Search

MTS SYSTEMS CORP. $39 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 17.7 million; Market cap: $690.3 million; WSSF Rating: Average) makes equipment and software that carmakers and other manufacturers use to test the mechanical behavior of materials, machines and structures. That helps them cut costs, and comply with new emission and safety regulations. In its second fiscal quarter ended March 31, 2007, MTS earned $0.56 a share, down 3.5% from $0.50 a year earlier. Revenue fell 1.1%, to $101.8 million from $102.9 million. Favorable foreign currency rates added $3.4 million to its latest quarterly sales. MTS is doing a good job expanding its overseas operations, which now account for two-thirds of its revenue. That cuts its exposure to the struggling North American automotive industry....

BRIGGS & STRATTON CORP. $29 (New York symbol BGG; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 49.4 million; Market cap: $1.4 billion; WSSF Rating: Above average) is the world’s largest maker of engines for lawnmowers. This business accounts for about two-thirds of its sales and profits. The remainder comes from other home and garden products, including pressure washers and snow blowers. Demand for labor-saving devices like these should grow as the population ages. Severe storms like those that hit the Midwest last winter should also spur sales of Briggs’ power generators. In its third fiscal quarter ended March 31, 2007, profits fell 87.1%, to $0.15 a share (total $7.8 million) from $1.16 a share ($60.0 million) a year earlier. However, the latest quarterly earnings included a $0.42 a share writedown. Sales fell 10.4%, to $717.1 million from $800.2 million. Large retailers such as Home Depot have cut pre-orders of generators since they built up their inventories last year. Unusually cold spring weather has also forced retailers to delay orders for seasonal goods like lawnmowers....

SNAP-ON INC. $55 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.6 million; Market cap: $3.2 billion; WSSF Rating: Average) makes tools and diagnostic equipment for mechanics. The company distributes its products directly to garages through a fleet of dealer vans. Similar to Tupperware’s model, this method keeps Snap-On’s distribution costs down. Mechanics prefer it since it cuts the time to buy new tools. In November 2006, Snap-On paid $527 million for the Business Solutions division of ProQuest Co. This business helps car dealers electronically access information about auto parts, warranties and service bulletins. It also helps them manage their inventory and billing systems....

GENUINE PARTS CO. $50 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.5 million; Market cap: $8.5 billion; WSSF Rating: Average) makes and distributes automotive replacement parts to over 4,800 independent outlets in North America. The company also owns 1,100 stores that operate under the NAPA banner. It also distributes industrial parts, electrical supplies and office equipment. The company earned $2.76 a share in 2006, up 10.4% from $2.50 a share in 2005. Revenue rose 7.1%, to $10.5 billion from $9.8 billion. Auto parts account for roughly half of Genuine Parts’ sales. Higher gas prices forced car owners to drive less in 2006, which hurt demand for parts....

THE TUPPERWARE BRANDS CORP. $26 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 61.1 million; Market cap: $1.6 billion; WSSF Rating: Above average) makes high-quality products for the home and kitchen, including plastic food and beverage containers and children’s educational toys. The company also makes a wide range of beauty products, including cosmetics, bath oils and fragrances. Major brands include Tupperware, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo and Swissgarde. Unlike most manufacturers of consumer products, Tupperware prefers to sell its products through independent dealers instead of traditional stores. These dealers hold “Tupperware parties” in homes, offices and other locations to demonstrate products and take orders for merchandise. Parties also give dealers an opportunity to recruit new dealers, and make it easier to expand sales in less-developed countries with few retail stores or distribution networks. Tupperware parties may seem old-fashioned, but Tupperware’s revenue grew at a compounded annual rate of 11.5%, from $1.1 billion in 2002 to $1.7 billion in 2006. Profits before unusual items fell from $1.30 a share (total $76.2 million) in 2002 to $0.82 a share ($47.9 million) in 2003, as the company ended a relationship with Target Stores. Profits improved steadily to $1.54 a share ($94.2 million) in 2006....

TAHERA DIAMOND CORP. $0.88 (Toronto symbol TAH; SI Rating: Speculative) (1-877- 777-2004; www.tahera.com; Shares outstanding: 209.8 million; Market cap: $184.6 million) has sold 22.5 million units at $1.00 per unit to raise $22.5 million. Each unit is made up of one Tahera share, and one-half of a share purchase warrant. Each whole warrant is exercisable at $1.00 over the next two years. Tahera completed its Jericho mine in Nunavut last year at a cost of $116 million, but production suffered due to operating difficulties and the early melting of the ice road last winter. The road is holding up this year, however, and the company expects to meet its target of shipping 520 loads of fuel, explosives and other supplies. Tahera is also using its technical support agreement with Teck Cominco, which owns 16% of Tahera, to utilize Teck’s mining expertise and boost output. Tiffany & Co. purchases and markets all of the diamond production from Jericho....

STORNOWAY DIAMOND CORP. $1.03 (Toronto symbol SWY; SI Rating: Start-up) (1-888-338-2200; www.sornowaydiamonds.com; Shares outstanding: 200.2 million; Market cap: $206.2 million) recently completed the acquisition of TSE-listed Ashton Mining for $117 million. In a separate transaction, it also acquired all of the outstanding shares of TSE-listed Contact Diamond for $19 million. The new combined diamond-exploration company holds cash of $37 million. It also holds interests in a number of projects, including a 50% interest in the Renard diamond project in Quebec, the Aviat, Qilalugaq, and Churchill areas of Nunavut, the Buffalo Hills area in Alberta and the Timiskaming area of Ontario and Quebec. TSE-listed Agnico-Eagle holds a 14% interest in the combined company. Stornoway is now undertaking advanced exploration work on the Foxtrot kimberlite at the Renard project in Quebec. This project was the key asset acquired in the Ashton Mining purchase. This advanced work to determine the economic potential of the project includes a 10,000-tonne bulk sample that will go through separation and then diamond recovery at Stornoway’s lab in North Vancouver....

DIAMONDS NORTH RESOURCES $0.93 (Toronto symbol DDN; SI Rating: Start-up) (1-866-802- 2010; www.diamondsnorthresources.com; Shares outstanding: 50.9 million; Market cap: $47.3 million) has interests in 12 projects covering over 10 million exploration acres in Nunavut and the Northwest Territories. Its prospects range from early to advanced-stage exploration. Diamonds North’s leading prospect is its 100%- held Amuruk project in Nunavut. To date, the company has discovered five kimberlites, of which drilling on two has produced microdiamonds and some macrodiamonds. Diamonds North is now conducting bulk samples on the property to test for a higher-percentage of more commercially viable macro-diamonds. The company is also at an advanced stage with its Hepburn project in the Northwest Territories, where it has identified over 200 kimberlite drilling targets. Diamonds North’s other active project is on Banks Island in the Northwest Territories, where airborne surveys have identified a number of anomalies that the company believes are kimberlite pipes. De Beers Canada is active in the area....

SHORE GOLD $5.86 (Toronto symbol SGF; SI Rating: Start-up) (306-664-2202; www.shoregold.com; Shares outstanding: 177.2 million; Market cap: $1.0 billion) owns 100% of the Star diamond project in the Fort a la Corne area of northern Saskatchewan, an area that hosts one of the most extensive kimberlite fields in the world. The Star project contains a diamond-bearing kimberlite, estimated in the 500 million tonne range. Bulk sampling has already returned high carat-grades of diamonds. Kimberlites are cone-shaped pipes, comprised of a mixture of magma (molten rock) and rock that is carried by volcanic activity to the surface of the earth from depths greater than 150 kilometers. Diamonds form at those depths, under a mixture of extreme pressure and high temperatures. Kimberlites may also pick up diamonds along the way — and sometimes in quantities large enough to justify a diamond mine. Shore Gold also holds 60% of the Fort a la Corne Joint Venture. Fort a la Corne (which consists of a number of drill-confirmed kimberlite bodies and macrodiamond findings) does not include Shore Gold’s main Star Diamond project. After acquiring 100% of the project last year, Shore Gold sold a 40% interest to Newmont Mining for $170.4 million. Newmont already holds a 9.9% interest in Shore Gold’s common shares....

SHAWCOR LTD. $29 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 74.0 million; Market cap: $2.1 billion; SI Rating: Average) makes coatings that protect oil and natural gas pipelines from corrosion. The company also inspects and repairs pipelines, and makes drilling equipment. In 2006, income from continuing operations rose 13.6%, to $1.25 a share (total $92.9 million) from $1.10 a share ($82.8 million) a year earlier. If you disregard an unusual tax recovery in 2005, income would have grown 44%. Most of the gain came from new, more profitable pipeline coating contracts and ongoing cost controls. Cash flow per share rose 7.3%, to $1.90 from $1.77. Revenue grew 5.0%, to $1.06 billion from $1.01 billion. The company gets 75% of its revenue from customers outside of Canada, and the higher Canadian dollar cut its 2006 revenue by $41.5 million....

SNC-LAVALIN GROUP INC. $33 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.0 million; Market cap: $5.0 billion; SI Rating: Average) is a leading Canadian engineering and construction company. SNC specializes in large-scale public works projects, such as roads, bridges, transit systems and water treatment systems. It also builds chemical plants and electrical power systems. In the past few years, SNC has expanded into concessions. These are public facilities that it builds and runs on behalf of governments. SNC’s biggest concession project is its 16.77% interest in Highway 407, a toll highway just north of Toronto. Concessions give SNC predictable revenue streams, which cuts its reliance on new projects for growth. In 2006, SNC earned $0.89 a share (total $136.6 million) from continuing operations, up 29.0% from $0.69 a share ($105.6 million) a year earlier. Revenue grew 50.7%, to $5.2 billion from...

GENNUM CORP. $12 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.8 million; Market cap: $429.6 million; SI Rating: Above average) makes chips and other equipment that let broadcasters store, manipulate and transport video signals without losing picture quality. Video products supply about two-thirds of Gennum’s revenue. The company also makes audio products such as hearing aids and telephone headsets, as well as chips for high-speed computer networks. In its first fiscal quarter ended February 28, 2007, Gennum’s profits rose 20%, to $0.12 a share (total $4.3 million) from $0.10 a share ($3.7 million) a year earlier. Most of the gain came from recent cost cuts, since revenue grew just 1.2%, to $34.9 million from $34.5 million....

FINNING INTERNATIONAL INC. $54 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 89.5 million; Market cap: $4.8 billion; SI Rating: Above average) is one of the world’s largest dealers of heavy equipment made by Caterpillar Inc., such as tractors, bulldozers, pavers and trucks. Major customers include the mining, forest products and construction industries. Revenue grew at a compound annual rate of 11.8%, from $3.2 billion in 2002 to $5.0 billion in 2006. Most of that growth is due to higher commodity prices, which have spurred strong demand for heavy equipment from mining and oil exploration firms. Profits from continuing operations were $1.68 a share (total $132.3 million) in 2002 and $1.68 a share ($132.0 million) in 2003, but rose to $2.27 a share ($240.7 million) in 2006. (These per-share figures do not reflect a 2-for-1 stock split planned for May 2007.) Cash flow per share rose from $5.99 in 2002 to $6.55 in 2003. It fell to $6.37 in 2004, and to $5.95 in 2005, but grew to $6.71 in 2006....

ISHARES MCSI CANADA INDEX FUND $26 (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. These shares are managed by Barclays Global Investors. There are now 27 different MCSI index funds. This fund has an MER of 0.84%. That’s a lot higher than the 0.17% MER on the S&P/TSE 60 units, also managed by Barclays. It’s also no better than most open-end index funds, which have MERs as low as 0.54%. We think MCSI Canada’s high MER 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. We don’t recommend iShares MCSI Canada Index Fund.

DIAMONDS TRUST SHARES $125 (American Exchange symbol DIA; buy or sell through brokers) hold the 30 stocks that make up the Dow Jones Industrial Average. Expenses are about 0.18% of assets. Currently, the fund’s top 10 holdings are IBM, 3M, Boeing Co., United Technologies, Caterpillar, Altria Group, American International Group, Johnson & Johnson, Procter & Gamble and Exxon Mobil....

S&P DEPOSITORY RECEIPTS $144 (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....

NASDAQ-100 TRUST SHARES $44.16 (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 Computer, Microsoft, Qualcomm, Google, Cisco, Intel, Gilead Sciences, Comcast, Oracle and eBay. Nasdaq-100 Trust Shares are a buy for aggressive investors only.

ISHARES CDN LARGECAP 60 INDEX FUND $76.72 (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 TSE. 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 TSE. 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, 7.1%; Manulife, 6.0%; Bank of Nova Scotia, 5.1%; TD Bank, 4.9%; EnCana Corporation, 4.4%; Suncor Energy, 3.9%; Bank of Montreal, 3.9%; Canadian Natural Resources, 3.3%; CIBC, 3.3%; Sun Life Financial, 2.9%; Barrick Gold, 2.8%; BCE Inc., 2.6%; and Canadian National Railway, 2.5%....

RBC CANADIAN DIVIDEND FUND $48.90 (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 41.4% of its portfolio in Financial services stocks. It has a further 15.9% in Energy stocks. The $8.5 billion RBC Canadian Dividend Fund’s top stock holdings are Royal Bank of Canada, Bank of Nova Scotia, TD Bank, Manulife Financial, CIBC, TransCanada Corporation, Bank of Montreal, Canadian National Railway and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 13.5% annual rate of return. That’s just over the S&P/TSX 60’s gain of 13.4% over the same period. The fund gained 10.6% over the last year, compared to the S&P/TSX 60’s gain of 15.0%. RBC Canadian Dividend’s MER is 1.72%....

BMO DIVIDEND FUND $50.87 (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 58.3% of its portfolio in the Financial services industry. Its largest holding is Energy at 16.1%. BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank of Canada, Enbridge, Toronto-Dominion Bank, Canadian National Railway, TransCanada Corporation, Imperial Oil, Brookfield Asset Management, Thomson Corporation, BCE Inc. and Sun Life Financial. Over the last five years, the $5.7 billion BMO Dividend Fund has posted a 13.2% annual rate of return. That’s just under the S&P/TSX 60’s gain of 13.4%. The fund gained 9.9% over the last year, compared to a gain of 15.0% for the S&P/TSX 60. BMO Dividend’s MER is 1.73%....

MCGRAW-HILL COMPANIES LTD. $63 (New York symbol MHP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 351.3 million; Market cap: $22.1 billion; WSSF Rating: Average) has three main operations: school textbooks (40% of sales in 2006, 21% of profit); financial information under the Standard & Poor’s brand (44%, 76%); and the media division which includes BusinessWeek magazine and four TV stations (16%, 3%). McGraw-Hill’s specialized information products and databases are ideally suited for the Internet, and it is rapidly expanding its online services. Electronic distribution speeds up delivery and cuts costs for postage and paper, while its mainly subscription based services gives it predictable revenue streams. In 2006, McGraw-Hill’s profits before one-time items grew 12.3%, to $2.56 a share (total $939.3 million) from $2.28 a share ($872.3 million) in 2005. The company began expensing stock option costs in 2006, which cut its earnings by $0.23 a share. Revenue grew 5%, to $6.3 billion from $6.0 billion....

DOW JONES & CO. INC. $34 (New York symbol DJ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 83.8 million; Market cap: $2.8 billion; WSSF Rating: Above average) publishes The Wall Street Journal, which is the second most widely read newspaper in the United States. It also publishes Barron’s magazine, and over 20 smaller newspapers. Dow Jones recently redesigned The Wall Street Journal to make it easier to read, and added more general interest features to expand its appeal beyond its traditional readership and advertisers. The company also shrank the width of the paper, which cuts its newsprint and delivery costs by roughly $18 million a year. Other cost cutting initiatives will save it $46 million a year. Thanks to these moves, earnings before restructuring costs and other unusual items rose 13.3% in 2006, to $1.11 a share (total $92.6 million) from $0.98 a share ($81.8 million) in 2005. Revenue grew 6.6%, to $1.78 billion from $1.67 billion....

GANNETT CO. INC. $56 (New York symbol GCI; Conservative Growth Portfolio; Shares outstanding: 234.9 million; Market cap: $13.2 billion; WSSF Rating: Above average) publishes 90 daily newspapers in 38 states, including USA Today, the nation’s most widely read newspaper. Other operations include over 1,000 non-daily community newspapers, and 23 TV stations. Gannett also owns 17 daily papers and over 300 non-dailies in the UK. Gannett’s broad array of newspapers gives its Internet operations an edge over other news sites. In fact, its web sites accounted for about 15% of the U.S. Internet audience in January. The company now plans to expand its online content by taking better advantage of the news gathering capabilities of its newspapers and TV stations. It will also look for acquisitions that enhance its web sites, such as last year’s purchase of a company that specializes in mobile phone search services....

CANADIAN UTILITIES LTD. (Toronto symbols CU $42 (Class A) and CU.X $42 (Class B); Income Portfolio, Utilities sector; Shares outstanding: 125.4 million; Market cap: $5.3 billion; SI Rating: Above average) is a leading supplier of natural gas and electricity in Alberta. It has 970,000 gas customers, and 216,000 electricity customers. It also operates power plants in other parts of Canada, as well as in the UK and Australia. ATCO Ltd. controls about 74% of the company’s class B voting common shares. In the past few years, Canadian Utilities has sold many of its unregulated operations. That hurts its growth prospects, but also limits its overall risk. It now gets about half of its revenue and income from regulated operations....

EMERA INC. $20 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 110.9 million; Market cap: $2.2 billion; SI Rating: Average) is the main supplier of electrical power in Nova Scotia, with 470,000 customers. It also provides power to 115,000 customers in Bangor, Maine. Right now, the company gets over 80% of its income from its main Nova Scotia Power subsidiary. Through acquisitions and investments, Emera eventually aims to cut this to 65%. For example, the company plans to invest $350 million in a new pipeline that will transport natural gas from a planned liquefied natural gas terminal in Saint John, New Brunswick to markets in Canada and the Northeastern United States. Emera also recently paid $22 million U.S. for a 19% stake in the main electrical utility on the Caribbean island of St. Lucia....