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Wind power stocks include companies that make components for wind turbines and those that use wind turbines to generate power.

Although publicly traded wind companies are considered green stocks, wind power does draw some objections from environmental groups. It also faces some challenging technical problems.

Concept has appeal, but wind power is imperfect

One of the key problems with wind power is that varying wind speeds cause its electricity output to fluctuate. In many areas, the wind is stronger in the daytime, when demand is lower, and dies down in the evening, when consumers use more appliances. Also, electrical power can’t be stored efficiently, so to make economic sense, it must be used when it is produced. As a result, it can’t supply all electricity needs, and utilities must maintain back-up power capacity or costly storage that is equal to their reliance on wind power.

One way for wind power stocks to overcome some of these problems is to have a large number of wind turbines operating at the same time. But this raises another problem: although the space between the wind turbines can be used for agriculture, a wind farm dominates the landscape, making it unsuitable for tourist areas or nature reserves.

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MOLSON COORS BREWING CO. $44 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 184 million; Market cap: $8.1 billion; Price-to-sales ratio: 2.1; WSSF Rating: Average) is the world’s fifth-largest brewer by volume. Its major brands include Coors Light, Molson Canadian and Carling. Molson Coors was formed in February 2005, when Canadian brewer Molson Inc. merged with U.S.-based Adolph Coors Co. The merger let Molson Coors close plants and combine distribution networks in the face of growing competition. Canada is Molson Coors’largest market, accounting for 40% of its 2008 sales and 57% of its gross profit. The U.S. (32% of sales and 33% of profit) was its second largest, followed by the U.K. (28% of sales and 10% of profit). It exports its beers to other markets, such as Asia and Latin America, or licenses them to local brewers....

TEXAS INSTRUMENTS INC. $19 (New York symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.3 billion; Market cap: $24.7 billion; Price-to-sales ratio: 2.1; WSSF Rating: Average) makes chips for a wide variety of electronic devices, including cellphones, DVD players and digital cameras. It also makes handheld calculators. The company has over 80,000 customers, but cellphone maker Nokia Corp. (New York symbol NOK) accounted for 18% of its 2008 sales. Texas Instruments earned $17 million, or $0.01 a share, in the three months ended March 31, 2009. In the year-earlier quarter, it earned $662 million, or $0.49 a share. Sales fell 36.2%, to $2.1 billion from $3.3 billion. The company spends around 18% of its revenue on research. In response to slowing sales, Texas Instruments has cut 3,400 jobs (or 12% of its workforce). Severance and other payments will cost it $400 million (including $105 million in the latest quarter), but the layoffs should lower its annual expenses by $700 million when it completes these cuts later this year....

NVIDIA CORP. $10 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 546.2 million; Market cap: $5.5 billion; Price-to-sales ratio: 2.0; WSSF Rating: Average) designs 3D-capable chips for computers, video-game consoles and other devices. The company outsources most of its production to chipmakers in Asia. The recession has hurt new-computer sales. In turn, computer makers are ordering fewer graphics chips from Nvidia. Computer makers are also switching to cheaper chips, particularly those that work well with “netbook” computers. Netbooks are small, inexpensive laptop computers whose processors are less powerful than those of traditional laptops. Because of their lower prices and portability, they are currently selling faster than desktops and laptops....

VERIGY LTD. $12 (Nasdaq symbol VRGY, Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.2 million; Market cap: $698.4 million; Price-to-sales ratio: 1.5; WSSF Rating: Extra Risk) designs and makes test systems that are used in the production of computer chips. Verigy’s products help chipmakers cut down on errors and improve the reliability of their products. The company has installed more than 4,500 of its systems worldwide. Aside from test systems, Verigy sells consulting and support services. These include start-up assistance, and system calibration and repair. These account for around 45% of Verigy’s revenue, and help lower the company’s reliance on sales of new systems, which have been slowed by the recession. Verigy lost $25 million, or $0.44 a share, in its second quarter, which ended April 30, 2009. Still, that was a lot better than analysts’ predictions of a loss of $0.65 a share. In the year-earlier quarter, Verigy earned $13 million, or $0.22 a share. These figures exclude non-recurring items, particularly costs related to an 18% cut to its workforce in 2008. The layoffs should lower Verigy’s annual expenses by $60 million. The company expects to complete the plan by the end of this year. Revenue dropped 56.2%, to $71 million from $162 million....

AMEREN CORP. $23 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 213.6 million; Market cap: $4.9 billion; Price-to-sales ratio: 0.6; WSSF Rating: Average) provides electricity and natural gas to 3.4 million customers in Illinois and Missouri. Ameren has faced a number of challenges recently. The recession has driven down electricity demand, and a warmer-than-usual winter hurt natural-gas sales. As well, a severe ice storm in January forced Ameren’s biggest power customer, an aluminum smelter in Missouri, to scale back its operations. As a result, Ameren’s earnings in the first quarter of 2009 fell 14.9%, to $114 million, or $0.54 a share. The company earned $134 million, or $0.64 a share, a year earlier. These figures exclude one-time items, including losses of $0.14 a share on futures contracts that Ameren uses to lock in its fuel costs. Revenue fell 7.9%, to $1.9 billion from $2.1 billion....

ALLIANT ENERGY CORP. $23 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 110.6 million; Market cap: $2.5 billion; Price-to-sales ratio: 0.7; WSSF Rating: Average) provides electricity and natural gas to 1.4 million customers in Wisconsin, Iowa, Minnesota and Illinois. Like Ameren, the recession and warmer-than-usual winter weather hurt Alliant’s first-quarter earnings. In the three months ended March 31, 2009, earnings rose 6.6% to $72.6 million, or $0.66 a share, from $68.1 million, or $0.62 a share, a year earlier. However, if you disregard a one-time income-tax gain, the company’s earnings fell to $0.30 a share. Revenue fell 4.2%, to $949.9 million from $992 million. Revenue at its regulated power plants rose 7%, but that was more than offset by a 14% drop in gas revenue. In light of the weak economy, Alliant will probably wait until next year before it asks power regulators for permission to raise rates. Meanwhile, it will look for ways to lower its costs. For instance, in March the company decided to cancel a new coal-fired power plant in Iowa. This should save it $1.2 billion over the next three years. Cancelling this plant also eliminates the need for Alliant to issue new shares, which could dilute the holdings of its existing shareholders....

A few years ago, many investors valued drug stocks the way they value the top software makers, bidding them up to 30 or more times earnings. However, drug stocks are riskier than investors generally realize. Because of that, while drug stocks can show fantastic profits, it might be more appropriate to value drug makers the way you value companies that are trying to bring new mineral discoveries into mines: at 10 times earnings or less. Drug buyers have no brand loyalty; when a better drug comes along, use of the old standby collapses overnight. Drug companies must invest large sums to bring new drugs to market, and there is great risk that their drugs will fail to clear all the necessary hurdles. If a drug does fail, it can leave the developer with a return of zero....

We’ve got four key Successful Investor investing for beginners tips that will help you profit from stock investing with less risk. No matter how widely or narrowly you cast your information net, some of your investments will disappoint you. But that won’t matter if you apply these three tips. That’s because your near-inevitable gains will overwhelm your all-but-unavoidable losses.

Successful Investor Investing for beginners Tip #1: Hold mostly high-quality, dividend paying stocks or mutual funds that hold those stocks

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We advise against a so-called “sector rotation” approach to investing; this is when you try to hop from sector to sector. We also advise against practicing a top-down sector rotation style; underweighting or overweighting sectors of the stock market depending on a forecast of the stage of the economic cycle, or other factors.

Few sector rotation strategies succeed over long periods, because they need to guess right twice. In other words, they have to pick the top sectors, and they need to pick the stocks to rise within those sectors. Consistently succeeding at both is extremely difficult.

There are many theories about which sectors will outperform at any given stage of the economic cycle. But trying to pick winning sectors — and staying out of other sectors — seldom works over long periods. Practitioners of sector rotation often wind up with heavy holdings in the worst-performing sectors. This can be devastating to your portfolio, even if you confine your investments to well-established companies.

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Rather than using sector rotation to try to beat the market, you should pick a good selection of stocks right from the outset. After you’ve decided what part of your savings to put in stocks, remember to spread it out across the five main economic sectors. This way, you avoid overloading yourself with stocks that are about to slump simply because of industry conditions or changes in investor opinion.

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Exchange Traded Funds, or ETFs, don’t load you up with heavy management fees, nor do they tie you down with heavy redemption charges if you decide to get out before six years have passed. Instead, they give you a lower-cost and more flexible and convenient alternative to mutual funds.

The problem is that ETFs are just as helpful for facilitating smart moves as they are for dumb ones. And there are all sorts of dumb moves that ETFs can facilitate.

ETFs are set up to mirror the performance of a stock market index or sub-index. They hold a more-or-less fixed selection of securities that are chosen to represent the holdings that go into the calculation of the index or sub-index.

This way, if you get an urge to invest in oil stocks, or gold stocks, or Swedish stocks, or wind-power stocks, or any of hundreds of other stock groups, you can act on that urge without doing any messy and time-consuming research on individual stocks.

In fact, since ETFs also trade on stock exchanges, you can buy or sell them any time the exchange is open. With conventional mutual funds, you can only buy or sell at the end of the day, at a price that reflects the value of the fund’s holdings at the close of trading.

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Aggressive investing is an investing strategy that can yield high returns – but also entails taking on a lot of risk. An investment strategy that involves aggressive investing is only suitable for investors who can accept substantial risk, and the chance of losses.

The most common form of aggressive investing is to put a large part of your portfolio in stocks (or mutual funds) of less well-established companies without a history of earnings or dividends. Aggressive stocks don’t have the secure hold on the growing, or at least stable, clientele that conservative stocks have. When something goes wrong with aggressive investments, there is great risk of serious, if not total, loss.

We feel that the best investing strategy for most people is to hold the bulk of their investment portfolios in securities from well-established companies. All these stocks should offer good “value” – that is, they should trade at reasonable multiples of earnings, cash flow, book value and so on. Ideally, they should also have above-average growth prospects when compared to alternative investments.

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DEVON ENERGY CORP. $61.81 (New York symbol DVN; SI Rating: Speculative) (405-235-3611; www.devonenergy.com; Shares outstanding: 443.9 million; Market cap: $27.4 billion) is one of the largest independent U.S.-based oil and gas explorers and producers. Its production mix is about 66% gas and 34% oil. Devon’s properties are mainly located in the United States and Canada. Aside from conventional production, they include shale oil in northern Texas, oil sands in Canada and deep-water wells in the Gulf of Mexico. In the three months ended March 31, 2009, Devon’s cash flow fell 60.8%, to $959 million, or $2.16 a share, from $2.4 billion, or $5.50 a share. The sharp drop was the result of lower oil and gas prices....

CIMAREX ENERGY $30.94 (New York symbol XEC; SI Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 83.3 million; Market cap: $2.6 billion) is an oil and gas explorer and producer that mainly operates in the U.S. Natural gas makes up 69% of its production. Cimarex has properties in western Oklahoma; Kansas; the upper Gulf Coast regions of Texas and southern Louisiana; the Permian Basin area of western Texas; and the Gulf of Mexico. The company’s natural-gas production averaged 489 million cubic feet equivalent per day in the latest quarter, up 3% from a year earlier....

Trading stocks online can look like a great way to build wealth. But it’s fraught with risks, and only really works when stock prices are rising steadily. Investors who see early success in a bull market can face devastating losses when markets retreat.

Today, you often see references to trading stocks online in the media, as if there’s something magical about entering buy and sell orders over the Internet, or making buy and sell decisions with the help of computer programs or Internet-based services.

You can, of course, cut your brokerage costs by trading stocks online through a discount broker. These brokers’ commissions tend to be lower than what you would pay by trading over the phone. However, if you are trading so much that this slight cut makes a material difference to your long-term returns, then your main problem is excessive trading, not high commissions.

Instead, we recommend that investors spend more time focusing on what they buy and how it fits in their portfolios. As their holding periods grow longer, chances are their profits will improve, as well. The Internet gives investors lots of information on publicly traded companies, including press releases, newspaper articles, company web sites and stock charts.

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Ottawa’s new Tax-Free Savings Accounts (or TFSAs) let you earn investment income — including interest, dividends and capital gains — tax free. A tax-free savings account can generally hold the same investments as an RRSP. This includes cash, mutual funds, publicly traded stocks, GICs and bonds. However, you are best to hold lower-risk investments in your TFSA. That’s because you don’t want to suffer big losses in your TFSA. If you do, you can’t use those losses to offset capital gains. You’ll also lose the main advantage of a TFSA: sheltering gains from tax. You won’t have gains to shelter if the value of your investments falls....

Part-time real estate investing can be very profitable. However, the best returns are mainly a result of three key factors that are easy to overlook when investing in real estate: leverage, sweat equity and higher risk. It’s easier to get financing to buy real estate than stocks, because real estate tends to be less volatile and easier to appraise, and it generally produces more current income. It also rarely drops drastically overnight, as some stocks do from time to time.

Leverage helps at times

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BOMBARDIER INC. (Toronto symbols BBD.A $3.78 and
BBD.B $3.65, Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.4 billion; Price-to-sales ratio: 0.3; SI Rating: Extra Risk) is the world’s third-largest maker of commercial aircraft, after Boeing and Airbus. Bombardier’s aerospace division supplies about half of its revenue and two-thirds of its profits.

The remaining revenue and earnings come from Bombardier’s transportation division, which controls 22% of the global market. This makes Bombardier the world’s largest maker of passenger railcars and commuter trains. The company sells most of its trains under long-term contracts with large, well-financed customers, such as national railways and municipal transit authorities. This helps offset the cyclical nature of Bombardier’s aircraft business.

Bombardier’s revenue fell from $15.6 billion in 2005 (the company’s fiscal year ends January 31) to $14.8 billion in 2006, but rose to $19.7 billion in 2009 (all amounts except share price and market cap in U.S. dollars). It lost $0.08 a share (or a total of $122 million) in 2005. But thanks to a major restructuring of its railcar business, earnings jumped from $0.11 a share (or $192 million) in 2006 to $0.56 a share (or $1 billion) in 2009.

The recession has hurt demand for new aircraft. In the latest fiscal year, Bombardier delivered 349 planes, down from 361 the previous year. Orders for new planes fell more than 50%, to 367 from 698.

Despite the drop in deliveries, the aerospace division’s revenue rose 2.6% in fiscal 2009, to $10 billion from $9.7 billion the previous year. The gain was the result of higher selling prices for business jets, and increased revenue from repairing and maintaining aircraft. Its gross profit margin (its gross profits as a percentage of its revenue) rose to 9.0% from 5.8%. The division’s $23.5-billion order backlog is equal to 2.4 years of revenue.

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CANADIAN UTILITIES LTD. (Toronto symbols CU $35 (class A non-voting) and CU.X $35 (class B voting); Income Portfolio, Utilities sector; Shares outstanding: 125.6 million; Market cap: $4.4 billion; Price-to-sales ratio: 1.6; SI Rating: Above Average) distributes electricity and natural gas in Alberta. It also operates power plants in other parts of Canada, the U.K. and Australia. ATCO Ltd. (Toronto symbols ACO.X and ACO.Y) owns 52.3% of Canadian Utilities. The company is evaluating a proposal to merge its Frontec division with ATCO’s Structures business. Both perform similar functions, including building temporary structures, airfields and communications systems for clients in the resource and construction industries. Canadian Utilities did not say how much this move would save it, but it plans to make a decision by the end of the second quarter. Meanwhile, Canadian Utilities earned $145.4 million, or $1.16 a share, in the three months ended March 31, 2009. That’s 3.3% less than the $150.3 million, or $1.20 a share, it earned a year earlier. If you disregard unusual items, including an insurance benefit stemming from an unplanned outage at its U.K. power plant in the year-earlier quarter, its earnings per share fell 1.7%. This plant is now operating normally, and that helped increase the company’s revenue by 3.8%, to $768.6 million from $740.6 million....

EMERA INC. $20 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 112.3 million; Market cap: $2.2 billion; Price-to-sales ratio: 1.7; SI Rating: Average) generates and distributes electricity to roughly 600,000 customers in Nova Scotia and Bangor, Maine. Over the past few years, Emera has steadily expanded into new areas in order to cut its reliance on Nova Scotia, which still accounts for 85% of its revenue. It owns 12.9% of the Maritimes & Northeast natural-gas pipeline and 50% of a hydroelectric facility in Massachusetts. Emera has also expanded into the Caribbean region. In January 2007, it paid $22 million for 19% of the main power utility in St. Lucia. Last September, it bought 25% of Grand Bahama Power Company for $41 million. In April 2009, Emera formed a partnership with Algonquin Power Income Fund (Toronto symbol APF.UN), which owns or has interests in 41 hydroelectric facilities in Canada and the United States. Emera will pay $27.6 million for a 9.9% stake in Algonquin, with an option to buy an additional 5% of the fund over the next two years....

TRANSALTA CORP. $20 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 197.8 million; Market cap: $4 billion; Price-to-sales ratio: 1.3; SI Rating: Average) operates over 50 electrical-power plants in Canada, the United States and Australia. TransAlta uses coal to generate 60% of its electricity, and owns three coal mines (two in Alberta and one in Washington State). This helps keep its costs down. Natural gas fuels 30% of the company’s electricity production, and hydroelectric and other sources account for 10%. This heavy dependence on coal has made TransAlta a target for environmentalists. To comply with tougher carbon-emission regulations, the company has teamed up with TransCanada Corp. to capture and store carbon emitted from TransAlta’s coal-fired power plants. The project could cost $400 million. The federal government plans to contribute $20 million to $30 million, and the two companies will probably split the rest....

FORTIS INC. $23 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 169.8 million; Market cap: $3.9 billion; Price-to-sales ratio: 0.9; SI Rating: Above Average) generates and distributes electricity in five Canadian provinces. It also owns power plants in the U.S. and Caribbean, as well as hotels and commercial real estate in Atlantic Canada.

Fortis is still benefiting from its July 2007 purchase of Terasen Inc., which distributes natural gas in B.C. In the three months ended March 31, 2009, Fortis’s revenue rose 4.8%, to $1.2 billion from $1.1 billion.

Terasen, driven by higher rates and increased natural gas use during the winter, accounted for 60% of this. Earnings rose 1.1%, to $92 million from $91 million. However, earnings per share fell 5.5%, to $0.52 from $0.55, on more shares outstanding. Gains at Fortis’s Canadian power plants offset a 43% drop at its Caribbean operations, as colder-than-usual weather and the recession hurt tourism. (The Caribbean power plants account for 7% of Fortis’s revenue.) Terasen’s earnings were flat.

Fortis is taking advantage of low real-estate prices to add to its properties division, which generates 4% of its revenue. In April, it paid $7 million for the 214-room Holiday Inn Select hotel in Windsor, Ontario. Despite the recession, this division is maintaining an occupancy rate of 96.0%, down slightly from 96.6% a year earlier.

The company has asked regulators for permission to raise rates at its Canadian operations this year (this includes Terasen). However, continued weakness at Fortis’s Caribbean operations will probably weigh on this year’s earnings. The stock trades at 15.3 times the company’s projected 2009 earnings of $1.50 a share. That’s a higher p/e than other utilities, but reasonable in light of Fortis’s high-quality operations and geographic diversity. The $1.04 dividend yields 4.5%.

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RBC CANADIAN DIVIDEND FUND $37.65 (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) invests in well-established, dividend-paying companies. In fact, it invests solely in common stocks. That’s why, despite the fund’s name, we rate it Conservative rather than Income. The $7.1-billion RBC Canadian Dividend Fund’s top stock holdings are: Royal Bank of Canada, Bank of Nova Scotia, TD Bank, Manulife Financial, Brookfield Asset Management, EnCana, Bank of Montreal, TransCanada Corp. and Power Corp. RBC Canadian Dividend is a Conservative buy.

GUARDIAN MONTHLY HIGH INCOME II FUND $9.16 (CWA Rating: Income) (BMO Guardian Group of Funds, Commerce Court West, Suite 4100, P.O. Box 201, Toronto, Ontario M5L 1E8. 1-800-668-5613; Web site: www.bmoguardianfunds.com. Available from brokers) is a fund we rate as Income. It invests in royalty and income trusts and real estate investment trusts (REITs). With assets of $479.5 million, this fund is large enough to diversify widely. It also focuses on stable REITs and high-quality, long-lived resource trusts. The fund’s top holdings are: Crescent Point Energy Trust, Canadian Oil Sands, RioCan REIT, ARC Energy, Boardwalk REIT, Keyera Facilities Income Fund, BFI Canada, Vermilion Energy Trust, CML Healthcare Income and Enerplus Resources. Guardian Monthly High Income II pays a $0.06 monthly distribution, for an 7.9% yield....

TD CANADIAN SMALL-CAP EQUITY FUND $21.56 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9. 1-800-386-3757; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) is a fund we rate as Aggressive. The fund invests in small to medium-sized companies that its managers feel are undervalued or offer strong growth potential as the economy improves. These firms are mainly located in Canada, but the fund invests in other countries, as well. Its top 10 holdings are: RuggedCom Inc., Eldorado Gold, Red Back Mining, Celtic Exploration, Addax Petroleum Corporation, Industrial Alliance Insurance & Financial Inc., TMX Group Inc., Progress Energy Resources, Cogeco Cable and Aecon Group. TD Canadian Small Cap Equity Fund stands out among small-cap funds because it focuses on well-established companies with strong management and prominent positions in their industries. It also invests in Canadian stocks. The riskiest small-cap funds invest in less-regulated overseas markets....