diversification

Abbott Laboratories, $53.89, symbol ABT on New York (Shares outstanding: 1.6 billion; Market cap: $83.6 billion), makes and sells health-care products. Abbott has four segments: i) Pharmaceuticals, which contributes 58% of Abbott’s total sales, makes drugs for treating high cholesterol, rheumatoid arthritis, hypothyroidism, obesity, HIV, epilepsy, migraines, prostate cancer and anemia. ii) Diagnostic Products (11% of sales) includes chemistry systems, screening and diagnostic tests for cancer, therapeutic drug monitoring, fertility, physiological diseases and infectious diseases, such as hepatitis and HIV. It also includes hematology (blood testing) systems....

Cemex (ADR), $10.54, symbol CX on New York, (Shares outstanding: 812.6 million; Market cap: $7.4 billion) is North America’s largest cement maker. It is the world’s third-largest cement maker after Lafarge of France and Switzerland’s Holcim. Mexico-based Cemex makes and sells cement, ready-mix concrete, aggregates (sand and gravel) and clinker (powdered cement). Its market breakdown is the United States (21% of sales), Mexico (18%), Spain (9%), UK (9%), the rest of Europe (19%), South America, Central America and the Caribbean (8%), Africa and the Middle East (4%), Asia (2%) and others (9%). In July 2007, Cemex completed the $15.3 billion acquisition of Australian-based cement maker Rinker Group. (All figures in U.S. dollars.) The U.S. generates about 80% of Rinker’s sales....

IMPERIAL OIL $40.18 (Toronto symbol IMO; Shares outstanding: 869.7 million; Market cap: $34.9 billion; SI Rating: Average) is Canada’s largest integrated oil company. Imperial’s 2,000 retail gas stations under the “Esso” banner provide diversification. ExxonMobil owns 69.6% of Imperial’s stock. Imperial’s production is set to rise in the long term, thanks to its new oil sands projects. This includes the 70%-owned Kearl Lake project. Imperial had hoped Kearl Lake would begin production by 2011. Now, however, it will probably delay work on the project until oil prices improve. The outlook for Imperial’s refining business is strong, partly due to a shortage of competition. Imperial’s refining profits could also keep expanding, since gasoline takes longer to fall than oil....

Our oil and gas trust recommendations hit record highs in 2007 and 2008, mainly in line with soaring oil and gas prices. In mid-2008, oil hit a record peak of $147 U.S. a barrel. Natural gas prices reached as high as $14 U.S. per thousand cubic feet. Oil and gas stocks have fallen since those highs. Oil is currently trading at just $43 U.S. a barrel. Natural gas prices are now at around $5.87 U.S. per thousand cubic feet. We still advise against over-indulging in oil and gas trusts or stocks, and we’d continue to confine investments to well-established companies or trusts that can survive during the inevitable price setbacks....

TRANSCANADA CORP. $36 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 578.0 million; Market cap: $20.8 billion; SI Rating: Above average) operates over 59,000 km of pipelines that transport natural gas, mainly from Alberta to markets in central and eastern Canada. The company also operates gas pipelines in the United States and Mexico. This business supplies 55% of TransCanada’s total revenue. The remaining 45% comes from its electrical power operations. TransCanada owns or holds interests in over 20 power plants in Canada and the United States. TransCanada continues to expand its power business. This includes its investment in the partnership that runs Ontario’s Bruce nuclear power plant. TransCanada owns 31.6% of the Bruce B complex, which consists of four working reactors....

TransCanada Corp. has aggressively expanded its operations over the past few years to reduce its reliance on its regulated gas pipeline business. Regulation gives these businesses steady, predictable cash flows, but limits TransCanada’s overall growth. The company is now working on several new projects. These new operations could spur big gains in its earnings and cash flow for years to come. TRANSCANADA CORP. $36 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 578.0 million; Market cap: $20.8 billion; SI Rating: Above average) operates over 59,000 km of pipelines that transport natural gas, mainly from Alberta to markets in central and eastern Canada. The company also operates gas pipelines in the United States and Mexico. This business supplies 55% of TransCanada’s total revenue....

TEMPLETON EMERGING MARKETS FUND $15.32 (New York symbol EMF; CWA Fund Rating: Speculative) is a closed-end fund that invests in equities from emerging economies. The fund’s manager is Franklin Templeton. Templeton Emerging Market Fund provides broad geographic diversification. Although volatile, it provides access to fast-growing economies such as Brazil, China, India and others. The $445.4 million fund’s regional allocation is Asia (58.2%), Europe (18.7%) and Latin America (23.1%)....

Investing in regions or countries outside of Canada and the United States can entail above-average volatility and risk. But these areas can also offer vast potential growth. We still think that for most investors, the best way to invest in those regions or countries is through mutual funds, rather than individual stocks. And you can cut your costs by buying closed-end funds. Here are four closed-end funds trading on the New York Exchange at discounts to their net asset value. All four are buys....

MANULIFE FINANCIAL $38.32 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife reported 7% lower earnings per share in the three months ended June 30, 2008, to $0.66 from $0.57. The decline came mostly from lower gains on stock and bond investments, plus the effects of a stronger Canadian dollar. However, company’s underlying insurance business grew, and insurance claims were lower. For example, the company’s John Hancock Life subsidiary ranked number one in U.S. individual insurance sales for the third consecutive quarter in the three months ended June 30, 2008. It also gained market share despite flat industry sales over the same period. John Hancock’s sales rose 22% in the quarter from a year earlier....

Everybody knows it’s hard to beat the market over long periods. Fewer investors recognize that it’s easy to do a lot worse than the market. It’s especially easy if you fall for every new investment innovation that comes along. Exchange-traded funds (ETFs) are an investment innovation that has advantages over some alternatives, but can still lead to steep losses. ETFs give you a low-cost way to invest in a narrow market segment. That’s cheaper than investing in a mutual fund with a similar focus. ETFs may cost you 0.5% a year, compared to 2% to 3% or higher on a fund. ETFs are also safer than investing in just one or two stocks from the area you are interested in. ETFs spread your money around over dozens, if not 50 or more, stocks....