Search

FAIR ISAAC CORP. $44.95 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 33.8 million; Market cap: $1.5 billion; Dividend yield: 0.2%) has been awarded seven patents by the U.S. Patent and Trademark Office. That brings the company’s total number of patent awards to 128.

Two of the new patents relate to Fair Isaac’s FICO Insurance Fraud Manager software, which detects fraud, waste and abuse in health care claims. These patents cover a method for analyzing codes that health care providers enter to represent specific medical procedures. That helps the program catch both potential and ongoing systematic fraud.

Four of the seven patents were for inventions used in FICO’s Blaze Advisor decision-management software. Additionally, FICO was awarded a patent for an invention related to the FICO Score, the standard measure of consumer credit risk in the U.S. This helps determine the conditions in credit scoring in which additional information is needed. FICO spends a high 9% of its revenue on research and development. That lets it stay ahead of the competition—and patent awards like these help reinforce its research efforts.

...

ALIMENTATION COUCHE-TARD $45.20 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 179.4 million; Market cap: $8.1 billion; Dividend yield: 0.7%) has reported sharply higher sales and earnings in its latest quarter. Without one-time costs related to its $2.7-billion purchase of Statoil Fuel & Retail ASA, the company’s earnings per share rose 26.7%, to $0.95 from $0.75 (all figures except share price in U.S. dollars). Sales rose 16.1% to $6.0 billion from $5.2 billion.

The gains came from higher fuel prices, acquisitions and higher merchandise sales. (The company gets about 30% of its sales by selling merchandise.) The results also included 11 days of operations from the Statoil gas station chain.

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

...

SASOL LTD. (ADR) $46.39 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082-883-9697; www.sasol.com; ADRs outstanding: 645.0 million; Market cap: $29.9 billion; Dividend yield: 3.1%) reports that in its fiscal year ended June 30, 2012, revenue rose 19.0%, to $20.3 billion from $17.1 billion in the previous fiscal year (all figures in U.S. dollars). Earnings per ADR rose 25.8%, to $5.05 from $3.99.

Higher oil prices were the main reason for the gains. The U.S. dollar also rose against the South African rand; that pushed up the value of Sasol’s sales outside South Africa.

The company plans to build an $8-billion to $9-billion gas-to-liquids (GTL) plant in Louisiana. It has also completed a feasibility study for an $8-billion GTL plant in Alberta.

...

DELPHI ENERGY $1.19 (Toronto symbol DEE; TSINetwork Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 131.2 million; Market cap: $156.1 million; No dividends paid) explores for oil and natural gas in Alberta and B.C. Gas makes up 74% of Delphi’s daily output; the remaining 26% is oil. In the three months ended June 30, 2012, Delphi’s average daily output fell 3.0%, to 8,636 barrels of oil equivalent (including natural gas) from 8,906 barrels a year earlier. Disruptions at third-party processing facilities were the main reason for the decline.

The lower production, plus lower natural gas prices, pushed down Delphi’s cash flow to $0.05 a share from $0.15.

The company’s debt of $134.4 million is a high 86.1% of its market cap. However, Delphi trades at 4.4 times its forecast 2012 cash flow of $0.27 a share, and only 3.1 times the 2012 forecast cash flow of $0.38 a share.

...

BELLATRIX EXPLORATION $3.82 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266- 8670; www.bellatrixexploration.com; Shares outstanding: 107.5 million; Market cap: $410.7 million; No dividends paid) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 63% of its output; the remaining 37% is oil.

In the three months ended June 30, 2012, Bellatrix’s production rose 42.3%, to 16,569 barrels of oil equivalent per day (including natural gas) from 11,643 barrels. The company’s highly effective drilling continues to add to its production: in the latest quarter, it drilled 15 wells with a 100% success rate.

Cash flow per share rose 4.3%, to $0.24 from $0.23. Bellatrix’s selling price for gas fell 50%, to $2.03 U.S. per thousand cubic feet from $4.06 U.S. a year ago. However, the big production increase offset that decline. The company’s long-term debt is $164.1 million, or a manageable 40% of its market cap.

...

TIM HORTONS $51.37 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 154.9 million; Market cap: $8.0 billion; Dividend yield: 1.6%) aims to take advantage of fast-growing interest in home coffee systems.

Under a new agreement, Kraft Foods and Tim Hortons will make and sell plastic cups, called T-Discs, filled with Tim Hortons premium blend coffee, including decaf and latte, and sealed with a foil top.

Kraft’s Tassimo beverage machine pierces the foil and brews a fresh single cup. The Tassimo system also scans a barcode on the T-Disc that tells it how much water to use, how long to brew the coffee and how hot it should be.

...

RUSSEL METALS $27.96 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 60.1 million; Market cap: $1.7 billion; Dividend yield: 5.0%) is one of North America’s largest metal distributors. The company serves its roughly 33,000 customers through a network of 51 locations in Canada and 12 in the U.S.

In the three months ended June 30, 2012, Russel’s revenue rose 16.2%, to $718.7 million from $618.6 million a year earlier. All three of the company’s divisions saw gains: higher sales volumes pushed up revenue by 11% at both the steel-distribution and metalservices businesses. And revenue jumped 32% at the energy tubular products division, which supplies pipes for oil and gas firms, thanks to an increase in drilling activity.

Without one-time items, earnings per share fell 13.5%, to $0.45 from $0.52 a year earlier. The company’s earnings fell despite 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.

...

GOODYEAR TIRE & RUBBER CO. $13.48 (NewYork symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 244.7 million; Market cap: $3.3 billion; No dividends paid) is the world’s largest tire maker, with over 60 plants in 25 countries.

In the three months ended June 30, 2012, the company’s sales fell 8.4%, to $5.15 billion from $5.62 billion a year earlier.

North American sales rose 1.7%, to $2.5 billion from $2.4 billion, but weak economic growth cut sales by 21.4% in Latin America; 17.9% in Europe, the Middle East and Africa; and 4.2% in Asia. Unfavourable foreign currency moves also lowered Goodyear’s overall sales by 6%.

...

MAJOR DRILLING $11.01 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866- 264-3986; www.majordrilling.com; Shares outstanding: 79.1 million; Market cap: $870.9 million; Dividend yield: 1.8%) has hiked its dividend and announced record quarterly revenue and earnings.

In the three months ended July 31, 2012, Major’s revenue jumped 44.7%, to a record $237.6 million from $164.1 million a year earlier. Earnings per share jumped 60.0%, to $0.40 from $0.25.

The strong results have prompted Major to raise its twice-yearly dividend by 11.1%, to $0.10 from $0.09. This follows a 12.5% hike in May, to $0.09 from $0.08. The stock now yields 1.8%.

...

COMPUTER MODELLING GROUP $18.53 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgroup.com; Shares outstanding: 37.4 million; Market cap: $693.0 million; Dividend yield: 4.0%) sells consulting services and software that help oil and gas producers get more out of their existing wells. Computer Modelling has clients in over 50 countries.

In the three months ended June 30, 2012, the company’s revenue rose 3.3%, to $16.5 million from $15.9 million a year earlier. An increase in software licence sales more than offset a drop in consulting and professional services revenue. (It consulted on some large one-time projects in the year-earlier quarter.)

Earnings fell 8.6%, to $6.1 million, or $0.16 a share, from $6.7 million, or $0.18 a share. The company hired new employees to handle its growing business. That meant it also had to acquire more office space, computers, furniture and fixtures. It now has 164 employees, up from 144 a year ago.

...

PASON SYSTEMS $15.76 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.0 million; Market cap: $1.3 billion; Dividend yield: 2.8%) rents equipment for monitoring and managing oil and gas rigs. It also sells communication systems, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors throughout Canada, the U.S., Mexico, Argentina and Australia.

In the three months ended June 30, 2012, Pason’s revenue rose 29.8%, to $81.1 million from $62.4 million a year earlier. Cash flow rose 31.5%, to $30.1 million, or $0.37 a share, from $22.9 million, or $0.28.

Even with declining oil prices and continued low gas prices, drilling activity rose 6% in Canada and the U.S. in the latest quarter, with a combined 188,291 active days and a rig count of 2,069, compared to 177,791 days and 1,954 rigs a year earlier.

...

SYMANTEC CORP. $18.94 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 701.9 million; Market cap: $13.3 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 June 29, 2012, Symantec’s earnings per share excluding one-time items rose 7.5%, to $0.43 from $0.40. That beat the consensus estimate of $0.33.

Revenue rose just 0.9%, to $1.67 billion from $1.65 billion. Stronger sales of security software to businesses offset lower sales to consumers, who account for about 30% of Symantec’s overall revenue. As well, higher sales in the Americas and Asia helped overcome declines in Europe.

...

ACI WORLDWIDE $42.71 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 39.8 million; Market cap: $1.7 billion; No dividends paid) makes software that is used to process transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments.

In mid-February 2012, ACI completed its purchase of S1 Corp. for $540 million in cash and stock. This acquisition is 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 second quarter of 2012, ACI’s revenue rose 32.1%, to $149.8 million from $113.4 million a year earlier. S1′s $43.1-million contribution was the main reason for the gain.

...

SHERRITT INTERNATIONAL $4.90(Toronto symbol S; TSINetwork Rating: Speculative) (1-800- 704-6698; www.sherritt.com; Shares outstanding: 296.9 million; Market cap: $1.5 billion; Dividend yield: 3.1%) recently finished building a mine at its 40%-owned Ambatovy project on the island nation of Madagascar, off Africa’s east coast.

The government of Madagascar has just signed an operating permit that will let Sherritt and its partners begin production at Ambatovy, which will be one of the world’s biggest nickel mines.

The $5.5-billion project will be able to produce 60,000 tonnes of refined nickel a year for the next three decades.

...

WESTJET AIRLINES $17.28 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 126.9 million; Market cap: $2.2 billion; Dividend yield: 1.9%) was trading at $14.10 when we made it our #1 Stock of the Year for 2011. It was a year late getting started, but it’s now hitting new highs.

The company serves 81 destinations in North America, Central America and the Caribbean. Its fleet of 99 modern Boeing 737s are 30% more fuel efficient than older aircraft. WestJet is scheduled to receive 36 more 737s through 2018.

In the three months ended June 30, 2012, WestJet’s revenue rose 9.0%, to $809.3 million from $742.3 million a year earlier. Demand for its flights remains high, and it has entered into new partnerships with other airlines; these were the main reasons for the higher revenue.

...

Most experienced investors recognize that it’s hard to outperform the market on a regular basis over long periods. However, only the successful minority recognize as well that it’s all too easy to underperform the market, often by a wide margin. Our advice is that the best way to try to outperform is to apply our three key investing principles: invest mainly in well-established companies; spread your money out across the five main economic sectors (Manufacturing, Resources, Consumer, Finance and Utilities); and downplay or avoid stocks in the broker/media limelight, where unpleasant surprises can lead to brutal declines. But applying these principles to buying stocks requires a good deal of judgment and attention. Even then, you won’t beat the market every year....

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 medical products stock that specializes in breathing and sleeping problems. This U.S. firm, which makes equipment to deal with respiratory disorders such as sleep apnea, is growing through acquisitions and the development of new products. ...

We continue to advise that you shouldn’t let the current or recent investment situation play too big a role in setting your investment objectives and investment strategy. Instead, try to pursue what you might call an “evergreen” investment approach. You want to invest in such a way that you profit in good times but don’t suffer too badly during the inevitable market setbacks. Above all, you want to make sure that you don’t make the mistake of losing out on some of your best investments....

The more you know about investing, the more successful you will be. That has been Pat McKeough’s approach through four decades as an investor and investment counsellor. He regularly presents his views on specific investment topics—and specific stocks—on video in order to share the insights he has gathered over the years. Today’s topic is one of the world’s leading tech stocks. In the contest to see which company would become the dominant Internet search engine, Google (symbol GOOG on Nasdaq) was the clear winner. It has built upon that foundation. Four years ago, the company launched its Android operating system for smartphones and tablet computers. This year, it purchased cellphone maker Motorola Mobility. Now it has announced a key re-organization that will make its richly-priced shares more liquid. We give an explanation of Google’s share initiative followed by Pat’s commentary. ...

INNERGEX RENEWABLE ENERGY $10.77 (Toronto symbol INE; Shares outstanding: 81.3 million; Market cap: $882.7 million; TSINetwork Rating: Extra Risk; Dividend yield 5.4%; www.innergex.com) is buying the 77-megawatt Wildmare wind project from Finavera Wind Energy for $22 million. The project is located in northeastern B.C. and is currently at an advanced stage of permitting.

Innergex aims to start construction of a wind farm at Wildmare in late 2013, and plans to start generating power at the site in early 2015. The total cost to complete the project is estimated at $217 million.

Once the project is fully operational, its power will be sold to BC Hydro under a 25-year contract.

...

ISHARES DEX UNIVERSE BOND INDEX FUND $31.62 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 664 bonds in the portfolio have an average term to maturity of 9.81 years. The fund’s MER is 0.33%.

The bonds in the index are 69.6% government and 30.4% corporate.

The fund yields 3.2%, compared to the Short-Term Bond Fund’s 2.8%. Its yield-to-maturity is 2.27%, 0.67% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.

...

ISHARES DEX SHORT-TERM BOND INDEX FUND $28.99 (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 326 bonds with an average term to maturity of 2.90 years. The bonds in the index are 66.0% government and 34.0% 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. But 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.

...

TORSTAR CORP. $9.10 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $727.1 million; TSINetwork Rating: Above Average; Dividend yield: 5.8%; www.torstar.com) reports that its earnings per share before one-time items fell 13.7% in the three months ended June 30, 2012, to $0.44 from $0.51.

The earnings drop is mainly due to weak advertising revenue at Torstar’s media division, which consists of over 100 newspapers, including its flagship newspaper, The Toronto Star, and related websites. This business accounts for 72% of the company’s revenue. The remaining 28% comes from its Harlequin book-publishing subsidiary.

Overall revenue fell 2.4%, to $383.9 million from $393.3 million. Revenue fell 2.2% at the media division and 2.9% at Harlequin.

...

ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $23.74 (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, 72.3%; Poland, 17.1%; Czech Republic, 3.7%; and Hungary, 3.5%.

The fund’s top holdings are Gazprom (Russia: gas utility), 18.1%; Lukoil (Russia: oil), 10.2%; Sberbank (Russia: bank), 8.6%; Novatek (Russia: natural gas), 3.8%; Mobile TeleSystems (Russia: wireless), 3.5%; Tafneft (Russia: oil and gas), 3.1%; Magnit OJSC (Russia: retailing), 3.0%; Rosneft Oil Company (Russia: oil and gas), 2.8%; MMC Norilsk Nickel (Russia: mining), 2.7%; and PKO Bank Polski SA (Poland: banking), 2.2%.

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

...

ISHARES S&P INDIA NIFTY 50 INDEX FUND $21.48 (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), 8.6%; Reliance Industries Ltd. (conglomerate), 7.5%; ICICI Bank, 6.9%; HDFC Bank, 6.6%; Infosys Technologies (software), 6.6%; Housing Development Finance, 6.3%; Larsen & Toubro Ltd. (conglomerate), 4.5%; Tata Consultancy Services (information technology), 3.9%; and State Bank of India, 3.3%.

The fund’s industry breakdown includes Banks, 19.8%; Computers, 13.3%; Cigarettes, 8.5%; Refineries, 8.1%; Housing, 5.9%; Automobiles, 5.5%; Engineering, 4.6%; Pharmaceuticals, 4.3%; Electricity, 3.8%; and Oil Exploration/Production, 3.8%. The ETF has an expense ratio of 0.89%.

...