Chevron Corp.
New York symbol CVX, is the second-largest integrated oil company in the United States after ExxonMobil. Production accounts for about 80% of its earnings. The remaining 20% comes from refineries and retail gas stations.
We focus on oil companies with large reserves that generate dependable cash flows. We also prefer stocks that mainly operate in politically stable areas, particularly North America. This approach has paid off, as two of our favourite oil stocks have largely escaped the current turmoil in the Middle East. CHEVRON CORP. $102 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.0 billion; Market cap: $204.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.chevron.com) began exploring for oil in Libya in 2005, after the U.S. dropped its economic sanctions on the country. However, its discoveries were too small to justify further investments. As a result, Chevron let its five-year exploration licenses expire last year....
FEDEX CORP., $98.32, New York symbol FDX, warned that severe winter weather and rising fuel costs are hurting its earnings. In its 2011 third quarter, which ends February 28, 2011, FedEx expects to earn $0.70 to $0.90 a share before unusual items. That’s down from its earlier earnings forecast of $0.95 to $1.15 a share. FedEx earned $0.76 a share in the year-earlier quarter. Even so, the company continues to see rising demand for its package-delivery services as the global economy recovers....
SHAWCOR LTD. $35 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.6 million; Market cap: $2.5 billion; Price-to-sales ratio: 2.4; Dividend yield: 0.9%; TSINetwork Rating: Average; www.shawcor.com) has won a contract from Chevron Corp. (New York symbol CVX) to coat pipelines that will pump oil from Chevron’s Jack/St. Malo offshore oilfield in the Gulf of Mexico. ShawCor will start work on this contract later this year, and complete the job in mid-2012. The deal is worth $40 million U.S. That’s just 4% of ShawCor’s annual revenue of over $1 billion (Canadian). However, it will probably lead to more pipeline-coating contracts from Chevron. ShawCor is a buy.
BECKMAN COULTER INC., $72.08, New York symbol BEC, rose 26.3% on Friday on media reports that the company has put itself up for sale. Beckman is reportedly talking with several possible buyers. However, the company could decide to stay public if it doesn’t attract an adequate offer. We’ll say more about this potential sale as more information becomes available....
THE BOEING CO., $63.09, New York symbol BA, fell 10% this week after an electrical fire forced one of its new 787 Dreamliner passenger jet planes to make an emergency landing. In response, the company has suspended test flights until it can determine the cause of the problem. The Federal Aviation Administration is also investigating this incident. The new plane is already over two years behind schedule due to parts shortages and structural problems where the wings connect to the plane’s body. Recent problems with the parts in the tail section have also delayed production. This latest setback prompted one customer to cancel its order for eight 787s. However, another airline decided to buy these planes....
SPDR DOW JONES INDUSTRIAL AVERAGE ETF $112.30 (New York Exchange symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average. The fund’s top holdings are IBM, Exxon Mobil, Chevron Corp., 3M, Procter & Gamble, McDonald’s Corp., Johnson & Johnson, Caterpillar Inc., United Technologies and Boeing Co. The fund’s expenses are about 0.18% of its assets. SPDR Dow Jones ETF is a buy....
SPDR S&P 500 ETF $119.95 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major U.S. stocks that are chosen based on their market cap, liquidity and industry group. The index’s highest-weighted stocks are Exxon Mobil, Microsoft, Procter & Gamble, Apple, JP Morgan Chase & Co., Johnson & Johnson, IBM, Chevron, General Electric, Coca Cola, Google and AT&T. The fund’s expenses are just 0.10% of its assets....
Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....
TIM HORTONS INC. $37 (New York symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 173.9 million; Market cap: $6.4 billion; Price-to-sales ratio: 2.7; Dividend yield: 1.4%; WSSF Rating: Average) is selling half of its Maidstone Bakeries business to Aryzta AG of Switzerland. (Tim Hortons and Aryzta own the bakery through a joint venture.) Based in Brantford, Ontario, Maidstone supplies donuts and other baked goods to Tim Hortons’stores in Canada and the U.S. Tim Hortons will receive $475 million when the sale closes on October 29, 2010 (all amounts except share price and market cap in Canadian dollars). As part of the deal, Maidstone will continue to supply Tim Hortons until 2016. The company could use the proceeds to pay a special dividend, or buy back a large number of shares. Buybacks boost per-share earnings, and give remaining shareholders a larger stake in the company....
APPLE INC., $263.41, Nasdaq symbol AAPL, rose 3% this week after the company relaxed some of the restrictions it places on software developers who write programs for its iPhone and iPad mobile devices. Relaxing these restrictions will make it easier for programmers to write software for multiple devices. That should expand the number of programs available to iPhone and iPad users, and let Apple collect more fees from software sales. Apple is a buy....