbury (baking dough), Old El Paso (tacos) and Progresso (soups and sauces).

In General Mills’ fiscal 2013 first quarter, which ended August 26, 2012, its sales rose 5.3%, to $4.05 billion from $3.8 billion a year earlier. Most of this gain is due to the company’s July 2011 purchase of a 51% stake in the private company that makes Yoplait yogurt; General Mills has made Yoplait products under license in the U.S. since 1977. The company also recently paid $940 million for a privately held maker of snacks and convenience meals in Brazil.

The extra sales from these new businesses helped offset the negative impact of foreign exchange rates; overseas markets supplied 27% of its total sales. As well, General Mills lowered some of its prices to compete with low-cost generic brands.

...

GOOGLE INC. $753 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 327.0 million; Market cap: $243.3 billion; Priceto- sales ratio: 5.7; No dividends paid; TSINetwork Rating: Above Average; www.google.com) rose to a new all-time high of $764.89 on September 25, 2012. The stock is now up 17% since the start of the year.

The company’s main Internet search business continues to grow strongly, particularly among mobile users. Google’s Android software now powers around two-thirds of the world’s smartphones. That’s driving more traffic to its websites and letting it charge higher advertising rates.

Google is also benefiting from problems with the new street-mapping application, or app, on Apple’s (Nasdaq symbol AAPL) new iPhone 5. Apple recently replaced the popular Google Maps app with its own version. However, errors with this new app may prompt Apple to switch back.

...

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. 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 the Inner Circle. This week we received a question from an Inner Circle member about an American stock that is literally a household name. Like many large U.S. consumer stocks it now generates more sales internationally than at home. While it has moved forward with a new acquisition, it is also recovering from a number of product recalls....

LOBLAW COMPANIES LTD. (Toronto symbol L; www.loblaw.ca) recently formed a partnership with J.C. Penney (New York symbol JCP). Under this deal, Loblaw will build Joe Fresh casual-clothing boutiques inside 700 of Penney’s 1,100 department stores in the U.S. These outlets should open in April 2013. Penney will also sell Joe Fresh products through its website....

From time to time, companies set up one or more of their divisions or subsidiaries as an independent company, then hand out shares in that company to their own shareholders, as a special dividend or “spinoff”.

Many investors seem to view spinoffs as a nuisance, because they leave you with a tiny holding in a stock you didn’t choose and that you know little about....

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 stock market advice that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Relying on just one or two indicators to help you choose stocks can increase your risk rather than diminish it.”...

Encana 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, which specializes in oil sands. Falling gas prices have pushed Encana’s shares down about 30% since the split. Oil prices have weakened lately, but Cenovus’ shares are up about 14%. 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....

Pat McKeough responds to many personal questions on potential stock picks 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 the Inner Circle. This week, an Inner Circle member asked about a stock that practices a form of socially responsible investing. This coffee maker emphasizes fair trade principles in its business dealings—and Pat assesses just how well the company is doing under those conditions. ...

WYNDHAM WORLDWIDE $53.52 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 142.2 million; Market cap: $7.6 billion; Dividend yield: 1.7%) is one of the world’s largest hospitality companies, with 7,170 franchised hotels worldwide. Aside from Wyndham and Ramada, it owns a variety of other brands, including Days Inn, Super 8, Wingate, Baymont Inn & Suites, Microtel Inns & Suites, Hawthorn Suites, Howard Johnson, Travelodge and AmeriHost Inn.

In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has 100,000 vacation rental properties worldwide. This wide range of operations gives it more consistent cash flow than most of its competitors, which mainly focus on hotels.

Vacation travel remains strong

...

ATLANTIC TELE-NETWORK $42.74 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340- 777-8000; www.atni.com; Shares outstanding: 15.6 million;Market cap: $666.7 million; Yield: 2.3%) sells telecommunications services, mainly in rural areas in the U.S., Bermuda
and the Caribbean region.

In the three months ended June 30, 2012, Atlantic’s revenue fell 4.4%, to $185.3 million from $193.8 million a year ago. However, earnings jumped to $10.5 million, or $0.67 a share, from $1.8 million, or $0.12.

...

DOMINO’S PIZZA $34.44 (New York symbol DPZ; TSINetwork Rating: Average) (734-930- 3030; www.dominos.com; Shares outstanding: 56.7 million; Market cap: $2.0 billion; No dividends paid) now operates in over 70 markets worldwide. Its international stores supply almost half of its sales and about a third of its earnings. The company still has considerable room to grow internationally.

For example, Jubilant Foodworks just opened the 500th Domino’s outlet in India. This company, which has the exclusive rights to operate Domino’s restaurants in that country, aims to continue its aggressive expansion by opening 100 new restaurants over the next year.

Jubilant also has franchise rights for Domino’s in Bangladesh, Nepal and Sri Lanka.

...

HECLA MINING COMPANY $6.61 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769-4100; www.hecla-mining.com; Shares outstanding: 285.5 million; Market cap: $1.9 billion) has agreed to pay $3.2 million for a 19.9% stake in Dolly Varden Silver Corp., symbol DV on Toronto. Dolly Varden owns several silver properties in northwestern B.C., including the pastproducing Dolly Varden and Torbit mines.

Hecla’s expertise should help Dolly Varden develop its properties, which are geologically similar to Hecla’s Greens Creek project.

Hecla Mining is a hold.

...