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BANK OF NOVA SCOTIA $52 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $57.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.scotiabank.com) has agreed to sell Scotia Plaza, its 68-storey office building in downtown Toronto.

Under the terms of the deal, Dundee REIT (Toronto symbol D.UN) and H&R REIT (Toronto symbol HR.UN) will pay Scotia $1.3 billion for the building when the sale closes, probably by June 30, 2012. Dundee will own two-thirds of the property, and H&R will own the remaining third. The bank will remain as the anchor tenant.

Meanwhile, Bank of Nova Scotia earned $1.5 billion in the three months ended April 30, 2012. That’s up 16.1% from $1.3 billion a year earlier. Earnings per share rose 8.5%, to $1.15 from $1.06, on more shares outstanding. Revenue rose 1.4%, to $4.7 billion from $4.6 billion. Strong gains at its international operations offset slower growth at its Canadian retail banking division.

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LINAMAR CORP. $21 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $1.4 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.5%; TSINetwork Rating: Extra Risk; www.linamar.com) gets 85% of its revenue by making engines, transmissions and other precisionmachined parts for automakers. The company has plants in North America, Europe and Asia.

The remaining 15% of Linamar’s revenue comes from its self-propelled, scissor-type elevating work platforms, which it makes under the Skyjack name, plus consumer products, such as lawn mowers and cargo trailers.

Thanks to rising new car sales, Linamar’s earnings jumped 55.3%, to $0.59 a share, in the three months ended March 31, 2012. This figure excludes a foreign-exchange gain. A year earlier, Linamar earned $0.38 a share.

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SHAWCOR LTD. $33 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.7 million; Market cap: $2.3 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.2%; TSINetwork Rating: Average; www.shawcor.com) makes sealants and coatings that keep oil and gas pipelines from rusting (88% of revenue). It also manufactures electrical wire and protective sheaths (12% of revenue).

So far this year, ShawCor has won over $45 million U.S. of coating orders related to big offshore natural gas projects near Australia. In addition, it has received a $30-million U.S. contract to coat undersea pipelines for a gas platform off the coast of Indonesia.

Meanwhile, ShawCor’s revenue rose 11.7% in the three months ended March 31, 2012, to $312.3 million from $279.5 million a year earlier. The company is benefiting as pipeline operators expand their operations to handle higher oil and gas production in North America and Latin America.

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SNC-LAVALIN GROUP INC. $39 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 161.1 million; Market cap: $6.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.snclavalin.com) is a leading Canadian engineering and construction company. It specializes in large-scale public works projects, such as roads, bridges, transit systems and water-treatment plants.

SNC’s shares fell from around $48 in February 2012 after the company discovered $35 million of unusual payments related to certain construction contracts.

A panel of independent directors and lawyers later found another unusual payment, bringing the total to around $56 million. The company didn’t say which projects are connected to these transactions.

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CANADIAN PACIFIC RAILWAY LTD. $73 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.9 million; Market cap: $12.5 billion; Price-to-sales ratio: 2.4; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.cpr.ca) has attracted a lot of media attention lately. That’s mainly due to efforts by a U.S.-based investment firm that wants to improve its performance and possibly spark a takeover offer.

In our three-part Successful Investor portfolio strategy, we advise investors to invest mainly in well-established companies, spread your money out across the five main economic sectors, and downplay stocks that are in the broker/media limelight, which can bloat investor expectations.

Downturns can be brutal when stocks fail to live up to those inflated expectations. So, investors have asked why we chose a #1 stock that’s in what they see as ‘the limelight’. The difference is in the definition.

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CANADIAN NATIONAL RAILWAY CO. $84 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 438.7 million; Market cap: $36.9 billion; Price-to-sales ratio: 4.1; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.cn.ca) operates the largest freight-rail network in Canada, with access to major ports such as Vancouver, Montreal and Halifax. It also serves 16 U.S. states, including ports in New Orleans and Mobile, Alabama.

Ottawa nationalized CN in 1922 because of the vital role the company played in Canada’s early growth. CN became a publicly traded company in 1995.

CN hauls consumer and industrial goods (22% of 2011 revenue), grain and fertilizers (19%), petroleum products (17%), forest products (16%), metals and minerals (12%), coal (8%) and automotive products (6%).

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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. Inner Circle members often ask us about dividend stocks In this case, Pat responds to a question about a U.S. company that provides business outsourcing services to a wide variety of clients and is counting on strategic acquisitions and an improving employment rate to keep its dividend rising. ...

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, the topic is one that figures into the retirement planning of many Canadians. Is my home an investment? Make sure you’ve made careful and complete calculations before you come to that conclusion, advises Pat.
Planning for Retirement: Your House as an Investment...

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 advice on the fundamentals of successful 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: “Those who wish to trade stocks online should be very wary of the promises offered by automated stock trading systems.”...

ANDREW PELLER LTD. (Toronto symbol ADW.A; www.andrewpeller.com) is Canada’s second-largest wine producer, after Vincor Canada. Peller operates wineries in B.C., Ontario and Nova Scotia. It also imports wines and sells home-winemaking kits. In its 2012 fiscal year, which ended March 31, 2012, Peller’s sales rose 4.3%, to $276.9 million from $265.4 million in fiscal 2011....

STANLEY BLACK & DECKER INC. $62 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.9 million; Market cap: $10.6 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.6%; TSINetwork Rating: Average; www.stanleyblackanddecker.com) is one of the world’s largest makers of hand and power tools for consumers. Its top-selling brands include Stanley, Black & Decker, FatMax and Powerlock. This business supplied 51% of Stanley’s 2011 sales and 46% of its earnings.

The company’s building-security division makes locks, automatic doors and gates. It also monitors properties for its clients, typically through closed-circuit audio and TV systems. This division accounts for 25% of Stanley’s sales and 27% of its earnings.

The remaining 24% of sales and 27% of earnings comes from selling specialized tools to industrial users, such as auto mechanics and construction firms.

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CONAGRA FOODS INC. $25 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 415.4 million; Market cap: $10.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.8%; 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 and Orville Redenbacher popcorn.

In ConAgra’s 2012 fiscal year, which ended May 27, 2012, sales rose 7.8%, to $13.3 billion from $12.3 billion in fiscal 2011. That’s partly due to several recent acquisitions. The company also raised its prices to offset higher ingredient costs. Earnings per share rose 5.1%, to $1.84 from $1.75. These figures exclude several unusual items, such as losses on commodity-hedging contracts and costs related to changes in the way the company accounts for contributions to employee pension plans.

ConAgra expects its earnings to rise to $1.97 a share in fiscal 2013. The stock trades at 12.7 times that estimate. The annual dividend rate of $0.96 yields 3.8%.

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MTS SYSTEMS CORP. $38 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 16.1 million; Market cap: $611.8 million; Price-to-sales ratio: 1.2; Dividend yield: 2.6%; TSINetwork Rating: Average; www.mts.com) makes equipment and software that tests materials, machines and structures. This helps manufacturers lower their costs and improve the quality of their products.

In the three months ended March 31, 2012, MTS’s revenue rose 14.1%, to $129.0 million from $113.1 million a year earlier. Even so, earnings fell 5.5%, to $11.2 million from $11.8 million. Earnings per share fell 8.0%, to $0.69 from $0.75, on more shares outstanding.

MTS raised its research spending by 70.5%, to $6.1 million (or 4.7% of revenue) from $3.6 million (or 3.1% of revenue). That was the main reason for the earnings drop. However, this spending helps MTS keep up with rapidly changing technologies. It also helps it develop innovative new products that will spur its sales for years to come.

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PETSMART INC. $66 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 108.4 million; Market cap: $7.2 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.0%; TSINetwork Rating: Above Average; www.petsmart.com) continues to see strong sales growth at its 1,241 pet supply stores in the U.S....

VERIZON COMMUNICATIONS INC. $44 (New York symbol VZ, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 2.8 billion; Market cap: $123.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.5%; TSINetwork Rating: Average; www.verizon.com) continues to upgrade its high-speed wireless networks to Long Term Evolution (LTE) technology, which is up to five times faster than today’s systems. These upgrades will help Verizon profit from rising use of smartphones and new wireless services, such as video calling.

The company recently added 46 cities to its LTE network and expanded coverage in 22 of the cities it already covers. This makes it the largest provider of LTE service in the U.S., serving 304 cities representing two-thirds of the population.

Verizon is a buy.

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ALLIANT ENERGY CORP. $45 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 111.0 million; Market cap: $5.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 4.0%; TSINetwork Rating: Average; www.alliantenergy.com) sells electricity and natural gas to 1.4 million residential and business customers in Wisconsin, Iowa and Minnesota.

In the three months ended March 31, 2012, Alliant’s earnings fell 27.4%, to $54.5 million, or $0.50 a share. A year earlier, it earned $75.1 million, or $0.68 a share. These figures exclude unusual items, such as extra taxes related to the planned sale of Alliant’s wind- and solar-power subsidiary. Revenue fell 12.7%, to $765.7 million from $877.2 million.

Like Ameren, Alliant saw lower demand for electricity and gas due to the warm winter. However, power sales to industrial customers rose 3.8%.

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AMEREN CORP. $33 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $8.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.8%; TSINetwork Rating: Average; www.ameren.com) sells power and natural gas to 3.3 million clients in Illinois and Missouri.

In the three months ended March 31, 2012, Ameren’s earnings fell 11.7%, to $53 million, or $0.22 a share. A year earlier, it earned $60 million, or $0.25 a share. These figures exclude unusual items, such as a recent writedown of a coal-fired power plant.

Revenue fell 12.9%, to $1.7 billion from $1.9 billion. That was mainly because warmer-than usual winter weather prompted consumers to use less electricity and natural gas for home heating. As a result, electricity sales (which account for 79% of Ameren’s revenue) fell 10.9%, and gas sales (21% of revenue) fell 19.8%.

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APACHE CORP. $85 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 390.8 million; Market cap: $33.2 billion; Price-to-sales ratio: 1.8; Dividend yield: 0.8%; TSINetwork Rating: Average; www.apachecorp.com) has announced a major new shale gas discovery in the Horn River region of northeastern British Columbia. This single field could contain 48 trillion cubic feet of natural gas. To put that in context, discoveries in the entire region so far total 78 trillion cubic feet.

Even with today’s low gas prices, this discovery has huge potential. It also makes it more likely that the company will build a facility in Kitimat, B.C., to convert gas to a liquid form. Ships would then deliver the gas to markets in Asia. Apache and its partners will likely make a final decision on this project by the end of 2012.

Apache is a buy.

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MICROSOFT CORP. $30 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.4 billion; Market cap: $252.0 billion; Price-to-sales ratio: 3.5; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.microsoft.com) is buying Yammer Inc. for $1.2 billion. This private company operates an online social network for businesses. Over 200,000 companies now use this service.

Microsoft will probably add Yammer’s features to its Office suite of business programs. That would make it easier for Office users to collaborate on projects. Yammer should also add to Microsoft’s cloud computing expertise.

Microsoft is a buy.

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HEWLETT-PACKARD CO. $20 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.0 billion; Market cap: $40.0 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.hp.com) recently announced a major restructuring that includes merging its computer and printer businesses into a single division. The company also plans to cut 8% of its workforce over the next two years.

Hewlett expects to pay $3.5 billion in severance and related costs. However, these moves should save it $3.0 billion to $3.5 billion a year. The company will put most of these savings toward developing new products and services, especially in fastgrowing areas like cloud computing, analytics software and computer security.

In Hewlett’s fiscal 2012 second quarter, which ended April 30, 2012, sales fell 3.0%, to $30.7 billion from $31.6 billion a year earlier.

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INTERNATIONAL BUSINESS MACHINES CORP. $193 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.2 billion; Market cap: $231.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.ibm.com) started up in 1911, which makes it the world’s oldest computer company. IBM now operates in over 170 countries.

The company has long been known as a maker of mainframe computers. However, these products supplied just 18% of its revenue in 2011. That’s because IBM continues to expand into more profitable areas, like designing computer systems and managing them for clients (56% of revenue) and selling software (23%). Its financing division supplies the other 3%.

The company often uses acquisitions to enhance its expertise. In the three months ended March 31, 2012, it spent $1.4 billion buying smaller firms. It’s particularly interested in companies that specialize in analytics software, which helps businesses track consumer purchasing and other data.

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APPLE INC. $575 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 935.1 million; Market cap: $537.7 billion; Price-to-sales ratio: 3.8; Dividend yield: 1.8%; TSINetwork Rating: Average; www.apple.com) is now the largest publicly traded company in the world based on market cap, thanks to the huge success of its mobile devices, such as the iPhone smartphone and the iPad tablet computer. These products are also attracting more attention to Apple’s Mac desktop and laptop computers.

In its 2012 second quarter, which ended March 31, 2012, the company sold 11.8 million iPads, up 151.3% from a year earlier. iPhone sales jumped 88.0%, to 35.1 million units. That’s partly because the company recently signed new deals that let more Chinese wireless carriers sell the device.

Apple also sold 6.8% more Mac computers. However, sales of iPod music players fell 14.9%, as iPod users continued to upgrade to iPhones.

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NCR CORP. $21 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 158.8 million; Market cap: $3.3 billion; Price-to-sales ratio: 0.6; No dividends paid; TSINetwork Rating: Average; www.ncr.com) has paid an undisclosed sum for three Brazilian firms that make cash registers and other point-of-sale equipment for restaurants.

These purchases should help NCR increase its share of this market, which is growing by 10% a year. Restaurant spending should also keep rising in Brazil, particularly because the country is hosting the 2014 FIFA World Cup and the 2016 Summer Olympics.

NCR is a buy.

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INTERNATIONAL FLAVORS & FRAGRANCES INC. $54 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.1 million; Market cap: $4.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.iff.com) produces over 34,000 compounds that improve the taste of food and make consumer products smell better. It gets 75% of its sales from outside the U.S.

In the three months ended March 31, 2012, IFF’s sales fell 0.5%, to $710.6 million from $714.3 million a year earlier. Sales at the Fragrances division (which supplies 51% of IFF’s total sales) fell 4.0%, mainly because the company’s competitors cut their prices. That offset a 3.3% gain at the Flavors division (49% of sales). Earnings fell 3.6%, to $81.1 million, or $0.99 a share. A year earlier, the company earned $84.0 million, or $1.03 a share.

IFF is now conducting a strategic review of its Fragrances business. That could result in a number of changes, including the closure of some manufacturing plants or the sale of the entire division. It will take the company several months to complete its review.

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MCCORMICK & CO. INC. $59 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 120.1 million; Market cap: $7.1 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.1%; TSINetwork Rating: Average; www.mccormick.com) is the world’s leading maker of spices, herbs, seasonings, flavourings, sauces and extracts. It sells its products to consumers, restaurants and industrial food processors. Top brands include McCormick, Club House, Zatarain’s, Ducos and Schwartz.

The company is starting to benefit from its recent purchases of spice makers and food companies in India and Eastern Europe. Emerging markets now supply 14% of its sales. As well, its ongoing cost-cutting plan should save it $45 million in its current fiscal year.

In its fiscal 2012 second quarter, which ended May 31, 2012, McCormick’s sales rose 11.4%, to $984.0 million from $883.7 million a year earlier. Acquisitions accounted for about half of this gain. Earnings rose 9.2%, to $80.4 million, or $0.60 a share. A year earlier, McCormick earned $73.6 million, or $0.55 a share.

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