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CANADIAN NATIONAL RAILWAY CO. $51 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 494.5 million; Market cap: $25.2 billion; SI Rating: Above average) has agreed to buy a major portion of a 319-km railway near Chicago for $300 million U.S. The company also plans to invest $100 million U.S. to expand capacity on the new line. To put these figures in context, CN earned $485 million (Canadian) or $0.96 a share in the third quarter of 2007. This lightly used line would let CN bypass heavy rail traffic in Chicago. However, the company’s plan to increase volume on these tracks has encountered strong opposition from local municipalities. CN had hoped to complete the purchase in early 2008. But an environmental review could delay the transaction by about 18 months. The stock trades at 15.1 times its projected 2007 earnings of $3.38 a share. Earnings should rise to $3.82 a share in 2008 as CN begins to realize the benefits from its new terminal in Prince Rupert, B.C. That gives it a p/e of just 13.4. The $0.84 dividend yields 1.6%....

ENCANA CORP. $69 (Toronto symbol ECA; Conservative Growth Portfolio, Resource sector; Shares outstanding: 749.5 million; Market cap: $51.7 billion; SI Rating: Average) is one of North America’s leading producers of natural gas (80% of production) and oil (20%). EnCana prefers to focus on unconventional properties such as early-stage gas developments and oil sands. These assets cost more to develop, at least initially, but should last much longer than conventional properties. EnCana is enjoying the benefits of its new partnership with U.S.-based ConocoPhillips to develop its oil sands assets. Daily production at its two main oil sands properties rose 33% in the third quarter of 2007. Oil sands accounted for roughly 20% of EnCana’s earnings of $1.27 a share (total $961 million) in the third quarter of 2007 (all amounts except share price and market cap in U.S. dollars). That’s down from $1.31 a share ($1.08 billion) a year earlier, mainly because the year-earlier quarter included a $255 million pre-tax gain on the sale of an asset. Revenue rose 40.0%, to $5.6 billion from $4.0 billion....

PETRO-CANADA $52 (Toronto symbol PCA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 485.2 million; Market cap: $25.2 billion; SI Rating: Average) is Canada’s secondlargest integrated oil company after Imperial Oil. Main production areas include Western Canada, offshore platforms near Newfoundland, the North Sea, Libya and Trinidad and Tobago. The company also operates over 1,300 retail gas stations. Petro-Canada is investing heavily in long-term projects that should pay off for decades. For example, it owns 60% of the Fort Hills oil sands project, whose reserves should last up to 40 years. Production should begin in late 2011. Petro-Canada estimates its share of Fort Hill’s costs at $8.5 billion. To put that in context, the company earned $1.29 a share (total $630 million) before special items in the three months ended September 30, 2007, up 14.2% from $1.13 a share ($564 million) a year earlier. Revenue rose 5.8%, to $5.5 billion from $5.2 billion....

IMPERIAL OIL LTD. $52 (Toronto symbol IMO; Conservative Growth Portfolio, Resources sector; Shares outstanding: 914.2 million; Market cap: $47.5 billion; SI Rating: Average) is Canada’s largest integrated oil company. Imperial also operates 2,000 retail gas stations under the “Esso” banner. ExxonMobil Corp. owns 69.6% of Imperial’s stock. Imperial continues to invest heavily in new oil and gas projects. For example, it recently received regulatory approval to proceed with its Kearl Lake oil sands project, which contains roughly 4.6 billion barrels. That’s equal to 34% of Imperial proved and non-proved reserves of 13.5 billion barrels. Imperial owns 70% of Kearl Lake, while ExxonMobil owns the remaining 30%. Imperial estimates that Kearl Lake will cost $8 billion to develop. However, oil sands projects are extremely complex, and this figure will probably rise. To put that in context, Imperial earned $0.88 a share (total $816 million) in the third quarter of 2007, up 4.8% from $0.84 a share ($822 million) a year earlier. Revenue fell 3.8%, to $6.4 billion from $6.65 billion, due to lower natural gas production and prices....

JAPAN SMALLER CAP FUND $10.89 (New York symbol JOF; CWA Rating: Aggressive) invests mainly in less-widely-followed Japanese over-the-counter stocks. The fund’s top holdings are Jupiter Telecom, Eagle Industry Co., Nichias Corporation, Tokai Rubber, Futuba Industrial, Aeon Delight, Disco Corp., Kansai Urban Banking, Suraga Corp. and Hisamitsu Pharmaceutical. Japan Smaller Cap Fund sells for a 0.4% premium above 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. Japan Smaller Cap is a buy.

JAPAN EQUITY FUND $7.83 (New York symbol JEQ; CWA Rating: Aggressive) invests mostly in large capitalization stocks on the Tokyo Stock Exchange. The Japan Equity Fund’s top holdings include: Toyota Motor, Mitsubishi UFJ Financial Group, Mizuho Financial, Sumitomo Corp., Nomura Holdings, Mitsubishi Corp., Canon, East Japan Railway, Komatsu Ltd., and Nippon Steel. Japan Equity Fund is available for 7% less than the current value of its assets. It’s a buy.

BANK OF NOVA SCOTIA $52.15 (Toronto symbol BNS: SI Rating: Above average) ranks second among Canada’s five big banks, with assets of $408.1 billion. It has over 1,000 branches in Canada. In the three months ended July 31, 2007, Bank of Nova Scotia earned $1.02 billion or $1.03 a share, up 9.5% from $928 million or $0.94 a share a year earlier. Net interest income rose 5.6%, to $1.8 billion from $1.7 billion. Other income (which includes wealth management) rose 18.4%, to $1.4 billion from $1.2 billion. The bank’s shares currently yield 3.5%. The bank expects to write down some of its asset-backed securities in its fiscal fourth quarter ended October 31, and take an after-tax charge of around $135 million. However, a $160 million after-tax gain from the Visa restructuring will offset the writedown....

SCOTIA CANADIAN GROWTH FUND $74.27 (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 $619.8 million Scotia Canadian Growth Fund’s 10 largest holdings are Manulife Financial, Suncor Energy, Royal Bank, TD Bank, Research in Motion, Canadian Natural Resources, Sun Life Financial, CN Railway, Bank of Nova Scotia and EnCana. Scotia Canadian Growth currently holds 41.7% of its portfolio in the Resources sector. Its next-largest holding is Financial services at 29.3%. Over the last 10 years, Scotia Canadian Growth posted a 6.8% annual rate of return. That’s less than the S&P/TSX’s return of 9.8%. The fund gained 19.2% over the past year, compared to a gain of 21.4% for the S&P/TSX. Scotia Canadian Growth’s MER is 2.12%....

BMO EQUITY FUND $33.37 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) generally invests mostly in ‘blue-chip” Canadian companies. These stocks are selected based on the manager’s outlook for the industry they operate in, the earnings record of each company, the strength of management and the potential for growth. BMO Equity Fund’s 10 largest holdings are Manulife Financial, Suncor Energy, Royal Bank of Canada, TD Bank, EnCana Corporation, Canadian Natural Resources, Rogers Communications, Potash Corporation of Saskatchewan, CIBC and Bank of Nova Scotia. The $2.3 billion fund currently holds 41.9% of its portfolio in the Resources sector. Its next-largest holding is Financial services at 28.4%....

CIBC CANADIAN EQUITY FUND $26.81 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.cibc.com. No load — deal directly with the company.) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify companies that trade at reasonable valuations and yet have growth potential. The $642.2 million fund’s top holdings are Petro- Canada, EnCana, Manulife Financial, Teck Cominco, Bank of Nova Scotia, TD Bank, Canadian National Railway, Suncor Energy and Research in Motion. CIBC Canadian Equity holds 36.6% of its portfolio in Financial services stocks and 23.6% in Resource sector stocks....

RBC CANADIAN EQUITY FUND $29.28 (CWA Rating: Conservative) (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 mostly in larger-capitalization stocks, but also looks for opportunities in small and mid-cap stocks. The fund’s 10 largest holdings are TD Bank, Manulife Financial, Bank of Nova Scotia, Royal Bank, EnCana, Canadian Natural Resources, Suncor Energy, Research in Motion, Potash Corp. and Bank of Montreal. The $5.3 billion fund holds 39.3% of its holdings in Resources stocks. It also holds 28.4% in Financial services stocks. Over the last ten years, RBC Canadian Equity posted a 10.3% annual rate of return. That’s about equal to the S&P/TSX’s gain of 9.8%. The fund made 21.4% over the last year, equal to the gain of 21.4% for the S&P/TSX. The fund’s MER is 1.99%....

TD CANADIAN EQUITY FUND $32.56 (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 Royal Bank, Suncor Energy, TD Bank, Rogers Communications, Canadian Natural Resources, Canadian Oil Sands Trust, Research in Motion, Schlumberger, Manulife Financial and Freeport McMoran. The $3.2 billion fund currently holds about 51.7% of its portfolio in Resources shares. It also has a bias towards Financial services stocks, with 18.8% of its holdings in that sector....

GENUINE PARTS CO. $49 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 167.9 million; Market cap: $8.2 billion; WSSF Rating: Average) distributes automotive replacement parts to over 4,800 independent outlets in North America. The company also operates 1,100 stores under the NAPA banner. It also distributes industrial parts, office supplies and electrical equipment. The auto parts business supplies about half of the Genuine Parts’ revenue. However, most of the company’s recent growth has come from its industrial parts division, which accounts for 30% of total sales. In the three months ended September 30, 2007, sales of industrial parts rose 7%, while auto parts sales grew just 3%. Overall sales rose 3.7%, to $2.8 billion from $2.7 billion a year earlier. Earnings rose 7.0%, to $0.76 a share from $0.71 a share....

SNAP-ON INC. $48 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 57.6 million; Market cap: $2.8 billion; WSSF Rating: Average) makes and distributes hand and power tools and computerized diagnostic equipment for automotive mechanics. The company sells its products through a fleet of franchised vans that visit garages. Snap-On continues to make strong progress with its plan to cut costs and expand sales with new products and better customer service. The company is also selling some of its less profitable operations. In the third quarter of 2007, these initiatives cut Snap-On’s expenses by $7 million. That, plus an acquisition in late 2006, helped earnings grow 48.9% to $0.70 a share (total $41.1 million) from $0.47 a share ($27.6 million) a year earlier....

FAIR ISAAC CORP. $38 (New York symbol FIC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 55.4 million; Market cap: $2.1 billion; WSSF Rating: Average) makes software that helps banks and businesses calculate the likelihood that a borrower will pay back a loan. Its FICO credit scoring system is now an industry standard. The company also makes software that help businesses detect fraudulent transactions. In the fiscal year ended September 30, 2007, Fair Isaac’s revenue fell 0.4%, to $822.2 million from $825.4 million. Earnings grew 1.2%, to $104.7 million from $103.5 million in the prior year. However, per-share earnings jumped 14.5%, to $1.82 from $1.59. That’s because the company repurchased $451.1 million of its stock. Fair Isaac spent 8.6% of its revenue on research in fiscal 2007....

AUTODESK INC. $47 (Nasdaq symbol ADSK; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 231.7 million; Market cap: $10.9 billion; WSSF Rating: Average) makes AutoCAD, the world’s leading computer aided design program. AutoCAD helps engineers and architects design machinery and buildings, and supplies 90% of Autodesk’s revenue. The remaining 10% comes from software that filmmakers use to create special effects. Autodesk spends over 20% of its revenue on research. This helps it maintain its dominance in its niche markets. Heavy research spending is also helping Autodesk transform its software, from the traditional 2D models to 3D. That speeds up the design process and improves the quality of the final product or structure. Autodesk is also using acquisitions to strengthen its 3D expertise. In June 2007, it paid $29.1 million for UK-based 3D specialist NavisWorks....

SYMANTEC CORP. $18 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 867.3 million; Market cap: $15.6 billion; WSSF Rating: Average) makes software that helps protect computers from viruses and electronic attacks. Its best known product is the top-selling Norton Anti-Virus program. Symantec continues to cut its reliance on sales to consumers by increasing its corporate operations. Security products and services for businesses also give it steadier revenue streams than consumer software sales. As part of this strategy, Symantec recently acquired Altiris Inc. for $1.05 billion. Altiris’s products let computer administrators easily install and manage software across a wide variety of computers attached to a network....

ADOBE SYSTEMS INC. $42 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 573.8 million; Market cap; $24.1 billion; WSSF Rating: Average) is best known for its Acrobat program, which lets users create electronic documents in the popular PDF format. However, Adobe gets nearly two-thirds of revenue from its Creative Solutions division, which help graphic designers create print publications and web pages. Adobe is starting to realize some of the benefits of its 2005 acquisition of Macromedia Inc., the developer of Flash. This program lets web page creators add animation and other features that make their sites easier to use. Popular sites such as YouTube use Flash to play videos and other content. Cellphones and other wireless devices that connect to the Internet represent a growing market for Flash. Adobe has licensed its mobile Flash technology to major cellphone makers such as Motorola and Samsung....

MICROSOFT CORP. $34 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 9.4 billion; Market cap: $319.6 billion; WSSF Rating: Above average) is the world’s largest maker of computer software. Its flagship products, the Windows operating system and the Office suite of business programs, dominate their markets. Microsoft released its new Windows Vista operating system in early 2007. While initial sales were slow, strong sales of new computers (with pre-loaded copies of Vista) have helped spur demand. A planned upgrade to the Vista operating system should also convince more business users to switch. In its first fiscal quarter ended September 30, 2007, Microsoft’s sales rose 27.8%, to $13.8 billion from $10.8 billion a year earlier. Earnings grew 28.6%, to $0.45 a share (total $4.3 billion) from $0.35 a share ($3.5 billion). The company spends around 13% of its revenue on research....

THE STANLEY WORKS $51 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 82.2 million; Market cap: $4.2 billion; WSSF Rating: Average) makes a wide variety of hand and power tools for consumers and industrial users. In addition to the Stanley brand, the company’s best-known trademarks include Bostitch, Husky, Monarch, and Mac Tools. It sells its products through home improvement chains such as Home Depot and Lowe’s, and independent distributors. In the past few years, Stanley has spent $2 billion on acquisitions to shift its focus from consumer products to industrial products and building security systems, which have steadier revenue streams....

TERANET INCOME FUND $10 (Toronto symbol TF.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 155.0 million; Market cap: $1.6 billion; SI Rating: Speculative) manages Ontario’s electronic land registration system. Customers use its proprietary software, Teraview, to conduct electronic real estate registrations as well as title and writ searches. The Ontario government has granted Teranet an exclusive land registry access contract until March 2017. Teranet has also developed fraud prevention software for use by financial institutions and other mortgage lenders to lower the risks associated with mortgage and real estate transactions. In the three months ended September 30, 2007, Teranet’s revenues rose 11.8%, to $71.2 million from $63.6 million a year earlier, due to a rise in real estate and refinancing activity. Cash flow in the quarter grew 38.0%, to $0.27 a unit (total $41.2 million) from $0.20 a unit ($30.3 million)....

LINAMAR CORP. $21 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 69.8 million; Market cap: $1.5 billion; SI Rating: Speculative) makes precision-machined components, assemblies and systems for the North American and European car and light to heavy truck markets. It focuses on the highly engineered systems of vehicles such as engines, transmissions, brakes, steering and suspensions. Linamar also owns Skyjack, which makes selfpropelled, scissor-type elevating work platforms. Strong demand for industrial equipment like this (about 25% of total sales) has helped Linamar offset slower sales of its auto parts. In the three months ended September 30, 2007, sales rose 10.1%, to $581.6 million from $528.1 million a year earlier. Earnings per share from ongoing operations rose 76.2%, to $0.37 from $0.21. The stock trades at 14.6 times its likely 2007 profit of $1.44 a share. The $0.24 dividend yields 1.1%....

METRO INC. $32 (Toronto symbol MRU.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 115.3 million; Market cap: $3.7 billion; SI Rating: Extra risk) is a major food retailer in Quebec. It operates 385 supermarkets under the Metro, Super C (discount supermarkets) and Marche Richelieu (neighbourhood stores) banners. It also operates 33 Loeb stores in northeastern Ontario. In 2005, Metro expanded further into Ontario with the acquisition of A&P Canada for $1.7 billion. A&P Canada operates 244 food stores throughout Ontario under the A&P, Dominion, Food Basics, The Barn and Ultra Food & Drug banners. In its third fiscal quarter ended July 7, 2007, Metro’s earnings rose 14.7%, to $0.78 a share (total $91.1 million) from $0.68 a share ($78.3 million) a year earlier. These figures exclude one-time items. Sales rose slightly, to $3.341 billion from $3.337 billion. If you disregard the sale of some operations in the year-earlier quarter, sales grew 3.2%....

INDIGO BOOKS & MUSIC INC. $15 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.6 million; Market cap: $369.0 million; SI Rating: Speculative) is the largest book retailer in Canada. It has 88 superstores under the Chapters, Indigo and the World’s Biggest Bookstore banners, and 158 small format stores, under the Coles, Indigo, SmithBooks and The Book Company names. Indigo’s sales in its second fiscal quarter ended September 29, 2007 rose 14.8%, to $209.2 million from $182.3 million a year earlier, due to strong demand for the final book in the Harry Potter series. That helped Indigo earn $0.13 a share in the quarter, compared with a loss of $0.04. The last three months of the year includes Christmas, and it’s the busiest period for the company. Indigo typically loses money in the other three quarters. Indigo plans to open eight new superstores over the next 18 months. Following a successful trial, Indigo also plans to add more toys to its superstores. These toys focus on the “edutainment” market — toys that offer both education and entertainment....

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 a federally regulated trust company. It 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 dipped as low as $34 in August due to concerns over rising mortgage default rates in the United States. However, Home Capital has no exposure to the U.S. mortgage market, and the stock quickly rebounded. Home Capital reports that revenues rose 33.6% in the three months ended September 30, 2007, to $94.3 million from $70.6 million. Total assets increased 27.0%, to $4.7 billion from $3.7 billion. Earnings per share rose 35.4% in the latest quarter, to $0.65 from $0.48. The $0.44 dividend yields 1.1%....