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PFIZER INC. $23 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 7.5 billion; Market cap: $172.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.pfizer.com) is the world’s largest pharmaceutical drug maker. Its top-selling brands include Lipitor (for high cholesterol), Lyrica (epilepsy), Celebrex (arthritis pain), Viagra (erectile dysfunction), Xalatan (glaucoma), Norvasc (hypertension) and Zyvox (bacterial infections). The company is also the world’s fifth-largest maker of over-the-counter drugs. Its major brands include Advil (pain relief), Centrum (vitamins) and Robitussin (cough syrup).

Pfizer gets about a third of its revenue by selling its products to drug wholesalers. The other two-thirds come from direct sales to retailers, hospitals, clinics and government agencies. Overseas markets supply 60% of its revenue.

Acquisitions added top-selling drugs

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ROYAL BANK OF CANADA (Toronto symbol RY; 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....

This week, an Inner Circle member wanted Pat’s opinion on the one of the world’s largest drug stocks. The leading maker of generic drugs,

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. Today, he deals with a question we hear quite often from our readers: How can I tell if my stock broker is really on my side? Pat begins by suggesting a version of the old encyclopedia buyer’s trick. Below is the transcription of Pat’s comments. ...

While interest rates remain near historic lows, borrowing money to invest continues to look like an attractive investment strategy.

We believe that this strategy works best if you borrow to buy well-established, dividend-paying stocks....

Chinese stocks are up over 30% since September 2011. That’s largely because investors believe that a global recovery will raise China’s exports and improve its domestic economy. As well, the country’s inflation rate is easing. That gives it more options to boost growth, including cutting interest rates. Here are two Chinese exchange traded funds (ETFs) that we cover in Canadian Wealth Advisor newsletter. One holds publicly traded Chinese stocks available to foreign investors, and the other holds small cap Chinese stocks....

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 had a particularly intriguing question about commodity stocks. Specifically, he wanted Pat’s opinion on a company that is using a revolutionary technology in an area in which traditional methods don’t work....

ENERFLEX LTD., $11.28 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 77.4 million; Market cap: $873.1 million; Dividend yield: 2.1%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration equipment and power generators.

In the quarter ended December 31, 2011, Enerflex’s revenue rose 10.4%, to $383.8 million from $347.6 million a year ago. The company gets 28% of its revenue from stable, recurring sales of parts and services.

Without one-time items, earnings per share doubled, to $0.22 from $0.11, due to the higher revenue and improved profit margins. Enerflex’s long-term debt of $119.0 million is just 13.7% of its market cap.

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TOROMONT INDUSTRIES LTD. $22.42 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 76.8 million; Market cap: $1.7 billion; Dividend yield: 2.1%) 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 right). Shareholders received shares of the new Toromont and shares of Enerflex. That company leases and sells equipment and services for natural gas production, including field production plants and compression and processing plants.

In the three months ended December 31, 2011, higher equipment sales and rentals pushed up Toromont’s revenue by 19.1%, to $408.4 million from $342.9 million a year earlier. Without one-time items, earnings per share rose 22.2% to $0.44 from $0.36, on the higher revenue and improved profit margins.

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VITERRA $15.95 (Toronto symbol VT; TSINetwork Rating: Average) (1-866-569-4411; www.viterra.ca; Shares outstanding: 371.7 million; Market cap: $5.9 billion; Dividend yield: 1.0%) has agreed to a friendly takeover offer from Glencore International plc, a Switzerland-based commodity trader. The purchase price is $6.1 billion, or $16.25 per Viterra share.

Viterra was our Pick of the Month in the March 2012 issue of Stock Pickers Digest. At the time, it was trading at $10.09. That’s a 58.1% gain since that recommendation. Our view was that the company is well positioned to benefit from an expected rise in Canadian and Australian crop yields in 2012, as well as the end of the Canadian Wheat Board’s monopoly on western Canadian wheat and barley sales. In addition, its Australian operations’ sales to Asia continue to rise.

We also said that Viterra might be an attractive takeover target.

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AASTRA TECHNOLOGIES $21.70 (Toronto symbol AAH; TSINetwork Rating: Speculative) (905- 760-4200; www.aastra.com; Shares outstanding: 14.0 million; Market cap: $303.8 million; Dividend yield: 3.7%) has completed its Dutch auction process, and has repurchased 2.17 million of its common shares at a cost of $23 each, for a total of $49.9 million.

In all, the company bought back roughly 15.5% its shares outstanding. Share buybacks raise earnings per share and other per-share calculations, and give the remaining shareholders a larger stake in the company.

Aastra is still a buy for aggressive investors.

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GABRIEL RESOURCES $2.94 (Toronto symbol GBU; TSINetwork Rating: Speculative) (416-955-9200; www.gabrielresources.com; Shares outstanding: 379.6 million; Market cap: $1.1 billion; No dividends paid) is down almost 35% since the company suffered setbacks in early April in its bid to build a mine at its 80.46%-owned Rosia Montana gold and silver project in Romania.

The court of appeals in Alba County, Romania, has now annulled a zoning permit relating to an area that Gabriel plans to incorporate into its mine. The lawsuit was started by two groups that oppose the project.

Gabriel sees the ruling as just another setback to be overcome, and feels that it shouldn’t affect the ongoing permitting process for the project. As well, most of Rosia Montana’s 2,800 residents believe that the project will bring back the much-needed jobs the area lost when a state-owned gold mine closed in 2006.

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SASOL LTD. (ADR) $46.49 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082-883-9697; www.sasol.com; ADRs outstanding: 641.4 million; Market cap: $29.9 billion; Dividend yield: 5.3%) is a South Africa-based company that has developed a technology to convert coal and natural gas into motor fuels.

In the six months ended December 31, 2011, Sasol’s revenue rose 23.9%, to $11.0 billion from $8.9 billion a year earlier (all figures in U.S. dollars). Earnings per ADR rose 81.8%, to $3.04 from $1.67. Higher oil prices were the main reason for the gains. A stronger U.S. dollar against the South African rand also pushed up the value of sales outside South Africa.

Last year, Sasol paid $2.2 billion for a 50% interest in two major shale gas properties held by Talisman Energy (symbol TLM on Toronto) in the Montney Basin region of western Alberta and northeastern B.C.

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ADOBE SYSTEMS $33.39 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536 -6000; www.adobe.com; Shares outstanding: 496.1 million; Market cap: $16.6 billion; No dividends paid) reports that in its fiscal 2012 first quarter, which ended March 2, 2012, its earnings fell 21.1%, to $185.2 million, or $0.37 a share. A year earlier, it earned $234.6 million, or $0.46 a share. Without unusual items, earnings per share fell 1.7%, to $0.57 from $0.58. Sales rose 1.7%, to $1.05 billion from $1.03 billion.

Customers are waiting for the new version of Adobe’s Creative Suite of publishing programs, which it will release later this year. That was the main reason for the lower earnings and weak sales growth.

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INTERNATIONAL ROAD DYNAMICS $0.28 (Toronto symbol IRD; TSINetwork Rating: Speculative) (306-653-6600; www.ird.ca; Shares outstanding: 14.0 million; Market cap: $3.9 million; No dividends paid) makes products and systems that manage highway traffic, including automated toll-road and weigh-station systems for trucks. The company’s weigh-in-motion system weighs trucks while they’re moving, rather than at less -efficient roadside weigh stations.

International Road continues to report rising losses and declining sales. That’s because governments are spending less on highway infrastructure as they struggle with ballooning budget deficits.

The company’s total debt of $6.7 million is a high 171.8% of its market cap. Its cash flow is negative, so it may need to borrow more money to sustain its operations. The cash shortfall could also make it hard for the company to maintain the marketing and research spending necessary to stay ahead of the competition.

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SHAMARAN PETROLEUM $0.23 (Toronto symbol SNM; TSINetwork Rating: Speculative) (416-364-8820; www.shamaranpetroleum.com; Shares outstanding: 808.0 million; Market cap: $185.8 million) holds oil and gas exploration interests in Kurdistan. Kurdistan is the most stable area of Iraq, but operating there still entails considerable political risk.

ShaMaran and its partners have struck oil, but they need to do much more drilling to decide whether to bring their new wells into production.

Meanwhile, the company will have to keep making dilutive share issues at today’s low prices to finance further exploration. ShaMaran’s development efforts also face a lot of uncertainty.

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CASH STORE FINANCIAL SERVICES INC. $5.52 (Toronto symbol CSF; TSINetwork Rating: Speculative) (780-408-5110; www.csfinancial.ca; Shares outstanding: 17.4 million; Market cap: $96.0 million; Dividend yield: 8.7%) operates 573 stores under two banners: The Cash Store and Instaloans. Both chains offer consumer payday loans (advances on upcoming paycheques).

The company faces increasing regulations in the payday loan industry. It has also been forced to pay a number of penalties, the latest being a March 2012 order from the B.C. government to refund its customers millions of dollars in overpaid interest and extra charges. These transactions date back to 2009.

Cash Store is now slowing its expansion in Canada and focusing on growing in the less-regulated U.K. market. But it’s far from certain if that strategy will be successful.

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AMAZON.COM $191.07 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 455.1 million; Market cap: $87.0 billion; No dividends paid) has agreed to buy Kiva Systems for $775 million. Kiva makes small orange robots that help manage warehouse inventory.

Amazon’s shipping volumes continue to rise. In response, the company plans to add 17 more warehouses, bringing its total to 69.

The Kiva purchase will let Amazon better control its labour costs. Amazon can also sell the robots to other retailers. Kiva’s clients already include the Gap, Staples and Saks.

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AEROPOSTALE INC. $21.81 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 81.0 million; Market cap: $1.8 billion; No dividends paid) is a mall-based retailer of casual clothing and accessories. It now has 983 stores, and mainly targets 14- to 17-year-old women and men. Its active-oriented clothing has a reputation for high quality and low prices.

Aeropostale also has 71 P.S. from Aeropostale stores, which are aimed at seven- to 12-year-old elementary school students.

In the three months ended January 28, 2012, Aeropostale’s sales fell 3.7% to $808.4 million from $839.3 million a year earlier. Same-store sales declined 9%. Sales from the company’s e-commerce business rose 8%, to $83.2 million from $77.3 million. Earnings dropped 57.6%, to $16.4 million, or $0.44 a share, from $45.4 million, or $0.95 a share.

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DOREL INDUSTRIES $29.34 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 32.6 million; Market cap: $956.5 million; Dividend yield: 2.0%) makes a wide range of products, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; recreational products, including bicycles; and home furnishings. It has 5,000 employees and plants in 22 countries.

In the three months ended December 31, 2011, Dorel’s sales rose 4.1%, to $561.6 million from $539.5 million a year earlier (all figures except share price in U.S. dollars).

Revenue at the company’s home furnishings division rose 22.8% on higher sales to U.S. retailers. That offset weaker revenue at the other divisions. Earnings per share rose 7.6%, to $0.85 from $0.79 a year earlier.

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NISSAN MOTOR CO. (ADR) $20.45 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310-771-3111; www.nissanmotors.com; Shares outstanding: 2.3 billion; Market cap: $47.0 billion; No dividends paid) reported record U.S. sales in March.

Overall, the company sold 136,317 cars and trucks in the U.S. during the month. That’s up 12.5% from 121,141 vehicles in March 2011.

The Nissan division’s sales jumped 14.8%, to a record 126,132 vehicles. Infiniti sales rose 9.8%, to 10,185 vehicles.

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MCCOY CORP. $3.60 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.5 million; Market cap: $95.4 million; Dividend yield: 3.3%) 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 clients in the oil and gas, wind energy, infrastructure and construction industries. It also makes trailer-mounted vacuum tanks and operates a truck dealership.

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WAJAX CORP. $49 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.6 million; Market cap: $813.4 million; Dividend yield: 6.6%) 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 December 31, 2011, Wajax’s revenue rose 19.2%, to $377.2 million from $316.4 million a year earlier. Demand remained strong across all of the company’s markets.

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REITMANS (CANADA) LTD. $15.27 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 66.3 million; Market cap: $1.0 billion; Dividend yield: 5.2%) reports that its sales fell 3.3% in the quarter ended January 28, 2012, to $260.0 million from $268.7 million a year earlier. Same-store sales fell 1.7%.

The company earned $4.7 million, or $0.07 a share. That’s down 66.2% from $13.8 million, or $0.21 a share.

Fewer shoppers visited Reitmans’ stores in the quarter, due to weaker consumer confidence. As well, the company spent more on promotions to fend off rising competition.

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BMTC GROUP $19.90 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 49.2 million; Market cap: $979.1 million; Dividend yield: 1.2%) 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, six Sleep Gallery stores and two distribution and administration centres in Montreal and Quebec City. It’s now building a new store in Levis that will open shortly.

In the three months ended December 31, 2011, BMTC’s sales fell 10.0%, to $194.2 million from $215.8 million a year earlier. Lower consumer spending hurt BMTC’s sales. Earnings per share fell 10.0%, to $0.45 from $0.50.

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