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p>TORONTO-DOMINION BANK $83 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 909.2 million; Market cap: $75.5 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.td.com) is Canada’s second-largest bank, with total assets of $773.7 billion. In December 2011, TD completed its $6.8-billion purchase of MBNA’s Canadian credit card operations from Bank of America (New York symbol BAC). These assets are a great fit for TD: They added 1.8 million clients to its 4.0 million credit card accounts. As well, MBNA is the largest MasterCard issuer in Canada. That diversifies TD’s credit card business beyond its current Visa cards.

The MBNA division should add $0.05 a share to TD’s annual earnings in the first year, and $0.10 a share thereafter.

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ROYAL BANK OF CANADA $56 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $78.4 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s largest bank, with $815.0 billion of assets.

The U.S. Commodity Futures Trading Commission (CFTC) recently accused Royal of using a complex series of trades to cut its tax bill in Canada. Specifically, the CFTC says that divisions of the bank bought Canadian and U.S. dividend-paying stocks (plus futures contracts on these stocks) and quickly sold them to other divisions. These transactions would let Royal earn tax credits on the dividends it received from these holdings.

The CFTC claims that this process was a wash trade, in which the bank artificially set prices for these transactions, instead of letting the market determine the prices. Royal has denied these allegations, and we agree with Royal. As well, any potential fine would likely be small next to Royal’s earnings.

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PENGROWTH ENERGY CORP. $8.96 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 360.3 million; Market cap: $3.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 9.4%; TSINetwork Rating: Average; www.pengrowth.com) has a long history of using acquisitions to expand, which adds risk. However, these purchases have increased its reserves and cash flow.

Its latest acquisition is NAL Energy Corp. (Toronto symbol NAE). NAL investors will receive 0.86 of a Pengrowth common share for each share they hold. That will give them 26% of the combined company. The deal should close by May 31, 2012.

Adding NAL’s properties in Alberta and B.C. (54% natural gas and 46% oil) will increase Pengrowth’s projected 2012 production by about 16%, to between 86,000 and 89,000 barrels of oil equivalent a day.

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BANK OF NOVA SCOTIA $55 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $60.5 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.scotiabank.com) is Canada’s third-largest bank, with assets of $637.1 billion.

During the financial crisis, the bank’s revenue fell 4.9%, from $12.5 billion in 2007 to $11.9 billion in 2008 (fiscal years end October 31). As the crisis passed, revenue rebounded by 45.6%, to $17.3 billion, in 2011.

Earnings fell 23.9%, from $4.01 a share (or a total of $4.0 billion) in 2007 to $3.05 a share (or $3.0 billion) in 2008. That’s largely because the bank’s loan-loss provisions rose as some of its clients fell behind on their payments. Writedowns of securities also contributed to the drop. However, earnings recovered to $3.31 a share (or $3.4 billion) in 2009, and reached $4.62 a share (or $5.0 billion) in 2011.

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TECK RESOURCES LTD. $36 (www.teck.com) plans to sell $1 billion U.S. of new long-term bonds. It will use the cash to redeem $1.05 billion U.S. of its existing debt. The company will record a one-time, non-cash charge of $340 million U.S....

A positive outlook for the Canadian economy will continue to boost stocks across many industries. Some stocks benefit by supplying different industries, like this heavy equipment supplier we have just added it to the list of growth stocks we cover in our newsletter for aggressive investing, Stock Pickers Digest. WAJAX CORP. (Toronto symbol WJX; www.wajax.ca) 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)....

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. Last week, an Inner Circle member, pleased with his investment in one U.S. stock, wanted to know if it would continue to pay off. This company uses personal sales representatives to sell its skin care and nutritional products and gets most of its sales in foreign markets like China....

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. In this session, Pat responds to a question about those analysts who are making grim predictions of a looming stock market crash. He introduces a note of calm, pointing out that when it comes to real estate investments, just because a boom cools down doesn’t mean it’s going to go bust.
Should You Worry About a Real Estate Crash?...

GENERAL ELECTRIC CO. $19 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $201.4 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.ge.com) is one of the world’s largest manufacturers. It makes equipment for generating and distributing electricity, such as turbines (31% of revenue, 32% of earnings); aircraft engines (13%, 17%); health care equipment, such as medical scanners (13%, 14%); home appliances and lighting (6%, 1%); and locomotives (3%, 4%).

Following the 2008/2009 financial crisis, the company scaled back the activities of its GE Capital subsidiary, which provides loans and other financial services to GE’s customers. This business now accounts for 34% of GE’s revenue and 32% of its earnings.

Recession took a toll …

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MOLSON COORS BREWING CO. $41 (New York symbol TAP;
Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 180.7 million; Market cap: $7.4 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.1%; TSINetwork Rating: Average; www.molsoncoors.com) has agreed buy StarBev L.P., which owns nine breweries in central and eastern Europe. The deal will close by June 30, 2012.

Molson Coors will pay $3.5 billion for StarBev. The company held cash of $1.1 billion at the end of 2011, so it will have to borrow most of the funds it will need to complete this purchase. Molson Coors’long-term debt of $1.9 billion is a moderate 26% of its market cap, so it can comfortably afford to borrow more money.

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PROCTER & GAMBLE CO. $67 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.8 billion; Market cap: $187.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.pg.com) has raised its quarterly dividend by 7.0%, to $0.562 a share from $0.525. The new annual rate of $2.25 yields 3.4%. Procter has paid dividends for 122 straight years, and has raised the payout each year for past 56 years.

Rising fuel and raw material costs continue to squeeze the company’s profit margins. In response, Procter has announced that it will cut jobs and spend less on advertising its household and personal-care products.

These moves should save it $10 billion over the next four years. To put this figure in context, Procter earned $4.7 billion, or $1.60 a share, in the six months ended December 31, 2011.

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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) has won regulatory approval to buy the Riverside gas-fired power plant in Beloit, Wisconsin. Right now, the company purchases power from this plant under a long-term contract. This deal also gives Alliant an option to buy the plant by May 31, 2012. The company is still deciding whether to do so.

If Alliant exercise its option, it would have to pay $392 million for the plant. That’s equal to 1.3 times the $305.3 million, or $2.76 a share, that it earned in 2011. Still, a purchase would let Alliant cut the plant’s costs. It would also lower the company’s need to buy power at unpredictable market prices.

Alliant Energy is a buy.

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MACY’S INC. $40 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 418.5 million; Market cap: $16.7 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.0%; TSINetwork Rating: Average; www.macysinc.com) continues to benefit from its My Macy’s plan to tailor its merchandise to local tastes. This strategy has attracted new shoppers to its department stores and encouraged repeat visits.

As a result, its same-store sales were 7.3% higher in March 2012 than in March 2011. Macy’s is also seeing strong sales growth at its websites: online sales jumped 39.0% from March 2011.

Macy’s is a buy.

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JONES GROUP INC. $11 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 82.3 million; Market cap: $905.3 million; Price-to-sales ratio: 0.3; Dividend yield: 1.8%; TSINetwork Rating: Average; www.jonesgroupinc.com) designs clothing, accessories and footwear for men and women. Its major brands include Jones New York, Gloria Vanderbilt, Anne Klein and Nine West.

The company continues to invest in new, upscale brands. It feels these additions will supply about 18% of its sales in 2012, up from 14% in 2011. Jones is also expanding overseas. In June 2011, it paid $350 million for Kurt Geiger, Europe’s largest luxury shoe retailer.

Even with these new businesses, Jones’s sales fell 2.6% in the three months ended March 31, 2012, to $936.0 million from $961.3 million a year earlier. Higher operating and interest expenses caused earnings to fall 24.8%, to $23.6 million, or $0.31 a share, from $31.4 million, or $0.38 a share.

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LIMITED BRANDS INC. $49 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 289.4 million; Market cap: $14.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.limitedbrands.com) owns the Victoria’s Secret lingerie chain and the Bath & Body Works personal-care products stores. It also owns the La Senza lingerie chain in Canada.

The company continues to expand its well-known brands into related niche markets. For example, in 2004, Limited launched the Victoria’s Secret Pink clothing line for younger women. This brand’s success has prompted the company to open two stand-alone Pink stores in the U.S. and eight in Canada.

Limited also plans to open more stores outside North America. This move gives the company lots of growth potential: right now, Limited gets just 9% of its sales from outside the continent.

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GANNETT CO. INC. $14 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 237.0 million; Market cap: $3.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 5.7%; TSINetwork Rating: Average; www.gannett.com) earned $80.8 million, or $0.34 a share, in the first quarter of 2012. That’s down 18.3% from $98.9 million, or $0.41 a share, a year earlier. Revenue fell 2.6%, to $1.22 billion from $1.25 billion.

The company spent $20 million on new growth projects in the quarter, including new applications for mobile devices and an expansion of its sports-related news services. This was the main reason for the lower earnings. As well, advertising revenue at its newspapers and TV stations should rebound during the Summer Olympics and the run-up to the November presidential election.

Gannett is a buy.

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NVIDIA CORP. $13 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 616.0 million; Market cap: $8.0 billion; Price-to-sales ratio: 2.0; No dividends paid; TSINetwork Rating: Average; www.nvidia.com) designs chips that make computer games run more smoothly and appear more lifelike.

In its 2012 fiscal year, which ended January 29, 2012, the company’s earnings rose 54.2%, to $734.4 million from $476.4 million in fiscal 2011. Earnings per share rose 46.9%, to $1.19 from $0.81, on more shares outstanding. Nvidia spent 25.1% of its sales on research in fiscal 2012, so it’s more profitable than it appears.

Sales rose 12.8%, to $4.0 billion from $3.5 billion. Nvidia continues to see strong demand for its new Tegra chips from mobile device makers. That’s helping offset slowing sales to computer makers.

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INTEL CORP. $28 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.0 billion; Market cap: $140.0 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.intel.com) is the world’s largest computer chip maker. About 80% of all computers use the company’s chips.

In the first quarter of 2012, Intel’s revenue rose 0.5%, to $12.9 billion from $12.8 billion a year earlier. Recent flooding in Thailand caused a hard drive shortage that hurt computer sales. That cut demand for Intel’s chips and caused a 2.0% sales decline at the company’s PC Client Group (which supplies two-thirds of its total revenue). However, software sales jumped 137.9% following last year’s purchase of antivirus software specialist McAfee.

Without unusual items, such as costs to integrate McAfee, Intel would have earned $2.9 billion in the latest quarter. That’s down 11.0% from $3.2 billion. Earnings per share fell just 3.4%, to $0.56 from $0.58, on fewer shares outstanding.

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MICROSOFT CORP. $32 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.4 billion; Market cap: $268.8 billion; Price-to-sales ratio: 3.7; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.microsoft.com) is paying $1.1 billion for 925 patents held by AOL Inc. (New York symbol AOL). It will also license another 300 patents from AOL. Microsoft held cash of $59.5 billion, or $7.09 a share, on March 31, 2012, so it can easily afford this purchase.

After the sale closes in the next few weeks, Microsoft will then sell 650 of AOL’s patents to social network operator Facebook Inc. for $550 million. As part of the deal, Microsoft will retain a licence on these patents.

AOL’s patents cover Internet communications technologies such as email and instant messaging. Controlling them will help Microsoft defend itself in future patent disputes. The patents will also let the company charge higher licensing fees to smartphone makers.

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INTERNATIONAL BUSINESS MACHINES CORP. $204 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.2 billion; Market cap: $244.8 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.ibm.com) continues to expand its analytics operations, which make software that helps businesses and governments quickly gather and analyze a wide range of data.

The company recently paid an undisclosed sum for Toronto-based Varicent Software Inc. Over 180 banks, insurance companies and retailers use Varicent’s products to manage employee salaries and bonuses paid to salespeople.

IBM is our #1 buy for 2012.

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3 tips for lowering risk when you’re investing in stocks have long been a part of the advice we give in our investment services and newsletters.

INVACARE CORP. $16 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.9 million; Market cap: $526.4 million; Price-to-sales ratio: 0.3; Dividend yield: 0.3%; TSINetwork Rating: Average; www.invacare.com) makes mobility and home-care products, including wheelchairs and motorized scooters.

The stock is down 54% from its July 2011 peak of $35. That’s mainly due to production problems at its wheelchair plant in Elyria, Ohio.

On previous inspections, the Food and Drug Administration (FDA) found that this plant violated some of its regulations. However, these violations are not related to the safety or performance of Invacare’s products.

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C.R. BARD INC. $97 (New York symbol BCR; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 84.8 million; Market cap: $8.2 billion; Price-to-sales ratio: 2.8; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.crbard.com) makes medical devices in four main areas: vascular products, such as stents and catheters (29% of 2011 sales); oncology products that detect and treat various types of cancer (27%); urology products, such as drainage and incontinence devices (25%); surgical tools (16%); and other medical products (3%).

Bard continues to expand its market share and diversify its product line with acquisitions. In 2011, it spent a total of $622.6 million buying three medical device makers. The company tends to focus on smaller companies with unique products. That cuts the risk of using acquisitions to expand.

Bard also aims to spur its long-term growth by developing new products. It launched over 50 new products in 2011.

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BAXTER INTERNATIONAL INC. $55 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 556.3 million; Market cap: $30.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.4%; TSINetwork Rating: Average; www.baxter.com) makes medical products, such as intravenous pumps and kidney dialysis equipment. It also makes vaccines and drugs. Half of the company’s sales come from single-use products that continually need to be reordered.

Baxter earned $569 million in the first quarter of 2012. That’s down 0.2% from $570 million a year earlier. The company spent $575 million on share buybacks during the quarter. Because of fewer shares outstanding, earnings per share rose 3.1%, to $1.01 from $0.98.

These figures exclude several unusual items, such as costs to integrate Synovis Life Technologies Inc., which Baxter recently bought for $325 million. Synovis makes surgical tools and bandages.

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WAL-MART STORES INC. $57 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.4 billion; Market cap: $193.8 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.walmart.com) fell 8% recently after it admitted that it is investigating allegations that executives of its 69%-owned Mexican subsidiary paid bribes to local officials in 2005 to speed up the construction of new stores.

U.S. companies are prohibited from bribing foreign officials under the 1977 Foreign Corrupt Practices Act.

Wal-Mart is fully cooperating with American and Mexican authorities. This should limit any possible fines it may have to pay. The company has also strengthened its internal accounting controls to make sure all of its overseas businesses comply with the anti-bribery law.

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