dividends paid

CGI GROUP INC. $15 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 297.0 million; Market cap: $4.5 billion; Price-to-sales ratio: 1.2; No dividends paid; SI Rating: Extra Risk) is Canada’s largest provider of computer-outsourcing and information-technology services. It also operates in 15 other countries. Canada provided 57% of CGI’s revenue in its latest year, followed by the U.S./India (36%) and Europe/Asia (7%). CGI’s main businesses are: 1) Outsourcing: CGI takes over all or part of a client’s information-technology and related functions. That lets the client cut costs and gain ongoing access to the most current computer technology. Outsourcing accounts for 60% of CGI’s revenue. 2) Consulting: In addition to technical expertise, CGI aims to ensure that its consultants have knowledge of the business issues in their clients’ industries or sectors....

We’ve chosen CGI Group is our “Stock of the Year” for 2010. It differs from past #1 picks in that it’s not a dividend payer and we rate it as Extra Risk. But we’ve followed it a long time and feel it may have set off on a rise that lasts years beyond 2010. The company took its present form in September 1981, and first sold shares to the public for $0.81 each (adjusted for splits) in December 1986. In June 2002, we added CGI to the stocks we analyze in Stock Pickers Digest, our newsletter for aggressive investors. It was then trading at $8.75. In December 2007, we thought the company had matured enough to suit more conservative investors, so we moved it to The Successful Investor. The stock has gained 50% since then....

TECK RESOURCES LTD. $41 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 588.7 million; Market cap: $24.1 billion; Price-to-sales ratio: 2.8; No dividends paid since July 2008; SI Rating: Extra Risk) owns 22.5% of the Antamina copper and zinc mine in Peru. The other partners are BHP Billiton (33.75%), Xstrata (33.75%) and Mitsubishi Corp. (10%). In light of rising copper prices, the partners plan to increase Antamina’s production by 30%. Teck’s share of the expansion cost is $290 million U.S. To put this in context, Teck earned $337 million (Canadian), or $0.59 a share, in the third quarter of 2009. This project should be finished in late 2011. The partners recently increased their estimates of Antamina’s reserves by 75%. That means its reserves should last until 2029....

NCR CORP. $11 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 159.2 million; Market cap: $1.8 billion; Price-to-sales ratio: 0.4; No dividends paid; WSSF Rating: Average) has a broader product line than Diebold, and gets just a third of its revenue from making and servicing ATMs. The rest comes from selling checkout scanners, cash registers and self-serve kiosks. NCR’s revenue rose slightly, from $6.0 billion in 2004 to $6.1 billion in 2006. Revenue fell to $5.0 billion in 2007, after NCR spun off Teradata Corp., but rose to $5.3 billion in 2008. Despite the slow sales growth, the company’s earnings rose from $0.89 a share (or a total of $171 million) in 2004 to $2.13 a share (or $389 million) in 2006. Earnings fell to $1.39 a share (or $254 million) in 2007, but rose to $1.61 a share (or $271 million) in 2008. Like Diebold, most of NCR’s earnings gains came from lower costs, mainly because it outsourced much of its ATM production to other companies. It’s also cutting 10% of its workforce. The layoffs should save it $250 million a year by the end of 2011....

Diebold began making locks, safes and vaults for banks in 1876. NCR started making mechanical cash registers in 1879. In the years since, both companies have evolved into the world’s top suppliers of automated teller machines (ATMs). Diebold continues to focus on the banking industry, mostly with specialized services. In contrast, NCR has cut its exposure to banks with a variety of products that help retailers cut their labour costs. Despite their different strategies, we like the outlook for both companies, and see them as buys for long-term gains....

H&R BLOCK INC. $21 (New York symbol HRB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 335.5 million; Market cap: $7.0 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.9%; WSSF Rating: Above Average) is best known for its income-tax preparation business, but it also sells accounting services to businesses through wholly owned RSM McGladrey. This subsidiary recently ended a legal dispute with auditing firm McGladrey & Pullen LLP. The companies also renewed their alliance until 2015. Ending the alliance would have been difficult, since both firms share employees and office space. They also serve many of the same clients. H&R Block is a buy. TEXAS INSTRUMENTS INC. $26 (New York symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.3 billion; Market cap: $33.8 billion; Price-to-sales ratio: 3.3; Dividend yield: 1.8%; WSSF Rating: Average) is seeing stronger demand for its chips, but is having trouble filling new orders. Still, the company expects that its revenue will range between $2.9 billion and $3.02 billion in the fourth quarter of 2009. That’s slightly better than its earlier forecast of $2.78 billion to $3.02 billion. As well, Texas Instruments expects its per-share earnings for the quarter to range from $0.47 to $0.51. That’s up from its previous estimate of $0.42 to $0.50....

TERADATA CORP. $32 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector: Shares outstanding: 171.2 million; Market cap: $5.5 billion; Price-to-sales ratio: 3.3; No dividends paid; WSSF Rating: Average) makes computers and software that capture and store large amounts of a business’s data, including its sales and inventory. Teradata then analyzes this information and identifies buying habits and trends. This helps its clients make better business decisions. The company gets 55% of its revenue from North and South America, followed by Europe (25%) and Asia (20%). The company was a wholly owned subsidiary of NCR Corp. until October 1, 2007. That’s when NCR handed out its Teradata shares to its own shareholders as a special dividend. ...

VERIGY LTD. $11.97 (Nasdaq symbol VRGY; SI Rating: Extra Risk) (1-800-447-8378; www.verigy.com; Shares outstanding: 58.8 million; Market cap: $704.3 million; No dividends paid) designs and makes test systems that are used in the production of computer chips. Verigy’s technology helps chipmakers cut down on errors and improve the reliability of their products. It has installed more than 4,500 of its systems worldwide. Verigy gets about 45% of its revenue from consulting and support services. These include start-up assistance and system calibration and repair. This business helps lower the company’s reliance on system sales, which have been slowed by the weak economy. The company lost $7 million, or $0.12 a share (before one time items) in its fourth quarter, which ended October 31, 2009. Still, that was a lot better than the $0.25-a-share loss that analysts were expecting. Verigy lost $36 million, or $0.60 a share, in the year-earlier quarter. Revenue fell 35.3%, to $97 million from $150 million. Orders rose 17% during the fourth quarter....

Here are two of the most promising early-stage diamond stocks. Both have speculative appeal, but they are buys for highly aggressive investors only. DIAMONDS NORTH RESOURCES $0.28 (Toronto symbol DDN; SI Rating: Start-up) (1-866-802-2010; www.diamondsnorthresources.com; Shares outstanding: 77.3 million; Market cap: $21.6 million; No dividends paid) has interests in seven exploration projects covering over four million acres in Nunavut and the Northwest Territories. Its prospects range from early- to advanced-stage exploration. The company funds its exploration programs with its $5 million of cash holdings. Diamonds North’s leading prospect is its 100%-owned Amaruk project in Nunavut. To date, the company has discovered 29 kimberlites at the site....

CANALASKA URANIUM $0.16 (Toronto symbol CVV; SI Rating: Start-up) (1-800-667-1870; www.canalaska.com; Shares outstanding: 137.8 million; Market cap: $22.0 million; No dividends paid) has announced an exploration budget of $15 million for 2010. So far in 2009, CanAlaska has spent $6.8 million. The company’s joint-venture partners funded $4.8 million of that total. These include Japan’s giant Mitsubishi Corp., Chinese mining firm East Resources Inc. and a consortium of Korean companies that consists of Hanwha Corporation, Korea Electric Power, Korea Resources and SK Energy. CanAlaska owns a large amount of land that contains lots of drilling prospects. Moreover, it has personnel with expertise in exploration and mine building, specifically in the Athabasca Basin region....