Search

NVIDIA CORP. $15 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 603.7 million; Market cap: $9.1 billion; Price-to-sales ratio: 2.4; No dividends paid; TSINetwork Rating: Average; www.nvidia.com) develops 3D graphics chips and related technology for computers, gaming consoles and other devices. The company’s chips make computer games run more smoothly and appear more lifelike. Nvidia focuses on design, and outsources production to other chipmakers. The company continues to see strong demand for its chips from makers of smartphones and other mobile devices; Motorola and Samsung are now using Nvidia’s new Tegra chips in their latest smartphones. Rising sales to mobile device makers are also offsetting slower sales of chips for desktop and notebook computers. In its 2011 second quarter, which ended July 31, 2011, Nvidia earned $193.5 million. That’s up 306.2% from $47.6 million a year earlier. Earnings per share rose 300.0%, to $0.32 from $0.08, on more shares outstanding. Sales rose 25.3%, to $1.0 billion from $811.2 million....

TERADATA CORP. $57 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 168.3 million; Market cap: $9.6 billion; Price-to-sales ratio: 4.4; No dividends paid; TSINetwork Rating: Average; www.teradata.com) makes computers and software that capture and store large amounts of a business’s data, including its sales and inventory. Teradata then analyzes this information and identifies buying habits and trends. This helps its clients make better business decisions. The company continues to add to its expertise in cloud computing, which involves storing data and software on one or more centralized servers. Users access these programs or files over the Internet, or through some other computer network. For example, in January 2011 Teradata paid $525 million for privately held Aprimo, which uses a cloud computing model to sell software and services to over 150,000 clients. Aprimo’s products help its customers evaluate their marketing campaigns....

Economic forecasts attract far more investor attention than they deserve, in view of the meagre advantage, if any, they provide in terms of investing advice. That’s especially true today in light of the debt crisis that keeps flaring up in Europe and the uncertainty that lingers in the U.S. Small wonder, then, that most experienced, successful investors feel skeptical, if not downright cynical, about economic forecasts, for three reasons....

ADOBE SYSTEMS INC. $28 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 490.9 million; Market cap: $13.7 billion; Price-to-sales ratio: 3.4; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) makes software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use Adobe’s software to create print publications and web pages. The company also makes Adobe Flash, which lets web site developers add animation and video. In its third quarter, which ended September 2, 2011, Adobe’s earnings fell 15.2% to $195.1 million, or $0.39 a share. A year earlier, it earned $230.1 million, or $0.44 a share. Without one-time items, earnings per share would have risen 1.9%, to $0.55 from $0.54. Revenue rose 2.3%, to $1.01 billion from $990.3 million....

How to be a successful investor by cutting down on your risk. Many people come up with unrealistic answers to the question of how much risk is right for them.

CONAGRA FOODS INC. $25 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 414.5 million; Market cap: $10.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.8%; TSINetwork Rating: 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. The company gets 65% of its sales from consumers. Businesses, such as restaurants, account for the remaining 35%. The company’s sales fell 3.5%, from $12.0 billion in 2007 to $11.6 billion in 2008. That’s because ConAgra sold its commodity trading operations. Sales rebounded to $12.7 billion in 2009, but fell 5.1%, to $12.1 billion, in 2010. Sales rose to $12.3 billion in 2011, thanks to acquisitions and price increases....

Dividend reinvestment plans, or DRIPs, are plans some companies offer to allow shareholders to receive additional shares in lieu of cash dividends. DRIPs bypass brokers, so shareholders save on commissions. DRIPs also eliminate the nuisance effect of receiving small cash dividend payments. Second, some DRIPs let you reinvest your dividends in additional shares at a 5% discount to current prices. Third, many DRIPs also allow optional commission-free share purchases on a monthly or quarterly basis. Generally, investors must first own and register at least one share before they can participate in a DRIP. Registration will generally cost $40-$50 per company. The investor must then notify the company that he or she wishes to participate in the company’s DRIP....

Companies with dominant market shares of widely used products are in an enviable position. But as markets become more saturated, those companies must look elsewhere for growth. Diebold aims to take on this challenge in several ways. DIEBOLD INC. (New York symbol DBD; www.diebold.com) is a leading maker of automated teller machines (ATMs). It also makes safes, vaults and building-security systems. To cut its reliance on ATMs, the company now offers more services, such as software, ATM maintenance and processing customer transactions. The company now gets over 50% of its revenue from services. That gives it recurring revenue and helps cut its risk....

H.J. HEINZ CO. $53 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 321.0 million; Market cap: $17.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.heinz.com) makes a wide variety of processed foods, including condiments, sauces, soups, baked beans, pastas and baby food. Its flagship product, Heinz ketchup, accounts for about 60% of U.S. ketchup sales. Heinz’s sales rose 18.9%, from $9.0 billion in 2007 to $10.7 billion in 2011 (fiscal years end April 30). Earnings rose 16.6%, from $791.6 million in 2007 to $923.1 million in 2009. Earnings per share rose 21.8%, from $2.38 to $2.90, on fewer shares outstanding. Unfavourable foreign-exchange rates cut Heinz’s earnings to $914.5 million, or $2.87 a share, in 2010. In 2011, earnings rebounded to $991.9 million, or $3.08 a share....

Pat McKeough responds to many personal questions on stocks and other investment 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. An interesting question came up this week about Ocean Power Technologies, a company that is generating electricity from ocean waves. This raised the issue of the risks and rewards associated with a renewable energy stock. In particular, Pat drew the comparison between the long-term prospects of wave power and wind power....

Our TSI Network rating system is a key guide we use to find the best stocks to recommend in our newsletters and investment services, including Wall Street Stock Forecaster, our newsletter that focuses on top-quality U. S. stocks. ...

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 how you can make the best investments for your portfolio. Each Investor Toolkit update gives you a fundamental piece of investment strategy, and shows you how you can put it into practice right away. Tip of the week: “Insider trading is just one indicator when you’re looking for the best investments”...

Technological advances can spur on some powerful growth stocks. However, when a company bases its future growth on the widespread adoption of a single technological breakthrough, it can also add risk. Intuitive Surgical (Nasdaq symbol ISRG; www.intuitivesurgical.com) makes the da Vinci, a computerized surgical system....

Here are 4 keys we consistently rely on when picking the stocks we recommend in our newsletters and investment services. We believe they can help you succeed in stock market investing in all kinds of markets, including today’s volatile conditions.

1. Always ask yourself, “What can go wrong with this investment?” What upcoming event/technology/political trend could derail its profitability? In other words, don’t fall in love with a stock just because it has a great track record.
   When a company’s profits have been rising for years, its stock price will always be expensive in relation to its per-share profit. If something goes wrong and profit starts to erode or, worse, turns into a loss, the stock can go through a devastating drop. In stock market investing, too much enthusiasm for a favourite can lead investors to ignore its risks and price it as if those risks don’t exist.
2. Remember that high profits attract competition. This is related to rule #1. When a company is making a lot of money, you can be sure that other companies are making plans to enter its market with a competitive product that is slightly cheaper, or better, or more effectively marketed or whatever. Unless demand is exploding, this is bound to limit sales growth and depress profit margins....

CAE INC. $9.67 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 257.2 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.7%; TSINetwork Rating: Average; www.cae.com) makes military and airline flight simulators. It also runs pilot-training schools. CAE continues to apply its simulator expertise to new fields, such as medical training. It recently bought Florida-based Medical Education Technologies, Inc. (METI), which makes medical simulators and other products, including life-like mannequins, for training paramedics and medical students. Since 1996, METI has sold about 6,000 simulators to medical schools in 40 countries. This purchase will add $60 million U.S. to CAE’s annual revenue of $1.6 billion (Canadian)....

Pat McKeough responds to many personal questions on stocks and other investment 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, an investor asked about one of the telecommunications giants of the world stock market, Telefonica. That prompted Pat to examine the balancing act a company like Telefonica undergoes when it experiences weakness in some markets and strength in others....

BOMBARDIER INC. (Toronto symbols BBD.A $4.10 and BBD.B $4.01; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.8 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.4%; TSINetwork Rating: Average; www.bombardier.com) is the world’s third-largest commercial-aircraft maker, behind Boeing and Airbus. It is also the world’s largest passenger railcar manufacturer. In the three months ended July 31, 2011, Bombardier’s earnings rose 56.7%, to $210 million, or $0.12 a share (all amounts except share prices and market cap in U.S. dollars). A year earlier, it earned $134 million, or $0.07 a share. Sales rose 17.4% to $4.7 billion from $4.0 billion. Sales at the railcar division (which supplies 56% of Bombardier’s total sales) rose 26.0%, mainly due to strong demand from European public-transit systems. In the latest quarter, this business received $3.9 billion of new orders, down from $4.3 billion a year earlier. Its order backlog is $33.9 billion, up from $33.5 billion on January 31, 2011....

Sweeping up after the 1929 Crash


Today, many investors might not immediately recognize the name of master investor John Templeton. In the final quarter of the last century, however, Templeton was as famous and highly regarded as Warren Buffett is today. ...

TORSTAR CORP. $8.97 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.5 million; Market cap: $713.1 million; Price-to-sales ratio: 0.5; Dividend yield: 5.6%; TSINetwork Rating: Above Average; www.torstar.com) publishes The Toronto Star, which is Canada’s largest daily newspaper by circulation. The company also publishes three other daily newspapers and over 100 weeklies, mainly in southern Ontario. Torstar’s newspaper business accounts for about 70% of its revenue and 60% of its earnings. The company’s other main business is wholly owned Harlequin Enterprises Ltd., the world’s leading publisher of romance novels. Torstar recently received $291.6 million from the sale of its 20% stake in CTVglobemedia to BCE Inc. (Toronto symbol BCE). CTVglobemedia owns CTV Television and other broadcasting businesses....

Our advice on 2 ways of investing money in the stock market. Most investors place two types of orders when buying stocks: market orders or limit orders

TRANSCONTINENTAL INC. $12 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 81.0 million; Market cap: $972.0 million; Price-to-sales ratio: 0.5; Dividend yield: 4.5%; TSINetwork Rating: Average; www.transcontinental.com) is the largest commercial printer in Canada, and the fourth-largest in North America. Its printing operations provide two-thirds of its revenue. The remaining third comes from publishing over 170 newspapers and magazines. The publishing division also has over 1,000 web sites, which will become more important to Transcontinental’s growth in the next few years as advertisers spend more on the Internet than print products. In the quarter ended July 31, 2011, the company’s revenue rose 2.3%, to $492.6 million from $481.3 million a year earlier. It has won a number of new printing contracts, including an expanded deal to print The Globe and Mail....

THOMSON REUTERS CORP. $29 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 836.8 million; Market cap: $24.3 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.thomsonreuters.com) has two main divisions: Markets (which supplied 57% of Thomson Reuters’ 2010 revenue and 48% of its earnings), sells news and information products to banks and other financial institutions. Professional (43%, 52%) sells information to professionals in the legal, taxation, accounting and scientific research fields. Thomson Reuters recently said it plans to sell its healthcare business, which sells data and software that helps hospitals, clinics and health-care professionals cut costs and reduce fraud. In 2010, this division accounted for $450 million, or 3%, of the company’s revenue of $13.1 billion (all amounts except share price and market cap in U.S. dollars). Thomson Reuters may use proceeds from the sale to make more acquisitions, particularly in developing markets, where demand for reliable information is growing quickly....

One of the trends in Canadian investing in recent years has been for companies to expand internationally. This strategy can diversify a company’s customer base and add revenue. But it can also add risk. Linamar Corp. (Toronto symbol LNR; www.linamar.com) makes engines, transmissions and other precision-machined parts for the North American, European and Asian car and truck markets. The company has 39 plants in Canada, the U.S., Mexico, Germany, France, Hungary, South Korea and China....

CANADA BREAD CO. LTD. $43 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.1 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.canadabread.ca) is Canada’s second-largest producer of baked goods, after Weston Bakery. It also makes pastas and sauces. Its main brands include Dempster, Tenderflake and Olivieri. Canada Bread’s sales rose from $1.3 billion in 2006 to $1.7 billion in 2008. The gain largely came from bakeries the company bought in the U.K. and U.S. However, sales fell to $1.6 billion in 2010, mainly due to unfavourable exchange rates. Before unusual items, the company’s earnings per share rose from $3.09 in 2006 to $3.31 in 2007. Its 2008 earnings fell to $2.87 a share, but rebounded to $3.20 in 2009. The lower 2010 sales pushed down its 2010 earnings to $2.85 a share....

MAPLE LEAF FOODS INC. $11 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 144.4 million; Market cap: $1.6 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.mapleleaf.ca) is Canada’s largest food-processing company. It mainly makes its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. This business accounts for roughly 65% of its revenue. The company also makes fresh and frozen bread, pastries and pasta through its 90.0% stake in Canada Bread Co. Ltd., which supplies 30% of Maple Leaf’s revenue. The remaining 5% comes from its agribusiness division, which raises hogs for the company’s processed-meat operations. This division also recycles animal by-products into other materials, such as soaps and biodiesel fuel. In 2006, Maple Leaf began to shift its focus to more-profitable processed foods, and cut back its fresh pork production. It also sold its animal-feed business and most of its fresh-meat operations....