Search

GENERAL MILLS INC. $57 (New York symbol GIS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 336.8 million; Market cap: $19.2 billion; WSSF Rating: Above average) is the second-largest cereal maker in the United States after Kellogg. Top brands include Cheerios, Chex, Total, Kix, and Wheaties. Other products include baking mixes (Betty Crocker), dinner mixes (Hamburger Helper) and yogurt (Yoplait). The company is doing a good job controlling its operating costs, which has helped offset rising grain prices. Hedging contracts and product price increases have also helped shield it from higher input costs. In its second fiscal quarter ended November 25, 2007, General Mills earned $390.5 million, up 1.3% from $385.4 million a year earlier. Per-share earnings rose 5.6%, to $1.14 from $1.08, due to fewer shares outstanding. The latest earnings included a $0.04 a share charge stemming from a recall of frozen pizza. Sales rose 5.7%, to $3.7 billion from $3.5 billion....

KRAFT FOODS INC. $32 (New York symbol KFT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $51.2 billion; WSSF Rating: Above average) is the world’s second-largest food company after Swissbased Nestle. Leading brands include Kraft (cheese), Maxwell House (coffee), Nabisco (biscuits and cookies) and Oscar Meyer (meats). In November 2007, Kraft agreed to merge its Post cereals business with Ralcorp Holdings Inc. (New York symbol RAH). Kraft will receive $2.6 billion in cash and Ralcorp shares. Prior to the closing of the deal in mid-2008, Kraft will hand out the Ralcorp shares to its own stockholders in a way that will let them avoid capital gains taxes. Kraft stockholders will then own 54% of Ralcorp. In 2007, Kraft’s revenue rose 8.1%, to $37.2 billion from $34.4 billion in 2006. These figures include the Post cereal operations. However, earnings before onetime items fell 6.2%, to $1.82 a share (total $2.9 billion) from $1.94 a share ($3.2 billion). Higher raw material costs, particularly milk, offset the gains from its restructuring plan....

J.C. PENNEY CO. INC. $50 (New York symbol JCP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 221.7 million; Market cap: $11.1 billion; WSSF Rating: Average) operates 1,067 department stores throughout the United States and Puerto Rico. About 40% of U.S. households have shopped at a JC Penney store in the past year. Apparel, footwear and jewelry account for about 75% of Penney’s total sales. Home furnishings and services such as services such as hair styling, optical, portrait photography and custom decorating provide the remaining 25%. Sales rose from $17.79 billion in 2004 to $19.90 billion in 2007 (fiscal years end January 31). Sales in 2008 slipped to $19.86 billion. Same-store sales were flat in 2008, compared with a gain of 4.9% in 2007....

LOJACK CORP. $12.51 (Nasdaq symbol LOJN; SI Rating: Speculative) (www.lojack.com; 1-781-326 4700; Shares outstanding: 18.5 million; Market cap: $231.8 million) sells vehicle theft recovery systems. The company has two main products: the LoJack Vehicle Recovery System and the LoJack Early Warning System. LoJack operates in the U.S. and 30 other countries around the world. In Canada, the company operates through its subsidiary, Boomerang Tracking. LoJack’s recovery systems use radio frequency technology to track stolen vehicles. Once a customer realizes a vehicle is stolen, they contact police. Local police cruisers and aircraft equipped with LoJack technology (supplied at no cost by LoJack to law enforcement agencies) are led to the tracking device. In the three months ended December 31, 2007, Lo- Jack’s sales rose 8.2%, to $55.3 million from $51.1 million. Earnings excluding one-time items 2.3%, to $4.5 million or $0.24 a share, from $4.4 million or...

DUNDEEWEALTH INC. $12.63 (Toronto symbol DW; SI Rating: Speculative) (1-800-301-6745; www.dundeewealth.com; Shares outstanding: 144.3 million; Market cap: $1.8 billion) has terminated the special committee set up late last year to study expressions of interest from companies interested in making takeover offers. Dundee Corp. will not sell its interest in DundeeWealth at this time. Dundee Corp. controls 60.8% of DundeeWealth. The Bank of Nova Scotia, Power Financial, Manulife Financial and CI Financial Income Fund were all reportedly considering bids. In September, 2007, Scotiabank purchased an 18% interest in DundeeWealth for $348 million. Scotiabank also has a right of first refusal on any sale of the controlling interest in DundeeWealth. DundeeWealth is still a hold....

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $51 and TPX.B $45; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 145.6 million; Market cap: $7.1 billion; SI Rating: Average) is the world’s fifth-largest brewer. The company is steadily expanding its portfolio of premium brands, mostly through deals with foreign brewers. For example, a new distribution deal with Mexican brewer Modelo expands the availability of the popular Corona brand in Canada. Molson Coors also continues to focus on cost controls. In the first nine months of 2007, it found $109 million in annual savings (all amounts except share price and market cap in U.S. dollars). A new deal to merge its operations in the U.S. and Puerto Rico with those of rival brewer Miller will cut annual costs by a further $500 million....

ANDREW PELLER LTD. $9 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.9 million; Market cap: $134.1 million; SI Rating: Above average) operates wineries in Ontario, Nova Scotia and B.C. The company has built up its premium wine business in the past few years, mainly through acquisitions. That has helped it expand its market share to about 12% of the Canadian wine market . This expansion has also let Peller take advantage of growing overseas demand for Canadian wines, particularly luxury icewines. Exports to the United States and Asia now account for about 40% of Canadian icewine production. Peller is now facing growing competition in this field, including counterfeits from China. The high Canadian dollar also makes wine imports cheaper. As well, a leading Chinese winery plans to build the world’s largest icewine estate. However, it’s unlikely that China’s climate will let it duplicate the high quality of Canada’s icewines....

TRANSALTA CORP. $32 ( Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 201.4 million; Market cap: $6.4 billion; SI Rating: Average) owns 50 unregulated power plants in North America and Australia. In late 2006, the company closed the coal mine that supplied its plant in Centralia, Washington. It successfully replaced this fuel with coal from a mine in Wyoming. Due to increasing output at Centralia, plus higher power rates, TransAlta’s earnings in 2007 rose 13.1%, to $264.3 million from $233.8 million in 2006. These figures exclude non-recurring items. Per-share earnings rose 12.9%, to $1.31 from $1.16, while cash flow per share grew 14.2%, to $3.86 from $3.38. Revenue improved to $2.8 billion from $2.7 billion....

FORTIS INC. $29 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 154.9 million; Market cap: $4.5 billion; SI Rating: Above average) provides electricity and natural gas to over 2 million customers in five Canadian provinces. It also owns power companies in the Caribbean, as well as hotels and commercial real estate in Canada. Much of Fortis’s growth in the past few years has come from acquisitions aimed at reducing its exposure to Atlantic Canada. Its biggest purchase to date was the $3.7 billion acquisition of the natural gas distribution business of Terasen Inc. in May 2007. This business supplies 95% of British Columbia’s natural gas users. Thanks to these new assets, Fortis’s revenue in the three months ended September 30, 2007 jumped to $651.0 million from $341.9 million a year earlier. However, earnings fell 16.8% to $32.3 million from $38.8 million. Terasen Gas makes most of its money in the winter, and reported a loss of $3.7 million in the quarter. Per-share earnings fell 44.4%, to $0.20 from $0.36, on more shares outstanding....

EMERA INC. $21 (Toronto symbol EMA; Income Portfolio, Utilities sector, Shares outstanding: 111.4 million; Market cap: $2.3 billion; SI Rating: Average) is the main supplier of electricity in Nova Scotia. It has 475,000 residential, commercial and industrial customers. Emera also distributes power to 110,000 customers in Bangor, Maine. Emera is now investing heavily in several new growth projects. For example, it plans to spend $350 million building the Brunswick Pipeline, which will move natural gas from a proposed liquefied natural gas (LNG) terminal in Saint John, New Brunswick to markets in the Northeastern United States. Emera has a 25-year deal with the owners of the LNG facility, which cuts the risk of this investment. The company also paid $46 million U.S. for 50% of the new Bear Swamp hydro-electric facility in northern Massachusetts, plus $22 million U.S. for 19% of the main electrical utility on the Caribbean island of St. Lucia....

CANADIAN UTILITIES LTD. (Toronto symbols CU $48 (Class A) and CU.X $47 (Class B); Income Portfolio, Utilities sector; Shares outstanding: 125.4 million; Market cap: $6.0 billion; SI Rating: Above average) is a leading distributor of natural gas and electricity in Alberta. It has over 1 million customers in nearly 300 communities. The company also operates independent power plants in other parts of Canada, the UK and Australia. ATCO Ltd. controls about 74% of the company’s class B voting common shares. Among Canadian Utilities’ overseas investments is a 25.5% stake in the Barking power plant in London, UK. Due to the recent failure of a steam turbine, the plant will operate at 60% of capacity for the next 45 days. The outage will cut Canadian Utilities’ earnings in the fourth quarter of 2007 by $5 million to $10 million....

TRANSCANADA CORP. $39 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 540 million; Market cap: $21.1 billion; 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. TransCanada aims to cut its reliance on its regulated pipeline business with new growth projects. These include the Keystone pipeline, which will transport crude oil from Alberta’s oil sands to the U.S. Midwest. Initial deliveries should begin in late 2009. The company recently agreed to sell half of Keystone to U.S.-based oil giant Conoco- Phillips for an undisclosed sum. TransCanada had earlier granted ConocoPhillips this option as part of a long-term shipping agreement. That will cut the risk of this project, as well as its projected cost of $3 billion....

IGM FINANCIAL INC. $42 (Toronto symbol IGM; Conservative Growth Portfolio; Finance sector; Shares outstanding: 264.4 million; Market cap: $11.1 billion; SI Rating: Above average) is Canada’s largest mutual fund company, with $117.6 billion in assets under management. Power Corp. controls 56% of IGM. 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 wealth management services. Unlike Great- West, IGM has few operations outside of Canada. IGM’s revenue rose from $1.9 billion in 2002 to $2.6 billion in 2006. Revenue probably reached $2.9 billion in 2007. Earnings before unusual items grew from $1.85 a share (total $491.1 million) in 2002 to $2.85 a share ($763.0 million) in 2006. Earnings in 2007 likely grew to $3.17 a share....

GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 892.5 million; Market cap: $28.6 billion; SI Rating: Above average) is Canada’s largest insurance company, with over $400 billion in assets under administration. Power Corp. controls 70% of Great-West’s shares. Great-West sells life insurance and health insurance, directly and through brokers, to groups and individuals under the Great-West, London Life and Canada Life banners. Other services include retirement planning and wealth management. It also provides administrative services to pension fund managers. Great-West’s revenues rose from $16.7 billion in 2002 to $27.3 billion in 2006, mainly due to its 2003 purchase of rival Canada Life. Earnings grew from $1.27 a share (total $931 million) in 2002 to $2.10 a share ($1.9 billion) in 2006. Great-West likely earned $2.45 a share in 2007....

ISHARES MCSI CANADA INDEX FUND $30 (American Exchange symbol EWC; buy or sell through brokers) invests in most of the stocks in the Morgan Stanley Capital International Canada Index. These stocks represent Canada’s largest and most-established public companies, accounting for about 60% of the market capitalization of all publicly traded stocks. This fund has an MER of 0.54%. These shares are managed by Barclays Global Investors. There are now 30 different MCSI index funds. MCSI Canada’s MER is more than triple the 0.17% MER on the S&P/TSE 60 units, also managed by Barclays. We think that defeats the main advantage of index funds. The spread between iShares MCSI Canada’s high MER and that of a low-fee fund may not appear to make a lot of difference in a single year, but there is no point in paying more than you need to....

S&P DEPOSITORY RECEIPTS $135 (American Exchange symbol SPY; buy or sell through brokers) are commonly called ‘Spiders’. The fund holds the stocks in the S&P 500 Index. This index is comprised of 500 major U.S. stocks chosen for market size, liquidity, and industry group representation....

DIAMONDS TRUST SHARES $124 (American Exchange symbol DIA; buy or sell through brokers) hold the 30 stocks that make up the Dow Jones Industrial Average. Currently, the fund’s top 10 holdings are IBM, 3M, Boeing Co., United Technologies, Caterpillar, Altria Group, Coca-Cola Co., Johnson & Johnson, Procter & Gamble and Exxon Mobil....

NASDAQ-100 TRUST SHARES $44.37 (Nasdaq Exchange symbol QQQQ; buy or sell through brokers) or ‘Qubes’, hold the stocks that represent the Nasdaq-100 Index. This index is made up of the 100 largest and most heavily traded stocks on the Nasdaq Exchange. The index reflects firms across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. Expenses are about 0.20% of assets. The top 10 highest-weighted stocks are Apple Inc., Microsoft, Qualcomm, Google, Cisco, Intel, Research in Motion, Gilead Sciences, Oracle and Teva Pharmaceutical Industries. Nasdaq-100 Trust Shares are a buy for aggressive investors only.

ISHARES CDN LARGECAP 60 INDEX FUND $76.65 (Toronto symbol XIU; buy or sell through a broker) (formerly called iUnits S&P/TSX 60 Index Participation Fund) is a good low-fee way to buy the top stocks on the TSX. The units hold a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and most heavily traded stocks on the TSX. Expenses on the units are just 0.17% of assets. Most of the 60 stocks in the index are good quality companies. However, to meet the requirement that all sectors are represented, the index holds a few firms we wouldn’t include, such as Cott Corporation and Celestica. The index’s top holdings are: Royal Bank, 6.6%; Manulife Financial, 5.8%; TD Bank, 4.7%; Bank of Nova Scotia, 4.7%; EnCana Corporation, 4.4%; Suncor Energy, 3.9%; Research in Motion, 3.7%; Canadian Natural Resources, 3.5%; Bank of Montreal, 3.1%; CIBC, 3.3%; BCE Inc., 2.6%; Barrick Gold, 2.8%; Sun Life Financial, 2.9%; and Potash Corporation, 2.6%....

RBC CANADIAN DIVIDEND FUND $44.84 (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) has 38.1% of its portfolio in Financial services stocks. It has a further 14.4% in Energy stocks and 8.5% in Consumer discretionary. The $9.6 billion RBC Canadian Dividend Fund’s top stock holdings are Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank, Manulife Financial, Canadian Imperial Bank of Commerce, TransCanada Corporation, Bank of Montreal, BCE Inc. and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 14.9% annual rate of return. That’s less than the S&P/TSX’s gain of 18.3% over the same period....

BMO DIVIDEND FUND $44.37 (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) currently holds about 49.0% of its portfolio in the Financial services industry. Its next-largest holdings are Energy at 15.1% and Consumer discretionary at 7.5%. BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank of Canada, Power Financial Corporation, Toronto-Dominion Bank, Canadian National Railway, TransCanada Corporation, Imperial Oil, Shaw Communications, Enbridge Inc., Husky Energy and Sun Life Financial. Over the last five years, the $5.8 billion BMO Dividend Fund has posted a 14.6% annual rate of return. That’s under the S&P/TSX’s gain of 18.3%. However, the S&P/TSX index held a high 40% or so of its holdings in Resources shares. That’s been one of the best-performing, although riskiest, sectors. The fund gained 1.8% over the last year, compared to a gain of 9.8% for the S&P/TSX index. BMO Dividend’s MER is 1.71%....

TRIMARK CANADIAN RESOURCES FUND $16.48 (CWA Rating: Aggressive) (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.) includes firms we’d rate as Speculative in its top picks. However, we like Trimark Canadian Resources Fund’s value-seeking, conservative approach to picking stocks in the volatile resource sector. The $527.1 million fund’s top holdings are Labrador Iron Ore Royalty Income Fund, West Fraser Timber Co. Ltd., Kinross Gold Corporation, Marathon Oil Corporation, Plum Creek Timber Co. REIT, Mayr-Meinhof Karton AG, Highpine Oil & Gas, Umicore S.A., Range Resources Corp. and Yamana Gold. Trimark Canadian Resources Fund is broken down by sector as follows: Golds, 21.9%; Oil, gas & combustable fuels, 17.6%; Paper & forest, 9.6%; Diversified metals & minerals, 8.0%; Energy equipment & services, 6.6%; REITs, 5.9%; Steel, 5.4%; Containers & packaging, 3.9%; and Commercial services & supplies, 3.5%....

TD RESOURCE FUND $32.78 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-386-3757; Web ite:www.tdcanadatrust.ca. No load — deal directly with the bank) invests in companies with superior asset bases, proven management and the ability to internally finance growth. The $259.3 million TD Resource Fund’s top stock holdings are mostly of ‘Average’ quality or higher. The fund’s holdings include Suncor Energy, EnCana Corporation, Talisman Energy Inc., Timminco Ltd., Goldcorp, Yamana Gold Inc., Petro- Canada, Nexen, Alcoa, BHP Billiton, Husky Energy, Chevron Corporation, Marathon Oil Corporation, Coeur d’Alene Mines Corporation and FNX Mining Company....

RIOCAN REAL ESTATE INVESTMENT TRUST $20.80 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has ownership interests in a portfolio of 207 retail properties across Canada, including 10 under development. These properties contain over 53 million square feet of leasable area. RioCan is Canada’s largest owner of neighbourhood shopping centres. These are enclosed malls in smaller urban centres. But where the company is showing the strongest growth is as the largest owner of ‘New Format’ malls. These are in the suburbs of larger cities, and are made up largely of ‘Big Box’ stores with lots of parking and room for new building. RioCan’s revenue in the three months ended September 30, 2007 was $172.5 million, up 7.3% from $160.7 million a year earlier. Cash flow was unchanged at $0.36 per unit. Total occupancy is 97.6%, and anchor tenants account for 82.6% of RioCan’s rental revenue. That should let RioCan keep paying monthly distributions of $0.1125 a unit. The units yield 6.5%....

RBC CANADIAN DIVIDEND FUND $44.84 (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) has 38.1% of its portfolio in financial-services stocks. It has a further 14.4% in energy stocks and 8.5% in consumer discretionary. The $9.6-billion RBC Canadian Dividend Fund’s top stock holdings are Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank, Manulife Financial, Canadian Imperial Bank of Commerce, TransCanada Corporation, Bank of Montreal, BCE Inc. and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 14.9% annual rate of return. That’s less than the S&P/TSX’s gain of 18.3% over the same period....