Search

SHAWCOR LTD. $25 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) makes sealants that protect oil and natural gas pipelines from rust and other forms of corrosion. The company also inspects and repairs pipelines, and makes specialty cables and wires. In the three months ended September 30, 2006, ShawCor’s earnings from continuing operations fell 52.2%, to $0.22 a share (total $16.6 million) from $0.46 a share ($34.7 million) a year earlier. However, the drop was entirely due to one-time items. The latest quarter included a $5.4 million charge related to ShawCor’s decision to scale down its operations in Nigeria due to political instability. The year-earlier earnings included an unusual $18.4 million tax gain. Revenue grew just 2.6%, to $245.3 million from $239.2 million, due to the timing of several major contracts. The recent rise in oil prices has spurred strong demand for ShawCor’s products and services, and the start-up of new contracts should increase its fourth quarter revenues....

AGRIUM INC. $36 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; SI Rating: Average) is a leading producer of nitrogen, phosphate and potash fertilizers and crop protection products. It has 12 major production facilities in Canada and the United States, and one in Argentina that it operates through a joint venture. Sales to farmers and other agricultural customers account for the bulk of Agrium’s sales. The company also sells its products to industrial companies. For example, forest companies use Agrium’s chemicals in the production of wood resins. Agrium’s revenue grew from $2.1 billion in 2001 to $3.3 billion in 2005, or 12.0% compounded annually (all amounts except share price in U.S. dollars). It lost $0.06 a share (total $7.0 million) in 2001, but earnings rose to $2.11 a share ($283.0 million) in 2005. Cash flow per share rose from $1.07 in 2001 to $3.27 in 2005....

ANHEUSER - BUSCH COMPANIES INC. $47 (New York symbol BUD; Conservative Growth Portfolio, Consumer sector; WSSF Rating: Above average) is the world’s largest brewer. Leading brands include Budweiser, Michelob and Busch. Beer supplies 80% of its revenue. The other 20% comes from theme parks and aluminum can recycling. In the third quarter of 2006, earnings rose 26.2%, to $0.82 a share from $0.65 a year earlier. However, if you disregard the costs of a lawsuit settlement in the year-earlier quarter, profits grew 7.9%. Sales rose 4.9%, to $4.3 billion from $4.1 billion. The company has roughly half of the beer market in the United States. Due to slowing domestic beer sales, the company has expanded its international operations in the past few years. It owns half of Mexico’s largest brewer (Modelo) and 27% of China’s main brewer (Tsingtao). A new deal to distribute Budweiser in Paraguay, where beer sales are rising 10% a year, should also expand international sales....

MOLSON COORS BREWING CO. $70 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) took its present form in February 2005 through the merger of Adolph Coors Co. and Molson Inc., a Canadian brewer. It is now the world’s fifth-largest brewer by volume. Major brands include Molson Canadian, Coors Light and Carling. The two companies merged because they felt they were too small to compete effectively with global brewers that enjoy large economies of scale. The merged company’s main goal was to cut its annual costs by $175 million in the first three years. Molson Coors now feels it can save a further $75 million by the end of 2008. That would give it $250 million in annual savings. Thanks to these savings, Molson Coors earned $1.56 a share (total $135.8 million) in the third quarter ended September 24, 2006, up 23.8% from $1.26 a share ($108.2 million) a year earlier. These figures included special charges of $28.5 million in the most recent quarter, and $33.5 million in the year-earlier quarter. Sales grew 3.3%, to $1.58 billion from $1.53 billion....

HONDA MOTOR CO. LTD. ADRs $35 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Above average) is the world’s seventh-largest carmaker. It also makes motorcycles as well as home and garden equipment like lawnmowers and snowblowers. Japan accounts for about a third of its sales. In its second fiscal quarter ended September 30, 2006, Honda’s earnings fell 9.2%, to $0.59 per ADR (total $1.09 billion) from $0.65 per ADR ($1.2 billion) a year earlier. (Each ADR represents one common share.)...

TOYOTA MOTOR CORP. ADRs $120 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector, WSSF Rating: Above average) is Japan’s largest carmaker. The company is gaining market share, and will likely overtake General Motors as the world’s largest carmaker in terms of vehicles produced within the next few months. Toyota operates plants in Japan, the United States and 21 other countries. Sales outside of Japan account for two-thirds of its revenue....

MCDONALD’S CORP. $42 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; WSSF Rating: Above average) operates over 30,000 fast-food restaurants in over 120 countries, which sell mainly hamburgers, chicken, french fries and soft drinks. Foreign operations account for two-thirds of its sales and one-third of its profit. The company’s revenue grew steadily, from $14.9 billion in 2001 to $20.5 billion in 2005. Profits fell from $1.36 a share (total $1.8 billion) in 2001 to $1.32 a share ($1.7 billion) in 2002, but rose to $1.97 a share ($2.5 billion) in 2005. Much of McDonald’s recent success stems from its plan to improve the quality of its food and service. It replaced its low-priced meals, which sparked a price war with competitors, with better quality food that generates higher profits for the company. It also added healthier foods, like salads and fruits....

LEGACY HOTELS REAL ESTATE TRUST $9.39 (Toronto symbol LGY.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Extra risk) owns 23 luxury hotels in Canada, including the Fairmont Royal York in Toronto and the Fairmont Queen Elizabeth in Montreal. It also owns two U.S. hotels. In the third quarter of 2006, Legacy earned $19.8 million, up 15.1% from $17.2 million a year earlier. However, per-unit profits rose just 5.3%, to $0.20 from $0.19. That’s because the conversion of a Legacy debenture increased the number of units outstanding by 11%. Revenue crept up to $223.0 million from $221.6 million, as higher room rates offset a drop in occupancy. Legacy’s Canadian hotels get about a third of their revenue from U.S. tourists. Proposed new rules that would force U.S. travelers to carry a passport could hurt its revenue. However, a drop in the Canadian dollar would offset the passport requirement. Meanwhile, the trust should generate enough cash to maintain its $0.32 distribution, which yields 3.4%. Legacy may also profit by converting some hotels to condominiums....

RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) owns all or part of 203 large, outdoor suburban malls across Canada. In the three months ended September 30, 2006, RioCan earned $0.21 a unit from continuing operations, down slightly from $0.22 a year earlier, mainly due to higher interest and amortization expenses. However, cash flow per share rose 29.0%, to $0.40 from $0.31, while revenue grew 7.3%, to $160.7 million from $149.8 million. Demand by retailers for space in RioCan’s malls remains strong. In fact, the occupancy rate rose to 97.5% in the most recent quarter — a new record. National chains such as Wal-Mart and Loblaw account for 83% of RioCan’s rental revenue, which cuts RioCan’s risk....

PETRO-CANADA $50 (Toronto symbol PCA; Conservative Growth Portfolio, Resources sector; SI Rating: Average) operates major oil and natural gas projects in Western Canada and Newfoundland. Canada accounts for 75% of its total production. Petro-Canada has expanded its international presence in the past few years, and now gets 25% of its production from the North Sea, Algeria and Libya. Oil accounts for roughly two-thirds of total production, and natural gas accounts for the remaining third. It also operates refineries, and a nationwide chain of over 1,300 retail gas stations. In the third quarter of 2006, earnings before unusual items fell 8.1%, to $1.13 a share (total $564 million) from $1.23 a share ($638 million) a year earlier. The company had to shut down its Terra Nova offshore oil platform near Newfoundland for repairs, and production in the latest quarter fell 6%. (Petro-Canada owns 34% of Terra Nova and operates it.) However, higher oil prices raised cash flow per share 12.4%, to $2.17 from $1.93. Revenue grew 10.6%, to $5.2 billion from $4.7 billion....

ENCANA CORP. $57 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; SI Rating: Average) produces oil and natural gas, mostly in the western part of North America. Natural gas accounts for three-quarters of its production. In the past few years, the company has focused on unconventional gas reserves in the Rocky Mountains. These discoveries initially cost more to develop than conventional reserves. But they could last decades longer, particularly as new technology helps EnCana extract more gas. In fact, EnCana estimates that its unbooked reserves are 1.3 times the size of its proved reserves. The company also wants to expand its oil sands production 10-fold over the next decade, and a new partnership with U.S.-based ConocoPhillips should help it reach this goal with much less risk....

IMPERIAL OIL LTD. $42 (Toronto symbol IMO; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is Canada’s largest oil company, with major operations in Alberta and the Northwest Territories. Oil accounts for over 70% of its production, while natural gas supplies the other 30%. Imperial also refines crude oil into gasoline and other petrochemicals, and operates over 2,000 gas stations under the “Esso” banner. ExxonMobil Corp. owns 69.6% of the stock. In the three months ended September 30, 2006, Imperial’s revenue fell 13.6% to $6.65 billion from $7.7 billion a year earlier. Overall oil production grew 12% due to rising output at its oil sands facilities, but conventional oil and natural gas volumes fell. Despite the lower revenue, income rose 31.3%, to $0.84 a share (total $822 million) from $0.64 a share ($652 million). That’s because the company earned higher profits from heavy oil and chemicals than from conventional oil and gas. Cash flow per share rose 60.9%, to $1.11 from $0.69. Imperial is Canada’s largest oil sands operator. It owns 25% of the massive Syncrude joint venture, and runs it. It also owns its own oil sands project at Cold Lake, Alberta. These operations accounted for 71% of its third quarter crude oil production....

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $78 and TPX.B $81; Conservative Growth Portfolio, Consumer sector; SI Rating: Average) is a wholly owned subsidiary of Molson Coors Brewing Company (New York symbol TAP), which was formed in February 2005 through the merger of Molson Inc. and Adolph Coors Co. Its exchangeable shares are equivalent to common shares of the parent company. The families of the two founding companies control roughly 79% of the votes. Molson Coors is the world’s fifth-largest brewer by volume. Major brands include Molson Canadian, Coors Light and Carling. It sells its products in four of the world’s top eight beer markets: North America, Europe, Latin America and Asia. The main reason for the merger was economies of scale in an increasingly competitive industry. The new company set a goal to cut its annual costs by $175 million in the first three years (all amounts except share price in U.S. dollars). In 2005, it realized $59 million in savings, which exceeded its $50 million target....

BECKMAN COULTER INC. $59 (New York symbol BEC; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) makes equipment that hospitals and clinics use to detect substances in blood and other bodily fluids. These machines help doctors diagnose patients for cancer, strep and other diseases. Beckman has installed more than 200,000 of its systems in about 130 countries. Overseas customers account for about half of its sales. Beckman’s revenue rose steadily, from $2.0 billion in 2001 to $2.4 billion in 2005. Profits grew from $2.21 a share (total $141.5 million) in 2001 to $3.21 a share ($210.9 million) in 2004....

LIZ CLAIBORNE INC. $42 (New York symbol LIZ; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) designs and markets women’s clothing and accessories under numerous brands, including Liz Claiborne, Mexx and Ellen Tracy. It sells its products through major department stores as well as roughly 660 company-owned specialty stores. It also makes men’s clothing, and licenses its many brands to non-apparel manufacturers. The company’s revenue grew from $3.45 billion in 2001 to $4.85 billion in 2005, partly due to acquisitions. Earnings rose from $1.92 a share (total $201.7 million) in 2001 to $2.94 a share ($317.4 million) in 2005....

LIMITED BRANDS INC. $29 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) operates about 3,600 stores under three main retail chains: Limited Brands (20% of revenue) sells men’s and women’s casual clothing; Victoria’s Secret (50%) sells lingerie; and Bath & Body Works (20%) sells personal care products such as soaps and fragrances. The remaining 10% comes from non-core businesses and other investments. A wide variety of apparel and products helps shield Limited Brands from unpredictable fashion trends and tastes. It large size also gives it clout when dealing with suppliers and mall owners. Limited’s revenue fell from $9.4 billion in 2001 to $8.4 billion in 2002, but rose to $9.7 billion in 2005. Profits grew from $0.87 a share (total $378.0 million) in 2001 to $1.35 a share ($638.0 million) in 2004, but fell to $1.29 a share ($559.7 million) in 2005....

JONES APPAREL GROUP INC. $32 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) designs and markets a wide variety of men’s and women’s clothing and footwear. Major brands include Jones New York, Gloria Vanderbilt and Nine West. Sales through department stores and specialty stores account for about two-thirds of Jones’s total revenue. The remaining third comes from its own retail operations of roughly 1,070 stores. Jones’s revenues rose steadily, from $4.1 billion in 2001 to $5.1 billion in 2005. Profits grew from $2.31 a share (total $236.0 million) in 2001 to $2.84 a share ($385.2 million) in 2002....

MANITOBA TELECOM SERVICES INC. $49 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; SI Rating: Average) is the leading provider of telecom services in Manitoba, with 1.8 million customers. It also provides telecom services to businesses across Canada through its MTS Allstream division. Manitoba Tel acquired Allstream in 2004 as way to cut its reliance on residential customers in a single province. However, the business telecom market is extremely competitive, and Allstream has not been as profitable as the company hoped. Based on the favourable reaction to BCE’s and Telus’s trust conversion plans, it’s more likely that Manitoba Tel will follow the same path. It would probably try to sell or spin off Allstream first, since the division’s uncertain cash flows would limit its appeal as a trust....

TELUS CORP. (Toronto symbols T $62 and T.A $62; Conservative Growth Portfolio, Utilities sector; SI Rating: Above average) is the main provider of telephone service in Alberta, British Columbia and parts of Quebec, with roughly 4.5 million customers. It also operates a national wireless service under the Telus Mobility banner. Back in October 2000, Telus acquired wireless provider Clearnet Communications Inc. This gave Telus an instant national network, and let it avoid having to build its own network from scratch. Demand for wireless services has soared since the acquisition, and now supplies half of Telus’s revenue and two-thirds of its cash flow. Along with the Clearnet business, Telus acquired substantial tax loss carryforwards, which is could use to offset its taxable income. However, the company is now close to using up all of the tax loss carryforwards. Rather than let its tax rate shoot up, the company unveiled plans in September to convert itself into an income trust. The stock shot up on the news....

BCE INC. $33 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; SI Rating: Above average) is Canada’s largest provider of traditional telephone services, with over 12 million customers in Ontario and Quebec. It also provides Internet access (Sympatico), satellite TV (Bell ExpressVu) and wireless services (Bell Mobility). In the past few months, the company has moved to unlock some of its value. It recently sold most of its interest in Bell Globemedia, the private company that owns The Globe and Mail and CTV Television. BCE also plans to sell a minority stake in satellite operator Telesat to the public. In July 2006, BCE merged its rural telephone business with 53.2%-owned subsidiary Aliant Inc. into a new income trust called Bell Aliant Regional Communications Income Fund....

ENCANA CORP. $50 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; SI Rating: Average) gets over 75% of its production from natural gas. The recent gas price drop has cut EnCana’s stock price from a peak of $65 in October 2005. Gas prices may move up again during the winter. EnCana’s deal to merge some of its oil sands assets with ConocoPhillips also cuts its risk. The stock is reasonably priced at 11 times earnings and 5 times cash flow....

AGRIUM INC. $30 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; SI Rating: Average) needs natural gas to make its fertilizers. Thanks partly to falling gas prices, the stock has gained 20% in 2006, and 70% since we made it our Stock of the Year in 2005. Agrium will probably earn $1.39 U.S. a share in 2006, and the stock trades at 19.0 times that figure. But earnings could reach $1.80 U.S. in 2007, which implies a more reasonable p/e of 14.7. Agrium is a buy.

THE STANLEY WORKS $50 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) makes a wide variety of hand and power tools for professionals and consumers. In the past four years, Stanley has shifted its focus away from cyclical consumer products to industrial products and building security systems, which have steadier revenue streams. Consumer products now account for about 30% of its revenue and profit, down from 40% four years earlier. Focusing on industrial products also cuts Stanley’s reliance on big retail chains such as Home Depot....

SNAP-ON INC. $44 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) makes and distributes hand tools to automotive mechanics, mainly through a fleet of franchised vans that visit garages. This business supplies about 45% of its revenue. The company also sells power tools and storage chests (45% of revenue) and provides financing to dealers (10% of revenue). Snap-On’s revenue grew at a compound annual rate of 3.4%, from $2.1 billion in 2001 to $2.4 billion in 2005. The slow economy cut profits from $1.84 a share (total $106.7 million) in 2001 to $1.35 a share ($78.7 million) in 2003. A successful restructuring plan raised earnings to $1.40 a share ($81.7 million) in 2004, and to $1.65 a share ($95.7 million) in 2005....

GENUINE PARTS CO. $43 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) distributes over 320,000 automotive replacement parts through 1,200 company-owned stores and 4,800 independent dealers. It also distributes industrial parts, electronic equipment and office supplies. The automotive business supplies roughly half of its revenue and profit. Demand for replacement parts tends to be less cyclical than car sales, since it’s cheaper to repair an older vehicle than buy a new one. That helped the company’s revenue grow at a compound annual rate of 4.6%, from $8.2 billion in 2001 to $9.8 billion in 2005. Earnings before unusual items rose from $2.08 a share in 2001 (total $361.5 million) to $2.50 a share ($437.4 million) in 2005, or 4.7% compounded annually....