dividends paid
CGI GROUP INC. $20 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.9 million; Market cap: $5.2 billion; Price-to-sales ratio: 1.2; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is Canada’s largest provider of computer outsourcing services. It also operates in 15 other countries. Canada and the U.S. each accounted for 47% of its revenue in the latest fiscal year; Europe and Asia supplied the remaining 6%. The company often uses acquisitions to fuel its growth. It cuts the risk of this strategy by focusing on smaller companies that enhance its products or expand its geographic reach.
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Big purchase starting to pay off
NEW GOLD $11.17 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold.com; Shares outstanding: 461.4 million; Market cap: $5.2 billion; No dividends paid) produced a record 387,155 ounces of gold in 2011, up 1.1% from 369,077 ounces in 2010.
The company’s production could rise as high as 445,000 ounces in 2012. That growth will come mostly from its New Afton mine, which should start up in the middle of this year.
Even if the New Gold doesn’t expand its mines or make acquisitions, its production could top one million ounces within six years. Most of that rise will come from the successful development of the Blackwater project, which could hold up to 6.8 million ounces of gold.
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The company’s production could rise as high as 445,000 ounces in 2012. That growth will come mostly from its New Afton mine, which should start up in the middle of this year.
Even if the New Gold doesn’t expand its mines or make acquisitions, its production could top one million ounces within six years. Most of that rise will come from the successful development of the Blackwater project, which could hold up to 6.8 million ounces of gold.
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SYMANTEC CORP. $17.94 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 737.2 million; Market cap: $13.2 billion; No dividends paid) reports that its earnings per share gained 20.0% in the three months ended December 30, 2011, to $0.42 from $0.35. Sales rose 6.9%, to $1.72 billion from $1.6 billion.
Demand for security software will likely remain steady due to rising concerns about identity theft and online intruders. However, a shortage of hard drives due to flooding in Thailand is dampening computer sales. That would hurt Symantec, because the company gets 85% of its sales to consumers from software that is preinstalled on new computers. Consumers account for about 30% of Symantec’s overall sales.
As well, economic uncertainty will probably weigh on sales in Europe, which supplies around 25% of Symantec’s overall sales.
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Demand for security software will likely remain steady due to rising concerns about identity theft and online intruders. However, a shortage of hard drives due to flooding in Thailand is dampening computer sales. That would hurt Symantec, because the company gets 85% of its sales to consumers from software that is preinstalled on new computers. Consumers account for about 30% of Symantec’s overall sales.
As well, economic uncertainty will probably weigh on sales in Europe, which supplies around 25% of Symantec’s overall sales.
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CHIPOTLE MEXICAN GRILL $375.73 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.3 million; Market cap: $11.8 billion; No dividends paid) reported 23.7% higher sales in the three months ended December 31, 2011, to $596.7 million from $482.5 million a year earlier. Earnings rose 23.2%, to $1.81 a share from $1.47 a share.
The company will open 155 to 165 new restaurants in 2012. That will push up its sales. However, rising food costs will keep putting pressure on its profit margins. It’s uncertain if Chipotle can further raise its prices to offset those increases.
Chipotle trades at nearly 46 times its forecast earnings for this year. That’s a high ratio that leaves the stock vulnerable if it runs into any short-term problems. Still, it’s a well-established chain with a growing following, especially among health-conscious, environmentally aware baby boomers.
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The company will open 155 to 165 new restaurants in 2012. That will push up its sales. However, rising food costs will keep putting pressure on its profit margins. It’s uncertain if Chipotle can further raise its prices to offset those increases.
Chipotle trades at nearly 46 times its forecast earnings for this year. That’s a high ratio that leaves the stock vulnerable if it runs into any short-term problems. Still, it’s a well-established chain with a growing following, especially among health-conscious, environmentally aware baby boomers.
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AMAZON.COM $184.47 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 454.8 million; Market cap: $83.9 billion; No dividends paid) is a major online retailer. Books, music and videos make up about 40% of its sales. Other products, including electronics, computer games and toys, make up the other 60%. Amazon Marketplace lets other companies sell their products through Amazon’s websites.
In the three months ended December 31, 2011, Amazon’s earnings fell 57.5%, to $177 million, or $0.39 a share. A year earlier, it earned $416 million, or $0.93 a share. The decline came despite a 34.6% jump in sales, to $17.4 billion from $12.9 billion.
During the quarter, the company spent $862 million on “technology and content,” up 66.1% from $519 million a year earlier. That was the main reason for the lower earnings. This additional spending included investments in new models of its Kindle electronic book reader, including the Kindle Fire tablet computer.
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In the three months ended December 31, 2011, Amazon’s earnings fell 57.5%, to $177 million, or $0.39 a share. A year earlier, it earned $416 million, or $0.93 a share. The decline came despite a 34.6% jump in sales, to $17.4 billion from $12.9 billion.
During the quarter, the company spent $862 million on “technology and content,” up 66.1% from $519 million a year earlier. That was the main reason for the lower earnings. This additional spending included investments in new models of its Kindle electronic book reader, including the Kindle Fire tablet computer.
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FORTRESS PAPER $36.77 (Toronto symbol FTP; TSINetwork Rating: Extra Risk) (1-888-820-3888; www.fortresspaper.com; Shares outstanding: 14.3 million; Market cap: $525.8 million; No dividends paid) just bought Domtar Corp.’s old pulp mill in Lebel-sur-Quevillon, Quebec. The company plans to convert the mill to produce a type of cellulose called dissolving pulp, which is used to make rayon fabrics.
Fortress is buying the plant for a nominal amount of $1, but it will commit to spending $222 million on the conversion, which should be finished in mid-2013. The Quebec government will grant the company a 10-year, $132.4-million loan to help finance the plant.
Fortress’s outlook is positive, and the new dissolving pulp plant should make a big contribution to its earnings.
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Fortress is buying the plant for a nominal amount of $1, but it will commit to spending $222 million on the conversion, which should be finished in mid-2013. The Quebec government will grant the company a 10-year, $132.4-million loan to help finance the plant.
Fortress’s outlook is positive, and the new dissolving pulp plant should make a big contribution to its earnings.
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ALARMFORCE INDUSTRIES $9.59 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800-267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $117.0 million; No dividends paid) sells two-way voice alarm systems and monitoring services in Canada and the U.S.
AlarmForce’s system differs from others because it lets operators verify an alarm by establishing immediate two-way voice contact with homeowners. It then dispatches security personnel. If intruders are present, the two-way contact can scare them off.
The company has used radio and TV advertising to gain a high profile. It gives its system away to gain new subscribers. Users then sign a three-year contract to pay $25 a month for monitoring service.
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AlarmForce’s system differs from others because it lets operators verify an alarm by establishing immediate two-way voice contact with homeowners. It then dispatches security personnel. If intruders are present, the two-way contact can scare them off.
The company has used radio and TV advertising to gain a high profile. It gives its system away to gain new subscribers. Users then sign a three-year contract to pay $25 a month for monitoring service.
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ADOBE SYSTEMS $32.46 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 493.8 million; Market cap: $16.0 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use its software to create print publications and web pages.
The company also makes Adobe Flash, which lets website developers make their pages more interactive by adding animation and video.
Adobe recently stopped making Flash for smartphones and other mobile devices. Instead, it will focus on developing products that are based on the newer HTML5 Internet standard.
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The company also makes Adobe Flash, which lets website developers make their pages more interactive by adding animation and video.
Adobe recently stopped making Flash for smartphones and other mobile devices. Instead, it will focus on developing products that are based on the newer HTML5 Internet standard.
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Ottawa’s tax on income trust distributions took effect over a year ago, on January 1, 2011. Most trusts have already converted to corporations in response. Real estate investment trusts (REITs) are exempt, however, so they will remain as trusts. All but one of our trust recommendations have converted. We still like the long-term outlook for all these picks, and we see them as buys. All of our REIT recommendations remain buys, as well....
In addition to IBM, we also like the outlook for these three other tech leaders. They come with significantly more risk, so these stocks should make up only a small portion of your portfolio. APPLE INC. $447 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 932.2 million; Market cap: $416.7 billion; Price-to-sales ratio: 3.1; No dividends paid; TSINetwork Rating: Average; www.apple.com) makes computers and a wide range of electronic devices, including the iPhone and iPad tablet computer. Apple recently teamed up with several leading textbook publishers to make more titles available to iPad and iPhone users. The company has also launched its new iBooks 2 software, which makes it easy for students to use Apple devices to take notes and search within text. Publishers can also use the program to quickly update content and add features, like video....