Search

APACHE CORP. $110 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 384.0 million; Market cap: $42.2 billion; Price-to-sales ratio: 2.5; Dividend yield: 0.6%; TSINetwork Rating: Average; www.apachecorp.com) saw its revenue rise 39.7% in 2011, to $16.9 billion from $12.1 billion in 2010, due to higher oil prices and a 13.8% production increase. Earnings jumped 46.6%, to $4.7 billion from $3.2 billion.

Earnings per share rose 32.3%, to $11.83 from $8.94, on more shares outstanding. Apache also raised its dividend by 13.3%. The new annual rate of $0.68 yields 0.6%.

Apache is a buy.

...

AGILENT TECHNOLOGIES INC. $43 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 347.5 million; Market cap: $14.9 billion; Price-to-sales ratio: 2.2; Dividend yield: 0.9%; TSINetwork Rating: Average; www.agilent.com) makes testing systems that improve electronic products, such as cellphones. It also makes medical equipment that detects and measures substances in blood and other patient samples.

Agilent was a subsidiary of Hewlett-Packard Co. until 1999, when Hewlett spun it off as a separate company.

In its 2012 first quarter, which ended January 31, 2012, Agilent’s revenue rose 7.6%, to $1.64 billion from $1.5 billion a year earlier. Strong gains from its life sciences division offset weaker demand for testing equipment. Agilent received $1.6 billion of new orders in the quarter, unchanged from a year ago.

...

MOTOROLA SOLUTIONS INC. $50 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 325.5 million; Market cap: $16.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.8%; TSINetwork Rating: Average; www.motorolasolutions.com) took its current form on January 4, 2011, following the breakup of the old Motorola Inc. The company makes specialized equipment, including bar-code scanners and radios for emergency vehicles. Governments supply 65% of its revenue; the remaining 35% comes from businesses.

In 2011, Motorola Solutions earned $888 million, or $2.61 a share. That’s up 42.5% from $623 million, or $1.84 a share, in 2010. These figures exclude several unusual items, mainly costs related to the spinoff from Motorola Inc. Sales rose 7.7%, to $8.2 billion from $7.6 billion.

The company’s sales will likely rise by just 5% in 2012, due to slowing demand for its current wireless networking equipment and government budget cuts. However, Motorola Solutions continues to devote nearly 13% of its sales to research. This is helping it develop new products that take advantage of faster wireless technologies.

...

SNAP-ON INC. $61 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.4 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.2%; TSINetwork Rating: Average; www.snapon.com) makes tools for auto mechanics. That puts the company in a great position to gain from rising car sales. Snap-On sells its products through a fleet of franchised vans that visit garages. It also makes specialized tools for mining companies, electrical power utilities and other industrial customers.

Snap-On’s revenue rose 11.1% in 2011, to $3.0 billion from $2.7 billion in 2010. Earnings rose 42.2%, to $265.2 million, or $4.52 a share, from $186.5 million, or $3.19 a share.

The company will spend $60 million to $70 million to expand and upgrade its operations in 2012. It’s particularly interested in growing in developing countries. Right now, it gets 59% of its revenue from North America.

...

GENERAL MOTORS CO. $27 (New York symbol GM; Shares outstanding: 1.6 billion; Market cap: $43.2 billion; www.gm.com) completed its initial public offering in November 2011, selling 555 million shares at $33.00 each. The U.S. government still owns 32.3% of General Motors in the wake of the company’s bankruptcy and restructuring.

GM’s profits are rising again: in 2011, it earned $7.6 billion, or $4.58 a share, up 61.7% from $4.7 billion, or $2.89 a share, in 2010. Sales rose 10.8%, to $150.3 billion from $135.6 billion.

However, the company’s European operations continue to lose money: a total of $15.6 billion since 1999. As well, rigid union contracts will make it difficult for GM to restructure this business. That could delay the company’s plan to resume paying dividends.

...

FORD MOTOR CO. $12 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.8 billion; Market cap: $45.6 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.7%; TSINetwork Rating: Extra Risk; www.ford.com) is the second-biggest carmaker in the U.S., and the world’s fifth-largest.

The company continues to benefit from its restructuring plan, which it implemented in 2005 to deal with its falling sales and market share. In the years since, Ford has sold its Jaguar and Land Rover luxury car divisions, closed factories and laid off workers.

In 2011, the company sold 5.7 million vehicles, up 7.2% from 5.3 million in 2010. Sales rose 11.3% in North America, 7.5% in Asia, 3.5% in South America and 1.8% in Europe. Ford now accounts for 16.5% of all car sales in the U.S., up from 16.4% in 2010. It also has 8.3% of the European market, down from 8.4% in 2010.

...

HONDA MOTOR CO. LTD. ADRs $37 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $66.6 billion; Price-to-sales ratio: 0.7; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.honda.com) is Japan’s second-largest carmaker, and the world’s largest motorcycle manufacturer.

Like Toyota, Honda has suffered setbacks due to the natural disasters in Japan and Thailand. In Honda’s fiscal 2012 third quarter, which ended December 31, 2011, its sales fell 3.5%, to $25.0 billion from $25.9 billion a year earlier. Honda sold 830,000 cars and trucks in the quarter, down 2.9% from 855,000 a year earlier. However, motorcycle sales rose 6.3%, to 3.1 million from 2.9 million.

Earnings fell 38.4%, to $613 million, or $0.34 per ADR, from $995 million, or $0.55 per ADR (each American Depositary Receipt represents one Honda common share).

...

TOYOTA MOTOR CO. ADRs $84 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $142.8 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.toyota.com) is Japan’s largest automobile maker and the world’s second-biggest after General Motors. Toyota also makes industrial equipment, such as forklifts and prefabricated housing. Like most carmakers, it offers vehicle loans through its financing division.

The company is starting to recover from the disruptions caused by the March 2011 earthquake and tsunami in Japan and the recent flooding in Thailand. Toyota sold 2.0 million vehicles in its fiscal 2012 third quarter, which ended December 31, 2011, up 9.3% from 1.8 million a year earlier.

As a result, its revenue rose 12.3%, to $63.2 billion from $56.3 billion. However, higher income taxes and unfavourable exchange rates cut its earnings by 6.8%, to $1.05 billion, or $0.61 per ADR, from $1.1 billion, or $0.65 per ADR. (Each American Depositary Receipt represents two Toyota common shares.)

...

WAL-MART STORES INC. $59 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.4 billion; Market cap: $200.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart.com) is buying 51% of Yihaodian, a Chinese company that sells groceries, clothing, consumer electronics and other goods over the Internet.

Wal-Mart did not say how much it is paying for this investment, but it already owns a minority stake in Yihaodian. This familiarity cuts the risk of an unpleasant surprise. As well, Wal-Mart’s expertise will help this company expand sales and cut costs. The deal should close later this year.

This is the latest in a series of acquisitions that have expanded Wal-Mart’s overseas operations. That’s helping it offset slower growth in the U.S., which accounts for 60% of its overall sales.

...

VISA INC. $116 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 813.3 million; Market cap: $94.3 billion; Price-to-sales ratio: 9.8; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest retail electronic payments network. The company processes credit, debit, prepaid and commercial payments under the Visa, Visa Electron, Interlink and PLUS brands.

Visa’s credit cards are accepted around the world. Visa/PLUS is one of the largest global automated teller machine networks, offering cash access in more than 200 countries.

The company first sold shares to the public at $44; it began trading on New York in March 2008.

...

VISA INC. $116 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 813.3 million; Market cap: $94.3 billion; Price-to-sales ratio: 9.8; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest retail electronic payments network. The company processes credit, debit, prepaid and commercial payments under the Visa, Visa Electron, Interlink and PLUS brands.

Visa’s credit cards are accepted around the world. Visa/PLUS is one of the largest global automated teller machine networks, offering cash access in more than 200 countries.

The company first sold shares to the public at $44; it began trading on New York in March 2008.

...

Pat McKeough responds to many personal questions on specific stocks and other investing topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. This week, one Inner Circle member asked about one of the largest telecommunications firms on the world stock market. Pat looks at the prospects and potential pitfalls ahead for a company that seeks to expand its presence in international markets. ...

As the stock market rebounded in 2009 from one of the worst crises in years, Pat McKeough was invited by Jonathan Chevreau of the Financial Post to appear on his ‘Wealthy Boomer’ telecast. In a two-part interview, Pat aired his views on a wide variety of investment subjects. Now, with the stock market coming off last autumn’s lows, we think it’s an appropriate time to replay the interview, entitled “40 stocks to retire on” on YouTube. Pat discusses not only specific solutions for volatile markets, but also how his investment advice applies in all market conditions. Here is part one of the interview (part two will be posted on Monday, February 20).
...

CGI GROUP INC. (Toronto symbol GIB.A; www.cgi.com) is Canada’s largest provider of computer outsourcing services. It also operates in 15 other countries. Canada and the U.S. each accounted for 47% of its revenue in the latest fiscal year; Europe and Asia supplied the remaining 6%. The company often uses acquisitions to fuel its growth. CGI’s most important purchase in the past few years was its $932.2-million acquisition of Stanley Inc. in September 2010. Stanley provides computer outsourcing services to military and civilian agencies of the U.S. government....

Poseidon Concepts rents its fluid-handling tanks to over 100 customers in the oil and gas industry. Poseidon has just issued 6.3 million new shares.

BROADRIDGE FINANCIAL SOLUTIONS $24.14 New York symbol BR: TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 124.1 million; Market cap: $3.0 billion; Dividend yield: 2.7%) serves the investment industry in three main areas: investor communications; securities processing; and transaction clearing. Broadridge’s systems help its customers cut costs.

Broadridge’s earnings jumped 45.3% in the three months ended December 31, 2011, to $15.4 million from $10.6 million a year earlier. Before one-time items, earnings per share rose 50.0%, to $0.12 from $0.08, on fewer shares outstanding. Revenue rose 8.5%, to $479.8 million from $442.3 million.

Timely acquisitions starting to pay off

...

INTACT FINANCIAL CORP. $60.00 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 129.6 million; Market cap: $7.8 billion; Dividend yield: 2.7%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.

In the three months ended December 31, 2011, Intact’s revenue rose 48.7%, to $1.58 billion from $1.06 billion. That was mainly due to AXA Canada, which Intact bought from Paris-based ASX Group for $2.6 billion last year.

AXA Canada is the country’s sixth-largest home, auto and commercial insurer. It also gives Intact a presence in Quebec, B.C. and Atlantic Canada.

...

NEW GOLD $11.17 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold.com; Shares outstanding: 461.4 million; Market cap: $5.2 billion; No dividends paid) produced a record 387,155 ounces of gold in 2011, up 1.1% from 369,077 ounces in 2010.

The company’s production could rise as high as 445,000 ounces in 2012. That growth will come mostly from its New Afton mine, which should start up in the middle of this year.

Even if the New Gold doesn’t expand its mines or make acquisitions, its production could top one million ounces within six years. Most of that rise will come from the successful development of the Blackwater project, which could hold up to 6.8 million ounces of gold.

...

SYMANTEC CORP. $17.94 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 737.2 million; Market cap: $13.2 billion; No dividends paid) reports that its earnings per share gained 20.0% in the three months ended December 30, 2011, to $0.42 from $0.35. Sales rose 6.9%, to $1.72 billion from $1.6 billion.

Demand for security software will likely remain steady due to rising concerns about identity theft and online intruders. However, a shortage of hard drives due to flooding in Thailand is dampening computer sales. That would hurt Symantec, because the company gets 85% of its sales to consumers from software that is preinstalled on new computers. Consumers account for about 30% of Symantec’s overall sales.

As well, economic uncertainty will probably weigh on sales in Europe, which supplies around 25% of Symantec’s overall sales.

...

WESTJET AIRLINES $13.95 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 130.8 million; Market cap: $1.8 billion; Dividend yield: 1.7%) reports that its revenue rose 12.9% in the three months ended December 31, 2011, to $781.5 million from $692.2 million a year earlier.

Demand for the company’s flights remains high, and it has entered into new partnerships with other airlines; these were the main reasons for the higher revenue.

Earnings fell 4.3%, to $35.6 million from $37.2 million. Higher fuel prices were the main reason for the decline. However, earnings per share were unchanged at $0.26, due to fewer shares outstanding. The company has also raised its quarterly dividend by 20%, to $0.06 from $0.05. The shares now yield 1.7%.

...

CHESAPEAKE ENERGY $23.02 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 659.3 million; Market cap: $15.2 billion; Dividend yield: 1.5%) plans to cut its daily natural gas production by 8% due to low gas prices. That will take about 500 million cubic feet per day off the market. Chesapeake is the second-largest natural gas producer in the U.S.

Chesapeake will now shift the focus of its drilling to oil and natural gas liquids (NGLs), which are broken down into ethane, propane and butane and sold to a variety of customers. For example, ethane is used to make a host of everyday products, like grocery and garbage bags, toys, medical tubing and so on. NGLs are typically priced in relation to crude oil.

Chesapeake Energy is still a buy.

...

DEVON ENERGY CORP. $71.70 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235-3611; www.dvn.com; Shares outstanding: 403.9 million; Market cap: $29.0 billion; Dividend yield: 1.0%) is one of the largest U.S.-based oil and natural-gas explorers and producers. Its production mix is 65% gas and 35% oil.

In May 2011, Devon completed the sale of its Brazilian operations for $3.2 billion. It has now sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop.

In all, the company received over $8 billion in after-tax proceeds from these sales. It’s using these funds to buy back shares, purchase properties and pay down debt. So far, it has bought back $3.5 billion of its shares. Its long-term debt is $6.0 billion, but that’s just 20.7% of its $29.0-billion market cap. The company holds cash of $7.1 billion, or $17.27 a share. As well, Devon recently sold a one-third interest in five shale oil and gas fields to giant Chinese state-owned petroleum and chemical company Sinopec (symbol SNP on New York) for $900 million. In addition, Sinopec will pay up to 70% of Devon’s share of the development costs at the five fields, up to $1.6 billion

...

CIMAREX ENERGY $81.59 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 85.7 million; Market cap: $7.0 billion; Dividend yield: 0.5%) produces and explores for oil and natural gas. Gas makes up 56% of its output.

Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas; the Permian Basin of western Texas and southeastern New Mexico; and the Texas Gulf Coast.

In the three months ended December 31, 2011, Cimarex’s production averaged 601.4 million cubic feet of natural gas equivalent per day (including oil). That’s down slightly from 604.5 million cubic feet a year earlier. The company did not offset natural declines at its Gulf Coast wells with new production.

...

CHIPOTLE MEXICAN GRILL $375.73 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.3 million; Market cap: $11.8 billion; No dividends paid) reported 23.7% higher sales in the three months ended December 31, 2011, to $596.7 million from $482.5 million a year earlier. Earnings rose 23.2%, to $1.81 a share from $1.47 a share.

The company will open 155 to 165 new restaurants in 2012. That will push up its sales. However, rising food costs will keep putting pressure on its profit margins. It’s uncertain if Chipotle can further raise its prices to offset those increases.

Chipotle trades at nearly 46 times its forecast earnings for this year. That’s a high ratio that leaves the stock vulnerable if it runs into any short-term problems. Still, it’s a well-established chain with a growing following, especially among health-conscious, environmentally aware baby boomers.

...

AMAZON.COM $184.47 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 454.8 million; Market cap: $83.9 billion; No dividends paid) is a major online retailer. Books, music and videos make up about 40% of its sales. Other products, including electronics, computer games and toys, make up the other 60%. Amazon Marketplace lets other companies sell their products through Amazon’s websites.

In the three months ended December 31, 2011, Amazon’s earnings fell 57.5%, to $177 million, or $0.39 a share. A year earlier, it earned $416 million, or $0.93 a share. The decline came despite a 34.6% jump in sales, to $17.4 billion from $12.9 billion.

During the quarter, the company spent $862 million on “technology and content,” up 66.1% from $519 million a year earlier. That was the main reason for the lower earnings. This additional spending included investments in new models of its Kindle electronic book reader, including the Kindle Fire tablet computer.

...