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TRANSCANADA CORPORATION $39.62 (Toronto symbol TRP; SI Rating: Above average) operates a 59,000-km network of natural gas pipelines in Canada and the United States. This business supplies 70% of its profit. The remaining 30% comes from its electrical power operations. In the three months ended March 31, 2008, the company’s revenues fell 4.5%, to $2.1 billion from $2.2 billion a year earlier, due to the temporary shutdown of a power plant in Quebec. However, earnings excluding one-time items rose 30.4%, to $326 million from $250 million. Per-share earnings rose 22.4%, to $0.60 from $0.49 on more shares outstanding. Most of the higher earnings came from the acquisition of pipelines and natural gas storage facilities in February, 2007. The company trades for 17.8 times the $2.23 a share it’s likely to make this year. The shares currently yield 3.6%....

TD CANADIAN EQUITY FUND $32.66 (CWA Rating: Conservative) (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) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies with strong growth potential. TD Canadian Equity Fund’s 10 largest holdings are EnCana, Canadian Natural Resources, Suncor Energy, Research in Motion, TD Bank, Potash Corp., Bank of Nova Scotia, Freeport McMoran, Canadian Pacific Railway and Sun Life Financial. The $3.3 billion fund currently holds about 54.8% of its portfolio in Resources shares. It also has a bias towards Financial services stocks at 18.1%....

RBC CANADIAN EQUITY FUND $29.08 (CWA Rating: Conservative) (RBC Mutual 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) mainly invests in larger-capitalization stocks, but also looks for opportunities in small- and mid-cap stocks. The fund’s 10 largest holdings are EnCana, Potash Corp., Research in Motion, Manulife, Royal Bank, Suncor Energy, TD Bank, Canadian Natural Resources, Bank of Nova Scotia and Goldcorp. The $5.1-billion fund invests 45.3% of its holdings in resource stocks. It also holds 27.7% in finance. Over the last ten years, RBC Canadian Equity posted an 8.7% annual rate of return. That’s just over the S&P/TSX’s gain of 8.1%. The fund gained 5.9% over the last year, less than the S&P/TSX’s 6.6%. The fund’s MER is 1.99%. RBC Canadian Equity Fund is a buy....

VERIGY LTD. $26 (Nasdaq symbol VRGY; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 60.0 million; Market cap: $1.6 billion; WSSF Rating: Extra risk) designs and makes test systems used in computer-chip production. Verigy was a subsidiary of Agilent Technologies until October 2006. Agilent investors received 0.122435 of a Verigy share for each Agilent share held. The stock is down from its peak of $30.25 in July 2007, as rising inventories of flash memory and other chips have hurt demand for Verigy’s products. However, a recent acquisition gave Verigy access to technology that helps its customers speed up chip production and reduce manufacturing errors. In its second fiscal quarter ended April 30, 2008, earnings fell 36.1%, to $0.23 share from $0.36 a year earlier. Revenue fell 11.5%, to $162 million from $183 million. Weak demand for memory and other chips prompted manufacturers to cut spending on testing systems....

AGILENT TECHNOLOGIES INC. $37 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 360.0 million; Market cap: $13.3 billion; WSSF Rating: Average) was a subsidiary of Hewlett-Packard Co. (see page 51) until June 2000. Hewlett stockholders received 0.3814 of an Agilent share for each Hewlett share held. Agilent’s testing systems help manufacturers improve the quality of electronic products such as cellphones. The stock rose rapidly to $162 a share in March 2000, but fell to $10.50 in 2002. It has stayed between $20 and $40 for the past three years. In its second fiscal quarter ended April 30, 2008, earnings excluding unusual items rose 6.3%, to $187 million from $176 million a year earlier. However, per-share earnings grew 18.6%, to $0.51 from $0.43, due to Agilent’s aggressive share buybacks. Revenue rose 15.4%, to $1.5 billion from $1.3 billion....

TERADATA CORP. $26 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 179.7 million; Market cap: $4.7 billion; WSSF Rating: Average) was a wholly owned subsidiary of NCR Corp. until October 1, 2007. NCR stockholders received one Teradata share for each NCR share held. Teradata helps businesses capture, store and analyze a wide variety of data, such as customer buying habits. That helps its clients make better decisions, and expand profits. The stock got as high as $30 just after it began trading. It then fell to $20 in April 2008 due to fears that the slowing economy would prompt businesses to delay or cut capital spending. In the first quarter of 2008, Teradata’s earnings grew 16.7%, to $0.28 a share from $0.24 a year earlier. The latest figure excludes costs related to the spinoff from NCR. Revenue rose 2.2%, to $375 million from $367 million, largely due to favorable foreign exchange rates. Overseas customers account for about 45% of Teradata’s total revenue....

BROADRIDGE FINANCIAL SOLUTIONS INC. $23 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding; 140.1 million; Market cap: $3.2 billion; WSSF Rating: Extra risk) was a subsidiary of Automatic Data Processing Inc. (ADP) until April 2, 2007. ADP investors received one Broadridge share for each ADP share held. Broadridge offers services to the investment industry in three main areas: investor communications; securities processing; and transaction clearing. Broadridge mails and processes 70% of all proxy votes. The stock fell to $15.25 in April 2008 due to concerns that its clearing services subsidiary, Ridge Clearing & Outsourcing, was taking on too much risk given today’s difficult financial environment. However, Ridge Clearing accepts only high quality, readily marketable securities as collateral....

NORDSTROM INC. $34 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 216.9 million; Market cap: $7.4 billion; WSSF Rating: Average) operates 105 fullservice department stores, as well as 54 smaller stores that sell shoes and clearance merchandise. Nordstrom prefers to focus on affluent shoppers. These customers are less likely to cut spending in the face of rising fuel costs. However, about a third of Nordstrom’s stores are in California, and falling home prices have hurt its overall sales. In Nordstrom’s first fiscal quarter ended May 3, 2008, sales fell 2.6%, to $1.9 billion from $1.95 billion a year earlier. Same-store sales dropped 6.5%. Earnings fell 24.2%, to $119 million from $157 million, due to costly markdown sales. However, pershare earnings declined just 10.0%, to $0.54 from $0.60, on fewer shares outstanding....

J.C. PENNEY CO. INC. $41 (New York symbol JCP, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 220.0 million; Market cap: $9.0 billion; WSSF Rating: Average) operates 1,074 department stores throughout the United States. In response to the recent slowdown in consumer spending, Penney has scaled back its expansion plans. It also aims to cut its inventory levels. That should help it stay profitable, and let it keep paying its $0.80 dividend (2.0% yield). In the three months ended May 3, 2008, earnings fell 48.1%, to $0.54 a share from $1.04 a year earlier. Slow sales forced Penney to cut selling prices to clear unsold seasonal merchandise. Sales fell 5.8%, to $4.1 billion from $4.35 billion. Same-store sales declined 7.4%....

MACY’S INC. $23 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 420.5 million; Market cap: $9.7 billion; WSSF Rating: Average) operates 850 department stores under the Macy’s and Bloomingdale’s banners. Macy’s now aims to cut its annual expenses by $100 million with a new restructuring plan, including consolidating seven of its regional offices into four centers. Due to these restructuring costs, Macy’s lost $0.14 a share (total $59 million) in the three months ended May 3, 2008. It earned $0.11 a share ($52 million) a year earlier. If you exclude all unusual items, earnings per share fell 87.5%, to $0.02 from $0.16. Sales in the quarter fell 3.4%, to $5.7 billion from $5.9 billion. Same-store sales declined 2.6%....

WAL-MART STORES INC. $57 (New York symbol WMT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 4.0 billion; Market cap: $228.0 billion; WSSF Rating: Above average) is the world’s largest retailer, with over 7,200 stores. About 55% of its stores are in the United States. The company has had trouble winning approval to expand in certain urban areas. Consequently, it will probably open just 140 new stores in the U.S. this year compared with 191 in the previous fiscal year. Instead, Wal-Mart will focus on expanding its international operations, particularly in fast-growing markets such as China, India and Brazil. Wal-Mart’s low prices continue to attract customers away from other retailers....

HEWLETT-PACKARD CO. $47 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.5 billion; Market cap: $117.5 billion; WSSF Rating: Above average) is one of the world’s leading makers of computers and electronic devices. Products include printers and digital cameras (27% of 2007 revenue, 41% of profits); personal computers (34%, 18%); business computers (18%, 19%); computer services (16%, 17%); financing, software and other (4%, 4%). Hewlett’s profits grew from $1.16 a share (total $3.6 billion) in 2003 to $2.68 a share ($7.3 billion) in 2007, largely due to a successful restructuring plan following its 2002 acquisition of Compaq Computer. Revenue rose from $73.1 billion in 2003 to $104.3 billion in 2007. Right now, most of Hewlett’s growth comes from sales of cyclical, low-margin computers and printers. It now aims to expand its higher-margin businesses. This includes computer consulting, which helps businesses manage their computing hardware and software needs. These services give Hewlett predictable revenue streams, and generate profit margins two to three times higher than hardware sales....

DUNDEE CORP. $14 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 75.6 million; Market cap: $1.1 billion; SI Rating: Average) is a holding company with subsidiaries in three main areas: wealth management, real estate and resources. Its main asset is its 45% stake (59% voting interest) in DundeeWealth Inc., which offers wealth management services and owns the Dynamic family of mutual funds. Dundee recently reorganized its wealth management operations. It sold Dundee Bank of Canada, a Schedule I Chartered Bank, to Bank of Nova Scotia for $260 million. Scotiabank also purchased $348.3 million of non-voting shares in DundeeWealth, which gave it an 18% economic interest. Thanks mainly to gains from asset sales, Dundee’s earnings from continuing operations in 2007 jumped to $3.49 a share (total $277.6 million) from $1.19 a share ($98.6 million) in 2006. Revenue rose 27.3%, to $1.4 billion from $1.1 billion. The market value of the company’s investment portfolio, excluding its consolidated subsidiaries, was $5.33 per Dundee share at December 31, 2007....

HOME CAPITAL GROUP INC. $41 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.5 million; Market cap: $1.4 billion; SI Rating: Extra risk) is the parent company of Home Trust Company, a federally regulated trust company that specializes in residential first mortgages to small business owners, the self-employed and others who don’t meet the stricter criteria of larger, traditional lenders. The stock fell to $30 in January 2008, mostly due to the ongoing writedowns of U.S. subprime residential mortgages by other lenders. However, Home Capital has no exposure to the U.S. Its conservative lending policies have also helped keep its credit losses down. In the three months ended March 31, 2008, earnings rose 18.0%, to $0.72 a share from $0.61 a year earlier. If you exclude a loss on the sale of an investment, earnings in the latest quarter would have grown 27.9%, to $0.78 a share. Revenue rose 30.7%, to $106.8 million from $81.7 million....

PENGROWTH ENERGY TRUST $20 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 247.9 million; Market cap: $5.0 billion; SI Rating: Average) is one of North America’s largest energy royalty trusts. Pengrowth produces oil and natural gas from properties in Alberta, British Columbia and Saskatchewan. It also owns 8.4% of the Sable Offshore Energy Project, which extracts natural gas from several fields south of Nova Scotia. Natural gas accounts for roughly 60% of Pengrowth’s production, while oil supplies the remaining 40%. Pengrowth focuses mainly on high quality, mature properties that give it plenty of steady cash flows. In the past three years, it has acquired properties that have increased its reserves by 45% and its production by 63%. Based on current production levels, Pengrowth’s reserves should last at least 10 years. Pengrowth uses hedging contracts to lock-in selling prices and stabilize its cash flows. Due to the sharp rise in oil prices in the past few months, Pengrowth had to write down the value of these contracts. Unrealized foreign exchange losses have also weighed on its profits....

PRECISION DRILLING TRUST $28 (Toronto symbol PD.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 125.8 million; Market cap: $3.5 billion; SI Rating: Extra risk) is the largest contract driller in Canada. It operates 231 drilling rigs, 223 well servicing rigs and a rental and production services division. It also operates 14 drilling rigs in the United States, and one rig in Latin America. In the past year, lower natural gas prices and increasing royalty payments have hurt demand for Precision’s rigs and services in its core markets in Western Canada. In the three months ended March 31, 2008, Canadian drilling rig utilization fell to 50.0% from 53.3% a year earlier, and prices fell 11%. However, that’s partly because Precision continues to avoid low-margin contracts. Earnings in the first quarter fell 33.3%, to $0.84 a unit from $1.26. Cash flow per unit declined 66.3%, to $0.28 from $0.83, while revenue fell 16.5%, to $342.7 million from $410.5 million....

FORDING CANADIAN COAL TRUST $71 (Toronto symbol FDG.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 148.7 million; Market cap: $10.6 billion; SI Rating: Average) is one of the world’s leading producers of metallurgical coal, a key ingredient in steelmaking. It came into existence as part of the break-up in October 2001 of the old Canadian Pacific holding company, rather than a new issue from a broker. Fording’s reserves should last 25 years at current production rates. Fording’s main asset is its 60% stake in the Elk Valley Coal Partnership, which operates six coal mines in British Columbia and Alberta. Teck Cominco owns the remaining 40% of Elk Valley, and operates the partnership. Teck also owns 19.95% of Fording’s units, which gives it an effective 52% stake in Elk Valley. In the first quarter of 2008, Fording’s earnings before unusual items fell 45.8%, to $0.26 a unit from $0.48 a year earlier. Cash flow per share fell 28.3%, to $0.38 from $0.53. Sales fell 5.3%, to $332.0 million from $350.5 million. Lower coal prices offset a 22% jump in production. Fording sells its coal in U.S. dollars, so it’s also vulnerable to the rising Canadian dollar....

ENCANA CORP. $91 (Toronto symbol ECA)differs from the typical spinoff in that the two portions are of comparable size. More often, the spinoff company is much smaller than the parent. But the principle is the same. The management is breaking up the company into two or more parts, despite the fact that this works against management’s interests, by reducing the assets to manage. Good managers do this for two reasons. First, they aim to serve shareholders’ interests. Second, the two companies generally experience an increase in stock values and/or a speedup in growth, which generally lead to higher pay for management. Of course managers sometimes negate the value of the spinoff or corporate breakup by taking huge bonuses for themselves, for arranging it. But that’s not happening at EnCana....

RioCan Real Estate Investment Trust $22 (Toronto symbol REI.UN Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 212.0 million; Market cap: $4.7 billion; SI Rating: Average) is Canada’s largest real estate investment trust. It owns 214 retail properties, including 12 under development, comprising an aggregate of almost 55 million square feet. RioCan specializes in “New Format” shopping centres. These are large, outdoor malls made up of “Big Box” stores in the suburbs of larger cities. They feature plenty of room for parking and future expansion. RioCan also operates smaller outdoor shopping centres, as well as enclosed malls in urban areas. The trust’s revenue rose from $474.5 million in 2003 to $719.9 million in 2007. Its earnings fell from $1.03 a unit (total $174.4 million) in 2003 to $0.69 a unit ($134.9 million) in 2005, but rose to $0.83 a unit ($163.8 million) in 2006. In 2007, a non-cash charge of $144 million related to changes in the way Ottawa taxes REITs cut earnings to $0.16 a unit ($32.4 million). If you exclude this adjustment, RioCan would have earned$0.85 a unit in 2007. Cash flow per unit grew from $1.26 in 2003 to $1.51 in 2007....

SCOTIA CANADIAN GROWTH FUND $67.62 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9 269; Website: www.scotiabank.com. No load — deal directly with the company.) uses fundamental analysis to identify what the managers see as investments that have the potential for above-average growth. The $579.2 million Scotia Canadian Growth Fund’s largest stock holdings include Manulife, Royal Bank, TD Bank, Research in Motion, Potash Corp., Suncor Energy, Bank of Nova Scotia and EnCana Corp. Scotia Canadian Growth currently holds 33.8% of its portfolio in the Resources sector. Its next-largest holding is Financial services at 28.9%....

JAPAN SMALLER CAP FUND $9.27 (New York symbol JOF; CWA Rating: Aggressive) invests mainly in less-widely-followed Japanese over-the-counter stocks. The fund has recently increased its holdings of service-sector firms, as well as financial services stocks. The fund’s top holdings are Jupiter Telecom, Mirai Industry Co., Nagase & Company, Tokai Rubber, Futuba Industrial, Aeon Delight, Disco Corp., Kansai Urban Banking, Shimamura Co. and Hisamitsu Pharmaceutical. Japan Smaller Cap Fund sells for a 4% discount to the current value of its assets....

JAPAN EQUITY FUND $7.39 (New York symbol JEQ; CWA Rating: Aggressive) invests mostly in large capitalization stocks on the Tokyo Stock Exchange. Lately, the fund has added to its holdings of firms selling to emerging markets, to offset exposure to the slowing U.S. economy. It has also upped its holdings of Japanese financial stocks. These have limited exposure to subprime-related securities. The Japan Equity Fund’s top holdings include: Toyota Motor, Mitsubishi UFJ Financial Group, Mizuho Financial, Sony Corp., Denso Corporation, Mitsubishi Corp., Canon, East Japan Railway, Komatsu Ltd. and Takeda Pharmaceutical Co. Japan Equity Fund is available for 9% less than the current value of its assets. Our long-standing advice is that you only buy closed-end funds trading at close to or below net asset value. It’s a buy.

FIDELITY FOCUS TECHNOLOGY FUND $8.81 (CWA Rating: Aggressive) invests mainly in technology companies. The fund’s investments include computer services, computer software and systems, communications systems, electronics, office equipment, scientific instruments and computer chips. The fund looks for stocks that have strong earnings growth and appear undervalued. Fidelity Focus Technology Fund’s top holdings now include Cisco Systems, Nintendo, Apple Computer, Nokia, Qualcomm, Google, Hewlett-Packard, Intel, Oracle Corporation and Microsoft....

FIDELITY FOCUS FINANCIAL SERVICES FUND $19.30 (CWA Rating: Aggressive) invests mostly in financial services companies in brokerage and investment management, investment banking, life insurance, personal loans, property and casualty insurance, and savings and loans. Fidelity Focus Financial Services Fund now holds a higher percentage of U.S. and UK stocks than in the past. Geographically, its holdings are allocated: the U.S., 41.8%; the UK, 11.6%; Japan, 9.0%; France, 8.4%; Germany, 7.6%; Switzerland, 5.3%; Sweden, 4.1%; Norway, 4.1% Italy, 3.0%; and Brazil, 2.9%. The top holdings of this $59.9 million fund are Bank of New York Mellon, American International Group, Munich Reinsurance, Mitsubishi UFJ Financial Group, Banca Intesa Sanpaolo, AXA, Assicurazioni Generali, Unicredito Italiano, Allianz and Sumitomo Mitsui Financial Group....

FIDELITY FOCUS CONSUMER INDUSTRIES FUND $17.03 (CWA Rating: Aggressive) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) invests mainly in U.S. consumer goods and services companies. Consumer spending is a key part of the U.S. economy, accounting for approximately two-thirds of activity. Fidelity Focus Consumer Industries Fund’s top holdings include Procter & Gamble, Nestle SA, Tesco, CVS Caremark, Toyota Motor, British American Tobacco, PepsiCo, DaimlerChrysler, Japan Tobacco and Imperial Tobacco. The $6.5 million fund is broken down by industry as follows: 12.3% in Food products, 11.5% in Media, 10.4% in Food & staples retailing, 10.2% in Household products and 10% in Beverages....