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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $39 and CU.X [class B voting] $39; Income Portfolio, Utilities sector; Shares outstanding: 125.6 million; Market cap: $4.9 billion; Price-to-sales ratio: 1.8; SI Rating: Above Average) distributes electricity and natural gas in Alberta. It also operates power plants in other parts of Canada, and in the U.K. and Australia. In August, Canadian Utilities received preliminary approval from the Alberta government to build and operate a new high-voltage transmission line between Edmonton and Calgary. Final approval for this project should come later this year. The line is part of a wider plan to make Alberta’s electricity grid more reliable. This new line will cost $1.65 billion, and will probably take several years to complete. To put this in context, Canadian Utilities earned $73.5 million, or $0.59 a share, in the three months ended June 30, 2009....

TRANSCANADA CORP. $33 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 624 million; Market cap: $20.6 billion; Price-to-sales ratio: 2.3; SI Rating: Above Average) operates a 59,000-kilometre pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. It also owns or invests in 20 electrical power plants. To diversify its operations, TransCanada is building the $12-billion U.S. Keystone pipeline, which will pump crude oil from Alberta’s oil sands to refineries in Illinois. TransCanada has already signed contracts with oil shippers at an average term of 18 years. In total, these deals represent 83% of Keystone’s capacity. The new pipeline’s first phase should start operating early next year. TransCanada plans to extend Keystone to the U.S. Gulf Coast by 2012....

PRECISION DRILLING TRUST $6.70 (Toronto symbol PD.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 275.6 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.3; SI Rating: Extra Risk) provides contract-drilling services to oil and gas producers. Its clients are located in western Canada, the U.S. and Mexico. The trust owns a fleet of 388 drilling rigs. Precision has been able to avoid cutting its rates to attract new business. That’s because rising oil prices have spurred demand for its drilling rigs. As well, many of Precision’s customers are locking in new contracts now because drilling services may become more expensive in the next year or two. The trust is also building new rigs for specific purposes and types of terrain. Demand for these models is growing strongly, so Precision can charge more for them than for its general-purpose rigs....

PENGROWTH ENERGY TRUST $11 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 258.4 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.2; SI Rating: Average) produces oil and natural gas, mainly from properties in western Canada. Natural gas accounts for 60% of its production; oil supplies the remaining 40%. In October, the trust cut its monthly distribution by 30%, to $0.07 a unit from $0.10. The new annual rate of $0.84 yields 7.6%. The lower payout should save Pengrowth roughly $93 million a year. That will help it pay down its $1.4-billion long-term debt, which is equal to 50% of its market cap....

AGRIUM INC. $53 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 157 million; Market cap: $8.3 billion; Price-to-sales ratio: 0.7; SI Rating: Average) makes fertilizers from natural gas at 11 plants in North America and Argentina. The company also makes other fertilizers, such as potash and phosphate, from mines in Alberta, Saskatchewan and Idaho. Agrium sells its products to industrial users and farmers through over 800 stores in the U.S., Argentina and Chile. The company continues to pursue a hostile takeover of U.S.-based fertilizer maker CF Industries Holdings Inc. (New York symbol CF). If successful, this would cost it $4.4 billion U.S. in cash and stock. Adding CF would triple Agrium’s phosphate and urea and ammonium nitrate (UAN) fertilizer-production capacity. The company has extended this offer several times. It now expires on October 22. Despite recent weakness, the long-term outlook for fertilizer is strong. Rising populations will continue to drive demand for food. This should prompt farmers to use more fertilizer to raise their crop yields, and the quality of their products....

POTASH CORP. OF SASKATCHEWAN $96 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 295.6 million; Market cap: $28.4 billion; Price-to-sales ratio: 3.6; SI Rating: Average) is the world’s largest fertilizer producer. The company operates six potash mines in Saskatchewan and one in New Brunswick. The reserves of five of these mines should last between 60 and 97 years. The other two mines have minimal or undetermined reserves. The stock hit an all-time high of $246 in June 2008, but fell to $62 last December. The drop was caused by lower prices for crops, which hurt demand for fertilizers like potash. As well, farmers in North America and Australia are seeing better-than-expected crop yields this year, even though they applied less fertilizer. This is mainly because of good weather and large amounts of residual fertilizer in the soil from last year. In an effort to stabilize prices, Potash Corp. will cut its production by 60% this year. Still, global inventories remain high. That’s because many customers stockpiled fertilizers during last year’s boom, in anticipation of continued rising demand. Prices will remain weak until they start using up their inventories....

TELUS CORP. (Toronto symbols T $34 and T.A $32; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 318 million; Market cap: $10.5 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) is Canada’s second-largest telephone company after BCE Inc. (Toronto symbol BCE). Telus has been expanding its wireless operations over the past few years. As a result, the company now gets 55% of its earnings from its 6.3 million wireless subscribers across Canada. Telus has 37% of the wireless market. Market leader Rogers Communications Inc. (Toronto symbol RCI.B) has 48%. The remaining 45% of Telus’s earnings comes from its traditional phone business, which has 4.1 million...

The price of uranium rose steadily from $7.10 U.S. a pound in December 2000 to as high as $138 U.S. a pound in June 2007.

Some advisors like to use sports or military analogies to describe their investment approach. They see a great stock pick as the equivalent of a touchdown or home run, and a series of them as a successful military campaign. This, however, puts too much emphasis on excitement and glory, and pays too little attention to risk. In contrast, if we had to compare our approach to anything outside the investment business, we’d choose chess. (You can learn more about our value-investing strategy for selecting stocks in our new free report, “Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.”)...

During the 1990s, many investors held to a fixed idea that global stock market equities would be more profitable than North American stocks. This was especially true, so they claimed, of companies based in China, India and other emerging markets. We advised our readers to resist investing heavily in emerging markets during those years. Instead, we recommended that investors look to their U.S. holdings, and the buys we recommended in Wall Street Stock Forecaster, for overseas exposure. U.S. blue-chip stocks operate in many countries. And we felt that the domestic U.S. market offered opportunities that simply weren’t available in Canada. In the end, this advice paid off handsomely for our readers....

When you join my Inner Circle service, you get to ask me your own personal investment questions, plus you get to see what other Inner Circle members have asked, along with our answers. So you can see how the service works, and get a sense of how it might help your portfolio, I’d like to share just a couple of member questions about stock market trading strategy and stock ideas. I hope you enjoy and profit from them. Q: Dear Pat: My 79-year-old aunt has inherited $250,000 and has asked me to invest the money on her behalf. She is in good health, has pensions that cover her routine expenses, and two financially independent children who will inherit her estate. My thoughts are to invest half the money in about 10 high-quality stocks, as per your long-standing investment advice (essentially on behalf of her children), and leave the other half more liquid to cover contingencies, such as the possible need for in-home care....

China Investment Corp. (CIC) has caught a lot of investors’ attention recently with a string of big purchases of commodity investments in the resource sector. CIC is the Chinese government’s “sovereign wealth fund.” Sovereign wealth funds have been around since the 1950s. They are state-owned investment funds that are usually financed by an economic surplus. Many Middle Eastern sovereign wealth funds, for example, are financed by state oil revenues. CIC is directly funded by the Chinese government, largely with U.S. dollar reserves accumulated through exports.

An impressive string of commodity investments

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TD HEALTH SCIENCES FUND $15.19 (CWA Rating: Speculative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) mainly invests in large-capitalization health-care stocks and earlier-stage biotechnology shares in the U.S. The fund’s managers believe these firms will benefit from increased health spending spurred by an aging population. The $151.7-million TD Health Sciences Fund’s top holdings include Gilead Sciences, Alexion Pharmaceuticals, Teva Pharmaceutical, Baxter International, Vertex Pharmaceuticals, Medco Health Solutions, Wyeth, Roche Holdings, Henry Schein Inc. and Schering Plough. TD Health Sciences Fund lost about 7.8% in Canadian dollars in the year ended August 31, 2009, compared to a loss of 15.6% for the S&P 500 (also in Canadian funds). The fund’s MER is 2.68%....

VANGUARD GROWTH ETF $49.28 (New York symbol VUG; buy or sell through brokers) aims to track the MSCI U.S. Prime Market Growth Index, a broadly diversified index that mainly consists of stocks of large U.S. companies. The fund has an MER of just 0.15%. The $14.0-billion fund’s top holdings are Microsoft, IBM, Apple Inc., Cisco Systems, Wal-Mart Stores, Google Inc., Hewlett-Packard, Procter & Gamble, Philip Morris International and PepsiCo. Vanguard Growth ETF is broken down by economic segment as follows: Information Technologies (34.2%), Health Care (15.5%), Consumer Staples (14.7%), Consumer Discretionary (11.9%), Industrials (7.9%), Energy (6.3%), Financials (4.7%), Materials (3.8%), Telecommunication Services (0.6%) and Utilities (0.4%)....

VANGUARD EMERGING MARKETS ETF $38.53 (New York symbol VWO; buy or sell through brokers) aims to track the MSCI Emerging Markets Index, which is made up of common stocks of companies located in emerging markets around the world. The fund has an MER of 0.27%. The funds’s top holdings are China Mobile (China: wireless), Gazprom (Russia: gas utility), Samsung Electronics (South Korea: electronics), Teva Pharmaceutical Industries, America Movil SA de CV (Latin America: wireless), Petroleo Brasileiro SA (Brazil: oil and gas), China Construction Bank, China Life Insurance Co. and Industrial and Commercial Bank of China. The $22.1-billion Vanguard Emerging Markets ETF’s largest holdings by country are: China (18.4%), Brazil (14.8%), South Korea (13.5%), Taiwan (11.2%), South Africa (7.6%), India (7.5%), Russia (6.1%), Mexico (4.6%), Israel (3.0%), Malaysia (2.9%), Indonesia (1.9%), Turkey (1.7%), Chile (1.4%), Thailand (1.4%), Poland (1.3%), Czech Republic (0.6%), Hungary (0.6%), Philippines (0.5%), Peru (0.4%), Egypt (0.3%), Cayman Islands (0.1%) and Colombia (0.1%)....

IMPERIAL OIL $40.75 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $34.5 billion; SI Rating: Average) is Canada’s largest integrated oil company. Imperial earned $0.25 a share in the three months ended June 30, 2009. That was down 80.5% from $1.28 a share a year earlier. Falling oil and natural-gas prices were the main reason for the drop. As well, Imperial’s Cold Lake and 25%-owned Syncrude oil-sands projects were closed for maintenance during the quarter. Revenue fell 40.1%, to $5.3 billion from $8.6 billion. The company’s production is set to rise in the long term, thanks to its new oil-sands projects, including the 70%-owned Kearl Lake project. As well, the outlook for Imperial’s refining business is strong, mainly because there is little competition. Moreover, Imperial is spending $400 million this year to upgrade its refineries....

You’ll find one of our six Successful Investor ratings displayed next to every stock we cover in each of our four investment newsletters. These ratings are a key guide we use to manage the portfolios of clients of our Successful Investor Wealth Management service. And they can give you a leg up in adding winning stock picks to your portfolio, too. Our top rating is Highest Quality, followed by Above Average, Average, Extra Risk, Speculative and, at the bottom of the scale, our riskiest, lowest-quality rating of Start-up....

We’ve had a lot of success over the years with the aggressive investing stock picks we recommend in our Stock Pickers Digest newsletter. Aggressive picks have the potential to give you bigger gains than your conservative selections. Even so, aggressive stocks are best suited to investors who can accept substantial risk in the portion of their portfolios that they devote to these types of investments. You can be wrong on any of your stock picks, of course. But when you’re wrong on a speculative stock, your losses are likely to be larger than they would be with a well-established company....

When investing in mutual funds, all too many amateur and professional investors and advisors try to take the easy way out. Instead of looking at the hard stuff — company fundamentals, industry trends, business plans and so on — they try to profit with a strategy called “momentum investing.” You might think of momentum investing as a mutation of growth-stock investing. Traditionally, growth-stock investors zero in on companies that have reported several years of growth and seem likely to keep on growing. Whether investing in mutual funds or stocks, growth investors tend to focus on investments that they plan to hold for years. Momentum investors also focus on growth stocks and funds — but with a shorter-term focus. They want to hold these investments only while prices are rising. They don’t mind paying a high price, because they plan to sell quickly if the rise begins to falter....

On October 22, Microsoft will launch its new Windows 7 operating system. If the release goes smoothly, Microsoft stands to gain from sales of the new software. That’s because many computer users put off upgrading from earlier versions because of complaints about its previous Windows release, Vista. The company has also timed the launch of Windows 7 to coincide with the beginning of the Christmas shopping season.

Other technology stocks stand to gain from Windows 7

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NVIDIA CORP. $15 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 547.8 million; Market cap: $8.2 billion; Price-to-sales ratio: 3.0; WSSF Rating: Average) designs video chips that make computer games run more smoothly and appear more lifelike. It outsources most of its production to chipmakers in Asia. Nvidia earned $37.7 million in its second quarter, which ended July 26, 2009. That’s down 49.4% from $74.5 million a year earlier. Earnings per share fell 46.2%, to $0.07 from $0.13. These figures exclude charges in both quarters for extra warranty payments related to defective chips. Sales fell 13.0%, to $776.5 million from $892.7 million. The company continues to spend around 25% of its revenue on research. It’s devoting most of this to new graphic chips for mobile devices. These should cut its reliance on computer sales. Nvidia holds cash of $1.5 billion, or $2.68 a share, and has little debt....

INTEL CORP. $20 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.6 billion; Market cap: $112 billion; Price-to-sales ratio: 3.3; WSSF Rating: Above Average) is the world’s leading computer-chip maker, with 80% of the market. The company is combining its operations into two main divisions. These will be organized by function instead of by product. The first, the Intel Architecture Group, will design chips for computers, cellphones and similar devices. The second, called the Technology and Manufacturing Group, will manage Intel’s manufacturing plants. Most chipmakers focus on either design or manufacturing, but not both. The reorganization would make it easier for Intel to split itself into two companies. However, any potential breakup is probably years away....

PETSMART INC. $22 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 125 million; Market cap: $2.8 billion; Price-to-sales ratio: 0.5; WSSF Rating: Above Average) sells pet food and supplies through 1,145 stores in the U.S. and Canada. It also provides veterinary and grooming services, and boards pets at its 156 PetHotels. In PetSmart’s second quarter, which ended August 2, 2009, its earnings rose 4.6%, to $39 million from $37.2 million a year earlier. Earnings per share gained 3.3%, to $0.31 from $0.30. Revenue rose 5.4%, to $1.3 billion from $1.2 billion. About 85% of the revenue gain came from the 70 stores and 35 PetHotels that PetSmart opened over the past year. Same-store sales rose 0.8%. Pet-service revenue, which accounts for 12% of the company’s overall sales, rose 10.2%. Because of the slow economy, PetSmart plans to open just seven to nine new stores in the second half of fiscal 2010. This will let the company focus on improving the profitability of its existing stores....

IDEXX LABORATORIES INC. $52 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.6 million; Market cap: $3 billion; Price-to-sales ratio: 3.1; WSSF Rating: Average) makes equipment that veterinarians uses to detect diseases in animals. Idexx also makes systems that detect contaminants in water and milk. Because of the weak economy, fewer pet owners are taking their animals to veterinarians for routine screenings. This has hurt sales of Idexx’s systems and supplies. As well, Idexx gets 40% of its sales from outside the U.S. This leaves it vulnerable to a high U.S. dollar. These factors drove down Idexx’s earnings by 14.5% in the three months ended June 30, 2009, to $33.7 million from $39.4 million a year earlier. Earnings per share fell 12.7%, to $0.55 from $0.63, on fewer outstanding shares. Revenue was down 5.3%, to $265.7 million from $280.6 million. Idexx spends about 5% of its revenue on research....

TUPPERWARE BRANDS CORP. $40 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 63 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.3; WSSF Rating: Above Average) makes plastic food and beverage containers. It also makes beauty products. The company sells its products through a network of independent dealers instead of traditional retail stores. This keeps its distribution costs low. Tupperware gets over 80% of its sales from outside of the U.S., so it’s particularly vulnerable to a rising U.S. dollar. In the three months ended June 27, 2009, sales fell 10.1%, to $524.7 million from $583.6 million a year earlier. But if you disregard foreign-exchange rates, its sales would have risen 4%. Earnings fell 7.1%, to $0.52 a share (or a total of $33.1 million) from $0.56 a share (or $36.0 million). However, earnings rose 42% on a constant-currency basis. The company is selling more high-margin products; this was the main reason behind the earnings gain. Tupperware also benefited from lower resin and freight costs....