dividends paid
LIZ CLAIBORNE INC. $6.38 (New York symbol LIZ; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 94.5 million; Market cap: $602.9 million; Price-to-sales ratio: 0.2; No dividends paid since December 2008; WSSF Rating: Extra Risk) designs and sells clothing and accessories for men and women. Its top brands include Liz Claiborne, Juicy Couture and Kate Spade. Liz Claiborne continues to cut costs in response to falling sales: Liz Claiborne has closed 10 distribution centres since 2007. It has also sold less-profitable brands and closed stores. As well, the company hopes to spur growth with new licensing deals with J.C. Penney (see page 104) and the QVC TV shopping channel. The transition of the Liz Claiborne brands to J.C. Penney and QVC caused sales in the three months ended July 3, 2010 to fall 15.5%, to $569.8 million from $674.6 million a year earlier. The company lost $0.19 a share in the quarter, a 61.2% improvement over its year-earlier loss of $0.49 a share....
Clothing sales are rising as the economy continues to recover. However, fashion trends are fickle, and consumers are often quick to switch brands. The six clothing designers and sellers we analyze below own some of the top brand names in the industry. That will help them keep increasing their sales. As well, all six cut costs during the recession. That will let them lower their prices and protect their market shares if sales slow. Still, only three are buys. LIMITED BRANDS INC. $29 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 322.8 million; Market cap: $9.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.1%; WSSF Rating: Average) operates two main retail chains: Victoria’s Secret (lingerie) and Bath & Body Works (soaps and bath oils). It also operates the La Senza lingerie chain in Canada and 30 other countries....
BELLATRIX EXPLORATION $3.87 (Toronto symbol BXE; SI Rating: Speculative) (403-266-8670; www.bellatrixexploration.com; Shares outstanding: 97.2 million; Market cap: $376.2 million; No dividends paid) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 73% of its output; the remaining 27% is oil. In the three months ended June 30, 2010, Bellatrix’s production fell 21.5%, to 7,671 barrels of oil equivalent per day (this measurement includes natural gas) from 9,767 barrels a year earlier. That’s mainly because Bellatrix sold properties that produced about 3,500 barrels per day in late 2009. Bellatrix’s cash flow per share fell 21.4% in the latest quarter, to $0.11 from $0.14. Higher oil and gas prices partly offset the lower production. Bellatrix’s total debt is $81.3 million, or a low 21.6% of its market cap....
WESTJET AIRLINES $11.71 (Toronto symbol WJA; SI Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 138.8 million; Market cap: $1.6 billion; No dividends paid) has signed a code-sharing agreement with Hong Kong’s Cathay Pacific Airlines. Code sharing lets airlines sell seats and move luggage under their own name onto another carrier’s flights. So, WestJet can now offer flights into overseas markets. The next step for WestJet is code sharing with a U.S. airline. The company had a deal with Southwest Airlines in 2008, but it fell through. However, the company is now reportedly in talks with American Airlines....
AMERIGO RESOURCES $0.88 (Toronto symbol ARG; SI Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 170.9 million; Market cap: $150.4 million; No dividends paid) has moved up 52% since June on higher copper prices. Copper is up 38% during that period, to a two-year high of $3.81 U.S. a pound. Rising demand from China is the main reason for the price rise. Amerigo processes copper and molybdenum from the waste rock from Chile’s El Teniente, the world’s largest copper mine. The company gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum. In the three months ended June 30, 2010, Amerigo’s revenue was $32.4 million, up 79.5% from $18.1 million a year earlier. (All figures except share price and market cap in U.S. dollars.) The company earned $2 million, or $0.01 a share, compared to a loss of $2.3 million, or $0.02 a share. Cash flow was $4.7 million, or $0.03 a share, in the latest quarter....
GABRIEL RESOURCES $5.84 (Toronto symbol GBU; SI Rating: Speculative) (416-955-9200; www.gabrielresources.com; Shares outstanding: 342.6 million; Market cap: $2.0 billion; No dividends paid) jumped 30% in September after a committee of members of several Romanian government ministries confirmed that the environmental-permitting process for Gabriel’s Rosia Montana gold project will continue. The environmental-impact assessment will likely take three to six months, and will be overseen by the Romanian Ministry of Environment and Forestry. The mine still faces further environmental and political opposition. However, the European Union has stated that the project complies with its environmental regulations. As well, Romania’s current ruling coalition appears to be softening its objections to a mine....
BAFFINLAND IRON MINES $0.99 (Toronto symbol BIM; SI Rating: Start-up) (416-364-8820; www.baffinland.com; Shares outstanding: 342.9 million; Market cap: $339.5 million; No dividends paid) is the subject of a hostile, $274.3-million takeover offer from Nunavut Iron Ore Acquisition Inc., which is wholly owned by privately held Iron Ore Holdings, LP. Nunavut is offering $0.80 in cash for each share of Baffinland. The company currently owns about 6% of Baffinland. Other shareholders who hold a combined 9.3% stake in Baffinland have also agreed to tender their shares to the offer. Baffinland is now trading at $0.99, or 23.8% above Nunavut’s bid. This indicates that investors expect a much higher bid from Nunavut or another buyer....
RUSSEL METALS $20.84 (Toronto symbol RUS; SI Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 59.7 million; Market cap: $1.2 billion; Dividend yield: 4.8%) is one of North America’s largest metal distributors. Russel serves its roughly 30,000 customers through a network of 50 Canadian and 12 U.S. locations. In the three months ended June 30, 2010, Russel reported earnings per share of $0.31 before one-time items. That’s a big improvement over the $0.10 a share it earned a year earlier. Revenue rose 9.4%, to $506.1 million from $462.5 million.
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Cost cuts continue to boost earnings
MDS INC. $10 (Toronto symbol MDS; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 67.2 million; Market cap: $672.0 million; Price-to-sales ratio: 3.4; No dividends paid since October 2006; SI Rating: Extra Risk) supplies medical isotopes for research, detecting cancer and sterilizing surgical tools. The company gets most of its isotopes from the Chalk River nuclear reactor near Ottawa. In May 2009, Atomic Energy of Canada Ltd., which operates the reactor, shut down Chalk River to repair a water leak. Atomic Energy restarted the reactor in August 2010, but plans to permanently close it in 2016. That’s why MDS recently signed a new deal to buy isotopes from Rosatom State Corp., a Russian state-owned company. The deal gives MDS the exclusive right to distribute Rosatom’s isotopes outside of Russia until 2020....
High unemployment continues to hold back consumer spending in the U.S. As well, many households are using their extra cash to pay down debt. Even so, demand for electronic devices, particularly smartphones and video-game players, continues to rise. That’s good news for these four leading makers of consumer-electronic products. All four have launched new devices in time for Christmas. Their new products are also helping them increase sales in emerging markets. Still, we see only three as buys right now. APPLE INC. $288 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 913.6 million; Market cap: $263.1 billion; Price-to-sales ratio: 4.6; No dividend paid; WSSF Rating: Average) makes computers and a variety of other electronic devices....