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STORNOWAY DIAMOND CORP. $0.22 (Toronto symbol SWY; SI Rating: Start-up) (1-888-338-2200; www.sornowaydiamonds.com; Shares outstanding: 227.2 million; Market cap: $50.0 million) holds interests in over 14 diamond exploration properties in Canada and one in Botswana. TSE-listed Agnico-Eagle holds a 17.7% interest in the combined company. Global mining giant Rio Tinto Limited holds an 11.2% interest. Stornoway’s projects include a 50% interest in the Renard diamond project in Quebec, which has the potential to become Quebec’ s first diamond mine. Bulk sampling has produced promising carat-grade recoveries. The project is now in the pre-feasibility stage to define a total resource estimate. Renard is the company’s most advanced project, but close behind is the Aviat project on the Melville Peninsula in the eastern Arctic. This project is a joint venture between Stornoway (90%) and Hunter Exploration (10%). The partners have discovered 12 kimberlites at the Aviat project. Early results have shown high sample grades of diamonds....

CANADIAN NATIONAL RAILWAY CO. $55 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 473.4 million; Market cap: $26.0 billion; SI Rating: Above average) operates a freight rail network across Canada, and in parts of the U.S. In the three months ended June 30, 2008, CN’s earnings fell 11.0%, to $459 million from $516 million a year earlier. Per-share earnings fell just 5.9%, to $0.95 from $1.01, on fewer shares outstanding. The company’s U.S. operations supply about 20% of its revenue, and the high value of the Canadian dollar cut CN’s earnings in the latest quarter by $0.05 a share. Revenue grew 3.5%, to $2.1 billion from $2.0 billion a year earlier. Higher volumes of grain, coal and petrochemicals helped offset lower shipments of lumber and automobiles. CN’s operating ratio weakened to 66.3% from 60.0% a year earlier, due to higher fuel costs. CN’s earnings should grow to $3.49 a share in 2008, and the stock trades at 15.8 times that estimate. The $0.92 dividend yields 1.7%....

CANADIAN PACIFIC RAILWAY LTD. $61 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 155.1 million; Market cap: $9.5 billion; SI Rating: Above average) transports freight over a rail network between Montreal and Vancouver. It also connects to major hubs in the United States. Due to rising fuel costs and lower shipments of automobiles and forest products, CP’s earnings in the second quarter of 2008 fell 13.4%, to $0.97 a share from $1.12 a year earlier. These figures exclude non-recurring items. Revenue was unchanged at $1.2 billion. CP’s operating ratio (regular operating costs divided by revenue — the lower, the better) rose to 79.4% from 74.7%. The company now aims to improve its long-term efficiency by increasing average train speeds, sharing more tracks with other railways and reducing waiting times in terminals....

DUNDEE CORP. $13 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 74.6 million; Market cap: $969.8 million; SI Rating: Average) is a holding company with subsidiaries in three main areas: wealth management, real estate and resources. Its main asset is its 49% stake (63% voting interest) in DundeeWealth Inc., which offers wealth management services and owns the Dynamic family of mutual funds. DundeeWealth manages $63.1 billion worth of assets. DundeeWealth recently completed its purchase of a 60% interest in Toronto-based pension fund manager Aurion Capital Management. It also acquired an 89% interest in BHR Fund Advisors, a Philadelphia-based mutual fund manager and distributor. The two purchases broaden Dundee- Wealth’s investment management capabilities, and diversify its sales distribution network. In the three months ended June 30, 2008, Dundee Corp.'s earnings fell sharply, to $0.08 a share from $0.20 a year earlier. Revenue fell 8.5%, to $286.1 million from $312.6 million....

HOME CAPITAL GROUP INC. $35 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.5 million; Market cap: $1.2 billion; SI Rating: Average) is the parent company of Home Trust Company, a federally regulated trust company. It provides financial services such as chequing accounts, mortgages and credit cards. Home Capital is more risky than Great-West and IGM Financial. That’s because it focuses on customers that usually have trouble meeting the stricter lending requirements of larger banks. But we feel its strong growth prospects help offset this risk. The company now aims to spur its growth by offering traditional mortgages. While that puts it in direct competition with the big banks, Home Capital feels this move will strengthen its position among mortgage brokers....

IGM FINANCIAL INC. $45 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 263.5 million; Market cap: $11.9 billion; SI Rating: Above average) is Canada’s largest independent mutual fund company, with $118.2 billion in assets under administration. Power Corp. controls 55.9% of IGM’s shares. The company has three main divisions. Investors Group sells funds through its own network of over 4,000 financial advisors. Mackenzie Financial sells its funds through independent brokers. IGM also owns 74.5% of IPC Financial, whose 540 advisors provide a range of wealth management services. IGM recently agreed to buy Saxon Financial Inc. for $287 million. Saxon provides wealth management services to individuals and institutions, and had $13.4 billion in assets under management at June 30, 2008. Saxon’s exclusive relationship with the Canadian Medical Association, holders of 30% of Saxon, also adds to its appeal....

GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 894.4 million; Market cap: $28.6 billion; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $392.8 billion. The company also provides retirement planning and wealth management services. Power Corp. controls 70.6% of Great-West’s shares. The company recently sold its U.S. health care business for $1.3 billion. This business faces strong competition from larger insurers, whose size lets them negotiate better terms with medical service suppliers, so selling it made sense. The cash will help Great- West fund last year’s purchase of struggling U.S.-based mutual fund manager Putnam Investment Trust. Putnam increases Great-West’s exposure to volatile stock markets. However, the acquisition gives it an opportunity to market its products to Putnam’s large client base....

TELUS CORP. (Toronto symbols T $40 and T.A $39; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 335.6 million; Market cap $13.4 billion; SI Rating: Above average) provides local and long distance telephone service to 4.3 million customers in Alberta, British Columbia and Eastern Quebec. This business supplies about 29% of Telus’s revenue. The company also operates a national wireless communication network with 5.8 million subscribers. The wireless business accounts for 47% of its revenue. The remaining 24% of Telus’s revenue comes from providing Internet service to individuals and businesses. It has 1.1 million high-speed Internet subscribers....

AIC DIVERSIFIED CANADA FUND $42.87 (CWA Rating: Conservative) mainly holds shares of Canadian companies of average or above-average quality. It also holds stocks of some U.S. firms. The $1.0 billion fund’s 10 largest holdings are Power Financial, Canadian Oil Sands Trust, TD Bank, Shoppers Drug Mart, FedEx, Thomson Reuters Corporation, Brookfield Asset Management, Royal Bank of Canada, Manulife Financial and Johnson & Johnson. AIC Diversified Canada holds just 17 stocks. The fund holds 49.6% of its assets in Financial services stocks. The rest of the portfolio breaks down as follows: Energy, 15.2%; Consumer staples, 10.6%; Consumer discretionary, 8.0%; Health care, 7.4%; Industrials, 3.6%; and Conglomerates, 2.3%....

AIC AMERICAN ADVANTAGE FUND $5.70 (CWA Rating: Aggressive) (AIC Group of Funds, 1375 Kerns Road, Burlington, Ont., L7R 4X8, 1-800-263-2144; Web site: www.aicfunds.com. Buy or sell through brokers) invests mostly in U.S. stocks, with over 99% of assets in the financial services area. The fund’s holdings in this segment break down as follows: Property & casualty insurance companies, 20.9%; Life & health insurance, 15.0%; Multi-line insurance, 14.5%; Investment banking & brokerage, 12.5%; Diversified financials, 9.1%; Diversified banks, 9.0%; Wealth management, 7.7%; and Consumer finance, 7.1%. The $48.9 million AIC American Advantage’s top 10 holdings are AEC Limited, AFLAC, Hartford Financial Services, Prudential Financial, JP Morgan Chase, Wells Fargo, American Express, American International Group, Merrill Lynch & Co. and The Progressive Corporation. This fund holds just 17 stocks....

H&R REAL ESTATE INVESTMENT TRUST $17.88 (Toronto symbol HR.UN; SI Rating: Extra risk) holds interests in 34 office properties, 124 industrial properties and 129 retail properties comprising over 43 million square feet. Over half of H&R’s properties are in the Greater Toronto Area. The rest are elsewhere in Ontario, in Quebec, western Canada and the United States. The company now has an industry-leading portfolio occupancy rate of 99.2%. Revenue in the three months ended June 30, 2008 was $151.3 million, up 6.1% from $142.5 million a year earlier. Cash flow per unit was unchanged at $0.40. H&R’s annual distribution of $1.44 gives the units a yield of 8.1%. H&R REIT is a buy.

CANADIAN REIT $29.30 (Toronto symbol REF.UN; SI Rating: Extra Risk) owns a portfolio of more than 150 income properties consisting of retail, industrial and office properties across Canada and in the Chicago, Illinois area. Occupacy is at 96.7%. CREIT’s revenue in the three months ended June 30, 2008 was $73.1 million, up 10.2% from $66.4 million a year earlier. Cash flow per unit rose 5.7%, to $0.56 from $0.53. The units yield 4.6%. CREIT focuses on acquiring properties in prime locations, usually near major metropolitan centres, that attract strong tenants, maintain high occupancy rates and deliver a reliable stream of rental income....

RIOCAN REAL ESTATE INVESTMENT TRUST $21.51 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has ownership interests in a portfolio of 227 retail properties across Canada, including 15 under development. These properties contain over 59 million square feet of leasable area. Portfolio occupancy stands at 97.0%. RioCan’s revenue in the three months ended June 30, 2008 was $169.9 million, up 7.1% from $158.3 million a year earlier. Cash flow per unit rose 5.3%, to $0.40 from $0.38. RioCan’s annual distribution of $1.35 gives the units a yield of 6.2%. RioCan is still a buy.

IBM $118.34 (New York symbol IBM; SI Rating: Above average) is the world’s biggest supplier of computers and information processing services. The company’s shift over the past few years into higher margin computer services and software is paying off. Revenues rose 12.8% in the three months ended June 30, 2008, to $26.8 billion from $23.8 billion a year earlier. Earnings rose 22.3%, to $2.8 billion from $2.3 billion. Earnings per share rose 28.7%, to $2.02 from $1.57, on fewer shares outstanding from share buybacks. IBM has increased its stock repurchase authorization by $15 billion. The company aims to buy back $12 billion worth of its stock in 2008, or about 8% of its market cap....

FORDING CANADIAN COAL TRUST $92.55 (Toronto symbol FDG.UN; SI Rating: Average) — recently accepted a cash-and- stock offer from Teck Cominco worth about $96 a unit. The deal should close in October, 2008. Note though that unlike most takeovers, Revenue Canada will treat the entire proceeds as ordinary income....

H&R REAL ESTATE INVESTMENT TRUST $17.88 (Toronto symbol HR.UN; SI Rating: Extra Risk) holds interests in 34 office properties, 124 industrial properties and 129 retail properties comprising over 43 million square feet. Over half of H&R’s properties are in the Greater Toronto Area. The rest are elsewhere in Ontario, in Quebec, western Canada and the United States. The company has an industry-leading portfolio occupancy rate of 99.2%. Revenue in the three months ended June 30, 2008, was $151.3 million, up 6.1% from $142.5 million a year earlier. Cash flow per unit was unchanged at $0.40. H&R’s annual distribution of $1.44 gives the units a yield of 8.1%. H&R REIT is a buy....

CINTAS CORP. $31 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 153.7 million; Market cap: $4.8 billion; WSSF Rating: Average) sells and rents uniforms to over 800,000 businesses in the United States and Canada. Uniforms and other business supplies such as entrance mats, mops and hygiene products account for 85% of Cintas’s revenue. The remaining 15% comes from a variety of other business services. These include first aid kits, fire extinguishers and smoke alarms, and document storage and shredding services. Cintas’s stock fell to around $25 in July 2008 due to fears that the recent downturn will prompt businesses to curtail spending on uniforms and other supplies. Rising fuel prices have also increased Cintas’s delivery costs....

FAIR ISAAC CORP. $23 (New York symbol FIC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 48.5 million; Market cap: $1.1 billion; WSSF Rating: Average) makes software that helps banks and businesses calculate the likelihood that a borrower will pay back a loan. Despite new competition, its FICO scoring system is still an industry standard. The subprime mortgage crisis has hurt the banks and other financial institutions that supply roughly half of Fair Isaac’s revenue. These customers may cut back on software spending in the near term. However, over the longer term, the subprime crisis will likely increase demand for Fair Isaac’s reliable credit-scoring software....

BROADRIDGE FINANCIAL SOLUTIONS INC. $20 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 140.3 million; Market cap: $2.8 billion; WSSF Rating: Extra risk) offers services to the investment industry in three main areas: investor communications; securities processing; and transaction clearing. These services help financial services institutions and public companies improve their efficiency and customer service. Despite volatile investment industry conditions, Broadridge continues to expand. It recently paid an undisclosed sum for Investigo Corp., which provides accurate and timely data to wealth management firms. This helps them better manage client portfolios, and comply with various securities regulations. Broadridge’s earnings in the fiscal year ended June 30, 2008 rose 2.4%, to $218.5 million from $213.3 million in the prior year. Earnings per share rose 1.3%, to $1.55 from $1.53, on more shares outstanding. These figures exclude unusual items. Revenue rose 3.3%, to $2.21 billion from $2.14 billion....

JONES APPAREL GROUP INC. $19 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 83.4 million; Market cap: $1.6 billion; WSSF Rating: Average) designs clothing, accessories and footwear under several brands, including Jones New York, Gloria Vanderbilt and Nine West. The company is starting to see some of the benefits of its restructuring plan, which included phasing out some of its unprofitable clothing lines. This has let Jones cut its annual costs by $100 million. The company is also benefiting from a new deal to supply clothing for teens to Wal-Mart. In the second quarter ended July 5, 2008, earnings before one-time items fell 6.6% to $16.9 million from $18.1 million a year earlier. However, per-share earnings grew 17.6%, to $0.20 from $0.17, on fewer shares outstanding. Sales fell 8.2%, to $829.4 million from $903.9 million. Same-store sales at the company’s retail clothing outlets were flat, but grew 5.8% at its footwear stores....

LIZ CLAIBORNE INC. $15 (New York symbol LIZ, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 94.8 million; Market cap: $1.4 billion; WSSF Rating: Average) designs a wide variety of clothing and accessories for men and women. It sells its products mainly through department stores, as well as its own retail stores. The company now plans to sell or discontinue 16 of its roughly 40 brands as part of a major restructuring. Besides lowering costs, this plan will free up more cash to invest in brands with better long-term growth prospects. It also plans to expand its own retail operations, which will cut its reliance on department stores....

LIMITED BRANDS INC. $20 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 340.3 million; Market cap: $6.8 billion; WSSF Rating: Average) operates two main retail chains: Victoria’s Secret (lingerie) and Bath & Body Works (soaps and bath oils). It also operates the La Senza (lingerie) chain, in Canada and 44 other countries. Last year, the company sold 75% of its Express and Limited casual clothing chains, which generated lower profits for it than its other operations. In Limited Brand’s second fiscal quarter ended August 2, 2008, sales fell 11.5%, to $2.3 billion from $2.8 billion, partly due to the Express and Limited transactions in the year-earlier quarter. Same-store sales fell 7%. However, earnings per share before one-time items rose 35.0%, to $0.27 from $0.20 a year earlier. Most of the gain came from a successful cost cutting plan....

MCDONALD’S CORP. $62 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.1 billion; Market cap: $68.2 billion; WSSF Rating: Above average) provides an example: The stock fell over 23%, from around $64 in mid-December 2007 to $49 in January 2008, on fears that high gasoline prices and lower consumer confidence in the wake of the housing market slowdown would limit customer spending. However, we felt the company’s Dollar Menu would continue to attract cost-conscious consumers. Also, McDonald’s operates over 31,000 fast food restaurants in 120 countries. Rising sales in overseas markets would also offset weaker domestic sales, and shield it from a weaker U.S. dollar. As well, new menu items such as premium coffee and healthier foods would continue to spur repeat visits....

H&R BLOCK INC. $25 (New York symbol HRB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 329.2 million; Market cap: $8.2 billion; WSSF Rating: Above average) is best known for its income tax return preparation business. The company provides these services through over 14,500 company- owned and franchised offices in the United States, Canada and Australia. It also sets up temporary offices in major retailers such as Sears and Wal-Mart in the weeks before the April 15 tax deadline. The tax preparation business accounts for about 70% of the company’s total revenue. H&R Block also provides tax, accounting and consulting services to businesses through wholly owned RSM McGladrey Inc., which is the fifth-largest accounting firm in the U.S. Services to businesses account for 20% of H&R Block’s revenue....

TRUE ENERGY TRUST $3.87 (Toronto symbol TUI.UN; SI Rating: Speculative) (403-264-8875; www.tketrust.com; Units outstanding: 79.2 million; Market cap: $306.5 million) produces oil and gas mostly in Alberta and Saskatchewan. About 65% of its production is gas. In the three months ended June 30, 2008, Trilogy’s production fell 30.4%, to 11,922 barrels of oil equivalent per day, from 17,122 barrels. The decline came as the company sold its oil and gas assets in Saskatchewan to focus its operations in Alberta. Cash flow per unit was $0.33, down 29.8% from $0.47. The shares now trade at 2.9 times cash flow. True’s monthly distribution of $0.04 gives it a yield of 12.4%. It flows about 59% of cash flow through to its unitholders. The company used the proceeds of its asset sales to cut its debt to $205.7 million, or 67% of market cap, from 81% at the end of 2007....