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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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GENERAL MILLS INC. $38 (New York symbol GIS, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 647.3 million; Market cap: $24.6 billion; Priceto- sales ratio: 1.5; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.generalmills.com) reported that its sales in the fiscal year ended May 27, 2012 rose 11.9%, to $16.7 billion from $14.9 billion in 2011. That’s mainly due to last year’s purchase of 51% of the company that makes Yoplait yogurt. General Mills also raised the selling prices of its cereals, soups and other products.

Earnings in fiscal 2012 fell 12.8%, to $1.6 billion, or $2.35 a share. It earned $1.8 billion, or $2.70 a share, in fiscal 2011. If you exclude the costs to integrate Yoplait and other unusual items, earnings per share would have risen by 3.2%, to $2.56 from $2.48.

Like Tupperware (see left), General Mills is targeting overseas markets for growth; international operations now account for 25% of its sales and 14% of its earnings. That’s why it recently agreed to pay $990 million for Yoki Alimentos S.A., a Brazilian maker of snack foods and seasonings. The deal should close by the end of 2012.

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TUPPERWARE BRANDS CORP. $54 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 55.9 million; Market cap: $3.0 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.tupperwarebrands.com) gets 70% of its sales by making high-quality products for the home, including plastic food and beverage containers and children’s educational toys. The remaining 30% comes from its beauty-products division, which makes a wide range of cosmetics, bath oils and fragrances.

Markets beyond the U.S. supply 90% of the company’s sales. Its main brands include Tupperware, Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare and Nuvo.

Tupperware prefers to sell its goods through independent dealers instead of retail stores. This helps keep its distribution and marketing costs down. As well, it pays its dealers commissions instead of salaries, so they have a greater incentive to promote Tupperware’s goods. That means the company rarely needs to use costly discounts to spur its sales.

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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. This past week, an Inner Circle member asked about one of the Canadian dividend stocks that was an income fund before the trust tax of 2011. This company raises revenue in a variety of ways, including the franchising of its company-owned gas stations, which allows it to collect commissions without high overhead. ...

This is the latest in a series of video interviews in which Pat McKeough gives his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies, including those for retirement planning, and still others focus on events that are affecting the markets and the economy. In today’s video, he replies to the many questions he receives on how much money people need to retire on. As he tells his personal Wealth Management clients, Pat explains, determining how much you need for your retirement is a lot more than just a matter of dollars and cents.
Q: Pat, we hear a lot these days about how much money people need to retire on. What do you tell your Wealth Management clients when they ask you about this?...

From time to time, I read articles saying that growing numbers of financial advisors and stockbrokers are abandoning the traditional buy-and-hold strategy. For instance, one article stated that some brokers were taking new approaches more in tune with the new “macro-economic climate.” That sounds suspiciously like just another way of trying to guess what will happen next....

When the government introduced its income trust tax, most real estate investment trusts (REITs) were exempted. A year and a half after the tax took effect, this has kept REITs popular among investors seeking income as well as capital gains. PRIMARIS RETAIL REAL ESTATEINVESTMENT TRUST (Toronto symbol PMZ.UN; www.primarisreit.com) owns large malls in medium-sized Canadian cities and suburban areas. In all, it owns 33 properties that contain 13.7 million square feet of leasable area....

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. This week we respond to a question from an Inner Circle member asking about one of the Canadian stocks with important interests in a nation that has been living through a period of upheaval, Libya. Pat notes that this infrastructure and engineering specialist also does a lot of business in North America, and assesses its outlook. ...

This is the latest in a series of video interviews in which Pat McKeough gives his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies and still others offer investment advice related to events that are affecting the markets and the economy. In last week’s video, Pat advised against selling during the market downturn. This week, the market turned up and Pat thinks people should look closer to home than Europe for one of the reasons why. He also looks at what may be ahead for the stock market.
Q: Pat, last week you said people shouldn’t be dumping their stocks. This week the market turned up. Was that because of something that happened in Europe, and do you think the crisis is over?...

CARFINCO FINANCIAL GROUP $7.93 (Toronto symbol CFNI; TSINetwork Rating: Speculative) (1-888 -486-4356; www.carfinco.com; Shares outstanding: 24.6 million; Market cap: $195.1 million; Dividend yield: 5.3%) provides car loans to consumers who aren’t able to meet the criteria of traditional lenders, like banks.

Edmonton-based Carfinco started out by financing vehicle repairs in 1997. In 1999, it began providing loans for car and truck purchases. In January 2001, the company got out of the repair-financing business to focus solely on lending money to car buyers.

Carfinco converted from a conventional corporation to an income trust in 2004. It converted back to a corporation on January 1, 2012.

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MAJOR DRILLING $12.33 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866- 264-3986; www.majordrilling.com; Shares outstanding: 79.1 million; Market cap: $982.2 million; Dividend yield: 1.2%) has moved down lately along with most mining and resource-related stocks. That’s because investors are concerned that a potential eurozone breakup, sluggish U.S. growth and a slowdown in China will hurt resource demand.

Even so, the company’s revenue rose 72.8% in the three months ended April 30, 2012, to a record $237.2 million from $137.3 million a year earlier. Earnings per share tripled, to $0.39 from $0.13.

Many of Major’s customers increased their drilling during the quarter, especially for gold, copper, coal and iron ore. Major raised its twice-yearly dividend by 12.5%, to $0.09 from $0.08, with the May 2012 payment. The stock now yields 1.5%.

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GOODYEAR TIRE & RUBBER CO. $11.65 (New York symbol GT; TSINetwork Rating: Extra Risk) (330 -796-2122; www.goodyear.com; Shares outstanding: 244.7 million; Market cap: $2.9 billion; No dividends paid) has announced a major expansion of its global off-the-road (OTR) tire business: The company has acquired 100% of its Nippon Giant Tire subsidiary in Japan. (OTR tires are used for heavy equipment.)

Goodyear now plans to spend $250 million to upgrade and expand Nippon Giant Tire’s manufacturing facility. When these improvements are completed, the plant will be able to make a complete line of 57-inch tires, as well as 63-inch tires at a future date.

OTR tire demand is growing rapidly in the mining and road construction industries, and this expansion will let Goodyear tap into that growth. It will also help the company grow further in the Asia-Pacific region, primarily in Australia, which is one of the world’s largest markets for OTR tires.

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FAIRFAX FINANCIAL HOLDINGS $392.57 (Toronto symbol FFH: TSINetwork Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.9 million; Market cap: $7.8 billion; Dividend yield: 2.5%) has agreed to buy 77% of Thomas Cook (India) Ltd., a publicly traded company that sells travel, insurance and foreign exchange services in India.

Fairfax is buying this stake from struggling U.K.- based parent company Thomas Cook Group plc for $150 million U.S.

This investment should help Fairfax profit from increasing business travel to India.

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CHESAPEAKE ENERGY $19.04 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848 -8000; www.chkenergy.com; Shares outstanding: 662.3 million; Market cap: $12.6 billion; Dividend yield: 1.8%) has moved up from its low of $13.32 in mid-May. That’s mainly because activist investor Carl Icahn has gotten involved in the company’s restructuring. Icahn, who has a long history of pushing companies to make changes that increase shareholder value, has acquired a 7.6% stake in Chesapeake.

Pressure from Icahn has already prompted Chesapeake to announce that it will replace four of its eight board members with nominees of its largest shareholders—Icahn and Southeastern Asset Management Inc., which holds a 13.6% stake.

Icahn now plans to push for cost-cutting measures and a more conservative approach to spending. His proposals will likely include cutting drilling budgets and selling certain pipelines and gas-processing plants.

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CAMECO CORP. $21.63 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306- 956-6200; www.cameco.com; Shares outstanding: 395.3 million; Market cap: $8.6 billion; Dividend yield 0.7%) is buying Germany-based nuclear fuel broker Nukem Energy for $300 million.

Nukem acts as an intermediary between uranium buyers and sellers. It also sells uranium from two different sources: it has 4.5 million pounds recycled from dismantled Russian nuclear weapons, as well as newly mined uranium from mines in Uzbekistan.

Adding Nukem raises Cameco’s share of the global uranium market to 25% from 18%.

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NEW GOLD $10.16 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold.com; Shares outstanding: 461.7 million; Market cap: $4.7 billion; No dividends paid) has three operating mines: the Mesquite mine in the U.S., the Cerro San Pedro mine in Mexico and the Peak mine in Australia. It also owns 30% of the El Morro copper/gold project in Chile (Goldcorp owns the other 70%) and 100% of the New Afton gold/copper/silver project in B.C.

El Morro contains an estimated 4.7 million ounces of gold and 3.7 billion pounds of copper. New Afton holds 2.7 million ounces of gold, 2.5 billion pounds of copper and 8.3 million ounces of silver.

New Gold also owns the Blackwater property in central B.C., which could hold as much as 7.8 million ounces of gold.

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YAMANA GOLD $16.36 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 746.0 million; Market cap: $12.2 billion; Dividend yield: 1.3%) owns seven operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina, and has three other properties in advanced stages of development.

In the quarter ended March 31, 2012, Yamana’s revenue rose 17.6%, to $559.7 million from $476.1 million a year earlier (all figures except share price and market cap in U.S. dollars). The company increased its production and benefited from higher gold prices. Earnings per share rose 19.0%, to $0.25 from $0.21.

Yamana held a high cash balance of $867.6 million, or $1.16 a share, on March 31. Its $766.0 million of debt is just 6.3% of its market cap. Thanks to the improved results, the company is raising its quarterly dividend by 18.2% with the July 2012 payment, to $0.065 from $0.055. The shares now yield 1.3%.

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