Search

TRIMARK FUND $28.55 (CWA Rating:Conservative) (AIM Funds Management Inc., 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.aimfunds.ca. Buy or sell through brokers) takes a value-seeking investment approach, and this cuts its risk. This fund sticks to the long-time Trimark Investments approach to stock-picking — buying high-quality investments and holding them for the long term. That Trimark Investments strategy eventually gives investors steady returns, with below-average risk. The $4.2 billion Trimark Fund’s top 10 holdings are Nestle SA (Swiss food & beverages), Nokia (Finnish mobile phones), Novartis AG (health care and pharmaceuticals), Reed Elsevier NV (Netherlands publishing & data), Grupo Televisa SA de CV (Mexican television & media), Anglo-Irish Bank Corp. (Irish banking), WPP Group plc (UK marketing & advertising), Adidas AG (German sporting goods & apparel), Willis Group Holdings (UK insurance) and Accor SA (French hotels & business services). Regionally, the fund’s portfolio is now distributed 28.9% in the U.S., 16.3% in the UK, 16.1% in Switzerland, 7.6% in Ireland, 7.0% in Germany, 5.3% in Finland and 3.9% in France. The MER for this fund from Trimark Investments is 1.62%....

SYMANTEC CORP. $14 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 839.1 million; Market cap: $11.7 billion; WSSF Rating: Average) has agreed to buy U.K.-based MessageLabs for $695 million in cash....

AMEREN CORP. $40 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 209.5 million; Market cap: $8.4 billion; WSSF Rating: Average) provides electricity and natural gas to customers in Illinois and Missouri. The floods in the Midwest had little effect on Ameren. However, the company needs to spend about $1 billion in the next two years to upgrade some of its plants. About half of that will go to improving the environmental performance of its coal-fired power plants (coal accounts for 85% of its fuel needs). Ameren will probably recover most of these expenses through higher rates. Meanwhile, in the three months ended March 31, 2008, the company earned $0.64 a share (total $134 million) before one-time costs. That’s 8.6% less than the $0.70 a share ($145 million) it earned in the year-earlier quarter, mainly due to higher fuel costs. Revenue rose 5.0%, to $2.1 billion from $2.0 billion....

ALLIANT ENERGY CORP. $33 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 110.4 million; Market cap: $3.6 billion; WSSF Rating: Average) supplies electricity and natural gas to customers in Wisconsin, Iowa, Minnesota and Illinois. Recent flooding forced the company to suspend operations at two of its generating stations in Cedar Rapids, Iowa. Although insurance will help cover some of its losses, the company estimates the flood will cut its 2008 earnings by $0.20 a share. To put that estimate in perspective, Alliant earned $0.62 a share (total $68.1 million) in the first quarter of 2008, up 10.7% from $0.56 a share ($65.2 million) a year earlier. Revenue grew 8.7%, to $992.0 million from $912.7 million....

VERIGY LTD. $23 (Nasdaq symbol VRGY; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 60.2 million; Market cap: $1.4 billion; WSSF Rating: Extra risk) makes equipment that chipmakers like Intel, Texas Instruments and Nvidia use to test their products. Verigy’s products help its customers cut down on production errors, and improve their profits. The company designs its test systems itself, then hires a contract manufacturer to make its products. Verigy spends about 12% of its revenue of $12.80 a share on research. This spending has helped it develop testing systems for more complex chips, such as the “system-on-a-chip”, which concentrates a wide variety of functions onto a single chip. Use of this design is expanding, since it helps manufacturers cut costs. This design also uses less power and is more reliable than multiple chip configurations....

NVIDIA CORP. $12 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 554.7 million; Market cap: $6.7 billion; WSSF Rating: Average) specializes in 3D graphics chips for computers, video game consoles and other electronic devices. The company focuses on chip design, and outsources most of its production to chipmakers in Asia. Nvidia got as high as $40 in October 2007, but has dropped recently due to fears that a slowing economy will hurt computer sales. Strong price competition from chief rival Advance Micro Devices, which makes graphic chips under the ATI brand, could also hurt Nvidia’s profit margins. The company now feels its revenue in its second fiscal quarter ending July 27, 2008 will fall to between $875 million and $950 million, down from its earlier forecast of $1.1 billion....

TEXAS INSTRUMENTS INC. $25 (New York symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.3 billion; Market cap: $32.5 billion; WSSF Rating: Average) makes chips for a wide variety of electronic devices, including mobile phones, DVD players and digital cameras. Chips accounted for 96% of the company’s revenue in 2007. The remaining 4% came from handheld calculators and other products. The company has more than 50,000 customers, but mobile phone maker Nokia Corp. accounted for 15% of its 2007 revenue. Nokia now plans to cut its reliance on Texas Instruments for most its chips. However, newer phones use chips that compress processing power into a single chip, instead of spreading these functions across several chips. Texas Instruments is a leading maker of these enhanced chips, so Nokia will likely remain a significant customer....

INTEL CORP. $22 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.7 billion; Market cap: $125.4 billion; WSSF Rating: Above average) is the world’s largest maker of computer chips, with roughly 80% of the global market. Intel currently spends about 16% of its revenue of $6.75 a share on research. This spending has led to several highly profitable products in the past few years. A good example is its multi-core processor chips, which let computers perform several tasks simultaneously. The company has also had great success with its Centrino platform for mobile computers. Centrino combines a processor, memory chips and high-speed wireless technology. It also consumes less power than other mobile platforms....

BANK OF AMERICA CORP. $33 (New York symbol BAC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 4.5 billion; Market cap: $148.5 billion; WSSF Rating: Above average), has reported better-than-forecast profits for the second quarter despite rising losses from its mortgage operations. Earnings in the quarter fell 43.8%, to $0.72 a share from $1.28 a year earlier. These figures do not include mortgage lender Countrywide Financial Corp., which Bank of America acquired on July 1, 2008. We feel the purchase will expand Bank of America’s long-term earnings. However, it will probably take it several months to restructure Countrywide. Bank of America is a hold.

THE WESTERN UNION CO. $28 (New York symbol WU; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 740.0 million; Market cap: $20.7 billion; WSSF Rating: Above average) provides money transfer and foreign exchange services. It operates in more than 200 countries through a network of 335,000 agents, such as post offices, banks and retailers. Over 80% of Western Union’s agents are located outside of the United States. The company began operations in 1851, and was one of the original 11 companies included in the Dow Jones average. In recent years, Western Union was a wholly owned subsidiary of First Data Corp. On September 29, 2006, First Data spun off Western Union to its own stockholders as a special dividend. Western Union’s main business is consumer-to-consumer transfers of money, which accounts for roughly 85% of its total revenue. The company charges the sender a fee based on the size of the transfer and the destination. Western Union also makes money on the conversion of funds from one foreign currency to another. In 2007, it processed 167.7 million transactions, up 14% from 2006....

OILEXCO INC. $16.27 (Toronto symbol OIL; SI Rating: Speculative) (403-262-5441; www.oilexco.com; Shares outstanding: 221.5 million; Market cap: $3.6 billion) reported cash flow of $0.64 a share on revenues of $172.4 million in the three months ended March 31, 2008. (All figures except share price and market cap in U.S. dollars). The company’s shares now trade at 6.4 times annualized cash flow based on the latest quarter. Year-earlier figures are not relevant as production only started up in June, 2007 at the company’s 100%- owned Brenda and 70%-owned Nicol oil finds in the UK North Sea. Production averaged 20,714 barrels of oil per day in the latest quarter. Oilexco estimates that production from the three wells in Brenda and one well in Nicol will average 30,000 barrels of oil a day by next year. Combined with expected output from its 100%-owned Shelley field and its 40% Huntington interest, 2009 production could average over 54,000 barrels per day. That should give the company annual cash flow of around $6.30 a share. The stock now trades at just 2.6 times that estimate....

DEVON ENERGY CORP. $101.38 (New York symbol DVN; SI Rating: Speculative) (405-235-3611; www.devonenergy.com; Shares outstanding: 446.2 million; Market cap: $45.2 billion) is one of the largest U.S.-based independent oil and gas explorers and producers. Devon’s properties are located mainly in the United States and Canada. The company has sold its operations in Egypt, and recently completed the sale of most of its assets in West Africa for $2.4 billion. In the three months ended March 31, 2008, Devon’s revenues rose 20.3%, to $3 billion from $2.5 billion. Cash flow rose 79.6%, to $2.4 billion, or $5.48 a share, from $1.4 billion or $3.06 a share. Devon’s shares trade at 4.6 times annualized cash flow based on the latest quarter. Long-term debt of $6.4 billion is equal to 11% of market cap. Devon also holds cash of $1.9 billion or $4.25 a share....

CHESAPEAKE ENERGY $56.67 (New York symbol CHK; SI Rating: Extra risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 573.7 million; Market cap: $32.5 billion) is a major U.S. producer of natural gas and an active driller of oil and gas wells. The company’s primary operating area is the Mid- Continent region of the U.S., which includes Oklahoma, Arkansas, Kansas and the Texas Panhandle. It’s also active in South Texas, the Permian Basin area of West Texas, the Arkansas/Louisiana/Texas border region and the Appalachian Basin. Approximately 92% of Chesapeake’s production is natural gas. Production averaged 2.2 billion cubic feet equivalent per day in the latest quarter, up 31.4% from 1.7 billion a year earlier....

CANADIAN TIRE CORP. $53 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.5 million; Market cap: $4.3 billion; SI Rating: Above average) aims to open its new 1.5 million square foot distribution centre near Montreal in early 2009. This new facility will supply 300 Canadian Tire stores throughout Ontario, Quebec and Atlantic Canada. The $240 million cost of this facility is equal to 59% of the $410.1 million or $5.03 a share that Canadian Tire earned in 2007 before unusual items. But it should lower Canadian Tire’s costs, and help it compete with larger retailers such as Wal-Mart....

TRANSCANADA CORP. $37 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 541.0 million; Market cap: $20.0 billion; SI Rating: Above average) owns 31.6% of Bruce Power LP, the partnership that operates the nuclear power facility on the Bruce Peninsula in Ontario....

BOMBARDIER INC. (Toronto symbols BBD.A $7.52 and BBD.B $7.50; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $12.8 billion; SI Rating: Extra risk) will probably win a contract to build over 200 streetcars for Toronto’s transit system now that rival Siemens AG has withdrawn its bid....

SNC-LAVALIN GROUP INC. $54 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.0 million; Market cap: $8.2 billion; SI Rating: Average) continues to win new infrastructure contracts. It recently received a $300 million contract to build two natural gas compression plants in France. The company will also participate in the construction of a $200 million U.S. hydrogen plant at an oil refinery in California. These are small jobs next to SNC’s annual revenue of about $7 billion, but add to its current backlog of $10.0 billion. SNC now trades at 29.0 times its projected 2008 earnings of $1.86 a share. That’s expensive considering much of its income comes from engineering projects with uneven revenue streams....

PRECISION DRILLING TRUST $25 (Toronto symbol PD.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 125.8 million;Market cap: $3.1 billion; SI Rating: Extra risk) is Canada’s largest contract driller. It pays monthly distributions of $0.13 a unit, for a yield of 6.2%. Precision recently offered to buy American Exchange-listed Grey Wolf Inc., which operates drilling rigs in the U.S. Gulf Coast region. Expanding outside of Canada gives Precision steadier revenue streams, as many of its Canadian customers suspend drilling during the winter. Grey Wolf has rejected the offer, and instead plans to merge with rival Basic Energy Services, Inc. However, if Grey Wolf’s shareholders reject the merger with Basic, Precision may take its offer...

FORDING CANADIAN COAL TRUST $76 (Toronto symbol FDG.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding:148.7 million; Market cap: $11.3 billion; SI Rating: Average) is a major producer of metallurgical coal, a key ingredient in steelmaking. Coal prices have shot up in the past year, due to strong demand from steelmakers in Asia and flooding at coal mines in Australia. That helped push up Fording’s units to a new high of $98 in June 2008....

PENGROWTH ENERGY TRUST $18 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 247.9 million;Market cap: $4.5 billion; SI Rating: Average) owns oil and natural gas properties in Alberta and B.C. Pengrowth prefers to focus on mature, proven properties that provide it with steady cash flows. At current production rates, Pengrowth’s reserves should last 10 years. The trust tends to replenish its reserves with acquisitions instead of exploration. However, it typically pays with new units, which...

One of our recommended Canadian income trusts is BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $28 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Units outstanding: 127 million; Market cap: $3.7 billion; SI Rating: Above average). Bell Aliant is the main provider of telephone services in Atlantic Canada. It also serves rural areas of Ontario and Quebec. BCE Inc. controls about 45% of Bell Aliant. As part of the deal that created the fund in July 2006, Bell Aliant transferred most of its wireless operations to BCE. Without these operations, Bell Aliant has focused on its other growth areas, such as high-speed Internet access. In the first quarter of 2008, a 14.6% rise in high-speed Internet subscribers helped expand Bell Aliant’s overall Internet revenue by 9.8% from a year earlier. Part of that increase was from the recent purchase of the publicly owned telephone system in Kenora, Ontario. Internet services now account for 11% of Bell Aliant’s total revenue....

MANITOBA TELECOM SERVICES INC. $41 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 64.6 million; Market cap: $2.6 billion; SI Rating: Average) is Manitoba’s main provider of regular and wireless phone services, with over 90% of the market. The company also owns Allstream, which provides communication services to businesses across Canada. Allstream accounts for 60% of Manitoba Tel’s revenue, but just 40% of its profit. The company recently dissolved a partnership it formed with the Canada Pension Plan Investment...

TELUS CORP. (Toronto symbols T $42 and T.A $40; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 321.4 million; Market cap: $13.2 billion; SI Rating: Above average) provides telephone service in Alberta, British Columbia and parts of Quebec. It also operates a nationwide wireless network. The wireless division now supplies close to half of Telus’s revenue. Ottawa now aims to increase competition in the wireless industry. In its current auction of wireless frequencies (called ‘spectrum’ in the industry), the federal government has set aside 40% for new companies....

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $56 and TPX.B $54; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 181.5 million; Market cap: $10.0 billion; SI Rating: Average) is the world’s fifth-largest brewer by volume....

HART STORES INC. $2.21 (Toronto symbol HIS; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 13.6 million; Market cap: $30.1 million; SI Rating: Speculative) operates 80 midsized department stores in Eastern Canada. It plans to expand to 100 stores in the next few years. Hart prefers to focus on smaller cities that larger retailers tend to avoid. It also emphasizes convenience and customer service. That helps Hart attract shoppers away from big-box style competitors. Many of the goods Hart sells come from overseas suppliers. While the rising Canadian dollar makes imported goods cheaper, Hart had to cut its selling prices to stay competitive. Consequently, sales in the fiscal year ended February 2, 2008 fell 2.9%, to $161.6 million from $166.4 million in the prior fiscal year. Same-store sales fell 4.2%. Earnings per share fell 16.7%, to $0.25 a share from $0.30. The stock now trades at 7.4 times Hart’s forecast earnings of $0.30 a share. The $0.10 dividend still appears safe, and yields 4.5%....