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TOYOTA MOTOR CO. ADRs $76 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.6 billion; Market cap: $121.6 billion; Price-to-sales ratio: 0.6; WSSF Rating: Above Average) is the world’s largest carmaker. Japan accounts for 47% of its revenue, followed by North America (24%), Europe (12%) and Asia (10%). In the fiscal year ended March 31, 2009, Toyota sold 7.6 million vehicles, down 15% from 8.9 million in the prior year. As a result of the drop, Toyota lost $4.3 billion, or $2.55 per ADR, in fiscal 2009. (Each American Depositary Receipt represents two of Toyota’s common shares.) It earned $17.5 billion, or $8.77 per ADR, a year earlier. Revenue fell 9.1%, to $203.3 billion from $223.6 billion. Toyota’s sales will likely fall to 6.5 million vehicles this year. The company is lowering its costs in response. For example, its smaller cars will share the same platform and parts by 2012. That should save $1 billion a year....

HONDA MOTOR CO. ADRs $27 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $48.6 billion; Price-to-sales ratio: 0.5; WSSF Rating: Above average) is Japan’s second-largest carmaker. It’s also the world’s largest motorcycle producer. Honda sold 3.5 million vehicles in fiscal 2009. That’s down 10.4% from 3.9 million in the prior year. However, motorcycle volumes rose 8.5%, to 10.1 million from 9.3 million. Revenue fell 14.9%, to $101.9 billion from $119.8 billion a year earlier. Earnings plunged 76.7%, to $1.4 billion, or $0.77 per ADR, from $6 billion, or $3.30 per ADR. (Each American Depositary Receipt represents one Honda common share.) The earnings drop was mostly because of lower sales, higher raw-material costs and the negative impact of the high Japanese yen. North America accounts for 45% of its sales, so it’s more vulnerable to currency movements than Toyota. Honda’s small, fuel-efficient cars should continue to appeal to cost-conscious consumers during the recession. Like Toyota, it also aims to lower its costs by building more models that use the same parts. This year’s earnings will probably drop to $0.37 per ADR, but should rebound to $1.15 in fiscal 2011. The stock trades at 23.5 times the 2011 estimate. The $0.46 dividend yields 1.7%....

DEL MONTE FOODS CO. $9.02 (New York symbol DLM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 197.7 million; Market cap: $1.8 billion; Price-to-sales ratio: 0.5; WSSF Rating: Average) makes a wide variety of canned fruits and vegetables, as well as sauces and soups. Del Monte also makes pet food under the 9Lives, Milk-Bone and Meow Mix brands. In the fiscal year ended May 3, 2009, Del Monte’s earnings rose 25.5%, to $147.7 million, or $0.74 a share. In the prior year, it earned $117.7 million, or $0.58 a share. If you exclude an $0.08-a-share charge related to job cuts in the prior year, per-share earnings would have risen 12.1%. Sales rose 14.1%, to $3.6 billion from $3.2 billion. Del Monte is raising the prices of its main brands, and spending more on marketing. It hopes these moves will make these products more profitable....

CAMPBELL SOUP CO. $29 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 350.3 million; Market cap: $10.2 billion; Price-to-sales ratio: 1.3; WSSF Rating: Above Average) is the world’s largest maker of canned soups. It also makes Prego canned pasta and sauces, Pepperidge Farm cookies and V8 vegetable juices. Like Heinz Campbell plans to spur growth by expanding overseas. International markets now supply 30% of its revenue. It is particularly interested in Russia and China, where soup is popular. As a result of its growing international operations, unfavourable currency rates held back Campbell’s earnings by $0.04 a share in its third fiscal quarter, which ended May 3, 2009. The company’s sales fell 10.3%, to $1.7 billion from $1.9 billion. Currency rates accounted for about half of the decline....

H.J. HEINZ CO. $35 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 315 million; Market cap: $11 billion; Price-to-sales ratio: 1.1; WSSF Rating: Above Average) is a leading maker of condiments. Its flagship product, Heinz Ketchup, makes up about 60% of all ketchup sold in the U.S. Heinz also makes frozen potatoes (under the Ore-Ida brand), pasta sauces (Classico) and diet foods (Weight Watchers). Heinz has expanded its overseas operations over the last few years. These now account for about 60% of its sales. And the company plans to keep adding new markets: it’s particularly interested in China, India, Russia and Poland. However, Heinz’s international growth adds currency risk. In its latest fiscal year, which ended April 29, 2009, sales rose just 0.8%, to a record $10.15 billion from $10.07 billion in the prior year. But excluding the negative impact of the higher U.S. dollar, sales would have risen 7.4%. The company raised its selling prices, which helped offset a 1.5% drop in volumes. Earnings rose 9.3%, to $923.1 million from $844.9 million. Earnings per share rose 10.3%, to $2.90 from $2.63, on fewer outstanding shares....

KRAFT FOODS INC. $26 (New York symbol KFT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $39 billion; Price-to-sales ratio: 0.9; WSSF Rating: Above Average) is the world’s second-largest food company after Nestle. Top brands include Kraft (cheese), Maxwell House (coffee), Nabisco (biscuits and cookies) and Oscar Meyer (meats). Kraft faces strong competition from private-label foods, particularly in some of its main product lines, such as cheese, coffee and processed meats. But it has been helped by lower costs for a number of its raw materials, especially dairy products. In the three months ended March 31, 2009, Kraft’s revenue fell 6.5%, to $9.4 billion from $10 billion a year earlier. However, if you account for last year’s sale of its Post cereals business and the negative impact of currency rates on overseas sales, Kraft’s revenue rose 2.3%. Overall earnings rose 21%, to $662 million from $547 million. Earnings per share rose 28.6%, to $0.45 from $0.35, on fewer outstanding shares....

CONAGRA FOODS INC. $20 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 447.2 million; Market cap: $8.9 billion; Price-to-sales ratio: 0.7; WSSF Rating: Above Average) makes a number of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter and Orville Redenbacher popcorn. In its third fiscal quarter, which ended February 22, 2009, ConAgra’s earnings per share rose 17.6%, to $0.40 from $0.34 a year earlier. These figures exclude several non-recurring items, but they include a $0.05-a-share gain on hedging contracts, which ConAgra uses to lock in costs for wheat, corn and other ingredients. As well, ConAgra paid $0.03 a share in legal costs related to a 2007 peanut-butter recall that was caused by a salmonella outbreak. Sales rose 6.1%, to $3.1 billion from $3 billion. ConAgra raised its selling prices because of higher raw-material costs. This offset lower sales volumes....

GENERAL MILLS INC. $55 (New York symbol GIS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 329 million; Market cap: $18.1 billion; Price-to-sales ratio: 1.3; WSSF Rating: Above Average) is the second-largest maker of breakfast cereals in the United States after Kellogg. Its main brands include Cheerios, Wheaties and Total. The company also makes Betty Crocker baking mixes, Green Giant canned and frozen vegetables and Yoplait yogurt. General Mills will probably report earnings of $3.92 a share in its latest fiscal year, which ended May 31, 2009. That’s slightly higher than its previous forecast of $3.87 to $3.89. These figures exclude unusual items, mainly gains and losses on hedging contracts that General Mills uses to lock in prices for wheat, corn and other raw materials. The company raised its selling prices last year in order to offset higher prices for these raw materials. Since then, these costs have stabilized; this was the main reason behind the higher earnings forecast. It also expects a lower income-tax rate in the fourth quarter of fiscal 2009....

UNITED TECHNOLOGIES CORP. $51 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 942 million; Market cap: $48 billion; Price-to-sales ratio: 0.9; WSSF Rating: Above Average) has six main businesses: Carrier makes heating and air-conditioning equipment (25% of 2008 revenue, 17% of profit); Otis makes and services elevators (22%, 32%); Pratt & Whitney makes aircraft engines (22%, 27%); Hamilton Sundstrand makes electronic controls for aircraft (11%, 13%); UTC Fire & Security sells burglar alarms and fire-protection services (11%, 6%); and Sikorsky makes helicopters (9%, 5%). The U.S. government is United Technologies’ biggest customer, and accounts for about 13% of its yearly revenue. We feel that United Technologies’ diversification is one of its major strengths. All of its businesses are leaders in their industries. Plus, the company sells products to both original-equipment manufacturers and aftermarket customers. That cuts its risk. For example, when demand for new planes is weak, airlines will probably buy more replacement parts instead of new aircraft. When the economy improves, aircraft makers will order more new engines and electronics. This will offset lower sales of spare parts....

Here are four classic, profit-killing errors that all investors make from time to time. All can seriously hinder your stock market returns. 1. “Averaging down” without reconsidering whether you should have bought in the first place. Many investors have made lots of money by “averaging in” to the stock of a well-established, well-managed company — that is, buying more as funds became available over a period of years....

Lately, a number of readers have been asking me whether it’s worth holding onto their U.S.-stock holdings if the U.S. dollar keeps falling. Some wonder if they should follow their brokers’ suggestions and hedge against the risk of a drop in the U.S. dollar, using options, futures or other investment products. If you knew that the U.S. dollar would keep falling, the best portfolio management strategy would be to sell all of your U.S. stocks and buy them back when the dollar stabilizes. However, you don’t know where the U.S./Canada exchange rate is going next — you never do. The financial industry has a variety of products that can insulate your U.S. investments from a drop in the value of the U.S. dollar. These products obviously cost you money. In addition, they reduce the long-term value of your U.S. investments. After all, you invest in U.S. stocks for two key reasons. One is that the U.S. stock market offers certain types of investment opportunities that are rare or non-existent in Canada, such as giant multi-national consumer companies like Procter & Gamble or McDonalds. The other key reason for U.S. investment is that it gives you currency diversification. That’s crucial to a sound portfolio management strategy....

As the market has rebounded, more investors have been asking me whether they should invest in junior mines.

My answer is that you should always first ensure that your portfolio is spread out across the five main economic sectors (Manufacturing & Industry, Resources & Commodities, the Consumer sector, Finance and Utilities). However, junior mines can play a role in the smaller part of your portfolio that you devote to more aggressive investments.

Resource prices have been on the rise lately, and it’s getting easier for many junior mines to raise funds for exploration and development.

With that in mind, I’ve zeroed in on four junior mines that I think have promise in the latest issue of Stock Pickers Digest. One of these, Baffinland Iron Mines (Toronto symbol BIM), is a good example of a junior mine that is worth considering.

Five keys to profit in junior mines

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Every investor would like to find an easy-to-use market indicator that tells you when to buy and when to sell. Some look to technical analysis as a way of determining this. Technical analysis is the process of analyzing a stock’s past price movements in an attempt to determine its future price. It’s not concerned with financial statements, management or anything else that underlies a company’s business. It only studies how stock prices have behaved in the past, and the clues that could offer about future stock-price movements. In fact, an investor who uses only technical analysis might buy and sell a stock while knowing little or nothing about the underlying company.

One tool among many

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TRUE ENERGY TRUST $0.81 (Toronto symbol TUI.UN; SI Rating: Speculative) (403-264-8875; www.trueenergy.ab.ca; Units outstanding: 78.5 million; Market cap: $63.6 million) produces oil and gas in Alberta and Saskatchewan. Gas makes up about 62% of its output. In the three months ended March 31, 2009, production fell 26.3%, to 9,981 barrels of oil equivalent per day from 13,552 a year earlier. True cut its capital spending to conserve cash and pay down its $196.3-million debt, which is a high 291% of its market cap. The cut was the main reason for the production drop. True also suspended its monthly distribution with the March 2009 payment....

TRILOGY ENERGY TRUST $6.52 (Toronto symbol TET.UN; SI Rating: Speculative) (403-290-2900; www.trilogyenergy.com; Units outstanding: 95.4 million; Market cap: $622.2 million) holds oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. Trilogy’s production is weighted approximately 78% toward natural gas and 22% to oil. In the three months ended March 31, 2009, Trilogy produced 20,211 barrels of oil equivalent per day. This was virtually unchanged from a year earlier. Trilogy’s $300.1-million debt is a somewhat high 46% of its market cap. To conserve cash and pay down debt, the trust cut its monthly distribution by 50% last February. The new $0.05 distribution gives the units a 9.2% yield. The lower distribution also reduced the trust’s payout to unitholders to just 40% of its cash flow....

ZARGON ENERGY TRUST $16 (Toronto symbol ZAR.UN; SI Rating: Speculative) (403-264-9992; www.zargon.ca; Units outstanding: 22.4 million; Market cap: $359.0 million) produces oil and gas in Alberta, Manitoba, Saskatchewan and North Dakota. Its output is weighted 51% toward natural gas and 49% to oil. In the three months ended March 31, 2009, Zargon’s production rose 2.2%, to 9,213 barrels of oil equivalent per day (this measurement includes natural gas) from 9,015. As well, Zargon recently paid $41.4 million for Masters Energy. This will add 1,275 barrels of oil equivalent per day to Zargon’s production, bringing it to an expected average of 10,200 barrels per day this year. Zargon’s $85.8-million debt is low, at around 23% of its market cap. The trust’s $0.18 monthly distribution gives the units a 13.5% yield. Zargon flows just 50% of its cash flow through to unitholders, so a distribution cut is unlikely....

CANALASKA URANIUM $0.17 (Toronto symbol CVV; SI Rating: Start-up) (1-800-667-1870; www.canalaska.com; Shares outstanding: 137.8 million; Market cap: $23.4 million) owns twenty uranium projects in Saskatchewan’s Athabasca Basin region. CanAlaska has added partners to help pay for exploration drilling. These include Japan’s giant Mitsubishi Corp., plus a consortium of Korean companies, including Hanwha Corporation, Korea Electric Power, Korea Resources and SK Energy. CanAlaska holds cash of $8 million, and has no debt. CanAlaska Uranium is a buy for highly aggressive investors....

AMERIGO RESOURCES $0.39 (Toronto symbol ARG; SI Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 132.1 million; Market cap: $51.5 million) processes copper and molybdenum from the tailings (waste rock) from Chile’s El Teniente, the world’s largest copper mine. In the three months ended March 31, 2009, Amerigo’s revenue fell 63.8%, to $29.9 million from $38.9 million a year earlier. (All figures except share price in U.S. dollars.) Sale prices for copper fell 48.9% during the quarter, and molybdenum prices dropped 73.4%. The company lost $0.04 a share, compared to a profit of $0.07 a share a year earlier. Still, Amerigo’s long-term outlook is bright, and copper and molybdenum prices are rising. The company holds cash of $3.5 million, and has little debt....

MIRANDA GOLD $0.40 (Toronto symbol MAD; SI Rating: Start-up) (604-689-1659; www.mirandagold.com; Shares outstanding: 44.9 million; Market cap: $18.0 million) is a gold exploration company mainly focused on Nevada. Miranda holds $12 million in cash. That’s enough for four to five years of exploration. The company also has joint ventures with Montezuma Mines, Piedmont Mining Company, White Bear Resources and Queensgate Resources. These partners pay for high-risk early drilling on Miranda’s properties. They get interests in these properties in return. Miranda is a buy for highly aggressive investors....

BAFFINLAND IRON MINES $0.49 (Toronto symbol BIM; SI Rating: Start-up) (416-364-8820; www.baffinland.com; Shares outstanding: 255.3 million; Market cap: $123.8 million) is looking for a major partner for its main Mary River iron-ore project on Baffin Island. Baffinland still hopes to start building an open-pit mine at the site next year, and plans to finish it by 2014. It then aims to produce 18 million tonnes of ore per year for over 21 years. Baffinland holds a high cash balance of $26.1 million. Baffinland is a buy for highly aggressive investors....

One of the questions we often get from clients of Successful Investor Wealth Management involves financial contingency planning. That is, how do you set up your finances and investments so that someone else can handle them if you can’t? When you’re doing this kind of retirement planning, we think it’s always a good idea to have such an arrangement in place. The first step is to find someone you thoroughly trust to step in on your behalf. You should also resist the urge to leave fixed instructions. Instead, give that person as much latitude as possible. This goes against the first instinct of many investors. But there is good reason to take a more hands-off approach.

Flexibility is a plus

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Simply put, a well-constructed stock portfolio will make your life easier and maximize your gains.

Early in their investing careers, many investors have only a vague idea of the value of a planned portfolio when investing in the stock market.

When you try to pick a handful of stocks that will all beat the market, you are asking a lot of yourself. No one, not even people that devote their entire lives to it, has ever been able to consistently pick stock-market winners over long periods.

On the other hand, it’s relatively easy to acquire a balanced, diversified portfolio of mainly high-quality dividend paying stocks, spread out across the five main economic sectors: Resources & Commodities, Finance, Manufacturing & Industry, Utilities and Consumer.

Spreading your holdings out across the five sectors helps you avoid overloading yourself with stocks that are about to slump because of industry conditions or a change in investor fashion. By diversifying across the sectors, you increase your chances of stumbling upon a market superstar – a stock that does two to three or more times better than the market average. These stocks come along every year. By nature, their appearance is unpredictable: if you could routinely spot them ahead of time, you’d quickly acquire a large proportion of all the money in the world, and nobody ever does that.

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Right now, Canadian income trusts pay out a high percentage of their cash flows to their unitholders. This lets them avoid paying corporate taxes. It also gives many of them significantly higher yields than a lot of dividend-paying common stocks.

Canadian income trusts face tax changes in 2011

In 2011, the Canadian government will begin taxing income trusts (with the exception of real estate investment trusts or REITs)....

Long-time Successful Investor readers may recall that a decade or two ago, we regularly reminded them that dividends could contribute up to a third of their long-term investment returns, without even considering the tax-cutting effects of the dividend tax credit (see below). Earlier in this decade, yields of dividend paying stocks were generally too low to provide a third of investment returns. But now that yields of dividend paying stocks have moved back up to their current level, it’s realistic to assume they will once again contribute as much as a third of your total return. That’s a good thing for investors, since dividends are more dependable than capital gains as a source of investment income.

Tax credits add to your gains

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CANADA BREAD CO. LTD. $41 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1 billion; Price-to-sales ratio: 2.5; SI Rating: Above Average) is Canada’s second-largest maker of fresh and frozen breads, rolls and bagels. (Weston Bakery is the largest). Canada Bread also makes pastas and sauces. Its main brands include Dempster, Tenderflake and Olivieri. As part of its long-term growth strategy Canada Bread plans to expand its overseas operations, which account for 25% of its sales. It’s now one of the largest makers of bagels and bakery products in the U.K. Canada Bread also owns three bakery plants in the U.S. In the first half of 2008, Canada Bread raised its prices to offset rising energy and wheat costs. Now that these costs have fallen, the company is starting to realize the benefits of this move. In the three months ended March 31, 2009, its earnings rose 22.9%, to $0.59 a share (or a total of $14.9 million) from $0.48 a share (or $12.2 million) a year earlier. These figures include unusual items, such as costs related to a fire at a bakery plant in the U.K. The company received $1.7 million in insurance proceeds to repair the damage. If you exclude these items, earnings per share rose 15.4%, to $0.60 from $0.52. Sales rose 7.9%, to $413.1 million from $382.9 million....