dow

In our July 27 Hotline, I said the market could ultimately knock 5% to as much as 15% off the market indexes. But I felt losses would be temporary and markets would go on to new highs in 2008. That view is unchanged. However, stocks could stay volatile over the next few months, while remaining within a range between the peak prices of July and the lows of August. When the market finally does launch a sustained rise, it could gain 10% to 20% by mid-2009. But it may go through a series of wild fluctuations before launching that sustained rise....

DIAMONDS TRUST SHARES $133 (American Exchange symbol DIA; buy or sell through brokers) hold the 30 stocks that make up the Dow Jones Industrial Average. Currently, the fund’s top 10 holdings are IBM, 3M, Boeing Co., United Technologies, Caterpillar, Altria Group, American International Group, Johnson & Johnson, Procter & Gamble and Exxon Mobil....

The best exchange-traded funds (ETFs) offer well-diversified, tax-efficient portfolios with very low management fees. Due to buyback and share issue arrangements, ETFs always trade close to their net asset value. Here are some of the best deals available in ETFs. We’ve also analysed one we don’t like. ISHARES CDN LARGECAP 60 INDEX FUND $79.86 (Toronto symbol XIU; buy or sell through a broker) (formerly called iUnits S&P/TSX 60 Index Participation Fund) is a good low-fee way to buy the top stocks on the TSX. The units hold a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and most heavily traded stocks on the TSX. Expenses on the units are just 0.17% of assets....

GAMESTOP CORP. $50 (New York symbol GME; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 159.0 million; Market cap: $8.0 billion; WSSF Rating: Extra risk) earned $0.13 a share in its second fiscal quarter ended August 4, 2007, up sharply from $0.02 a year earlier. Sales rose 35.0%, to $1.3 billion from $963.3 million, while same-store sales grew 29.1%. Most of the growth is due to strong sales of new game machines from Sony, Microsoft and Nintendo. Demand for used games is also high, and accounts for half of GameStop’s profit. But at 34.7 times its projected fiscal 2008 earnings of $1.44 a share, the stock is vulnerable to unexpected product shortages or delays in the release of new games. GameStop is a hold....

DOW JONES & CO. INC. $58.21, New York symbol DJ, plans to merge with News Corp., now that enough members of the Bancroft family, which controls 64% of the company’s votes through Class B multiple voting shares, have agreed to accept News Corp.’s $60.00-a-share takeover offer. The deal should close by the end of the year, assuming stockholders and regulators approve. The shares continue to trade below the News Corp. bid, which suggests the chances of a competing offer are small. Dow Jones is still a hold....

DOW JONES & CO. INC. $55.00, New York symbol DJ, moved a step closer to selling itself to News Corp. after its directors advised stockholders to accept News Corp.’s $60-a-share cash offer. However, the deal requires the approval of the Bancroft family, which controls 64% of Dow Jones’ voting power through class B shares that carry 10 votes each. The family will probably make a final decision next week. So far, no other bidder for Dow Jones has emerged. If the family turns down the News Corp. offer, the stock will probably drop back to its pre-bid level of about $35. That would increase the likelihood of a class-action lawsuit, but that would probably be more an annoyance than an economic threat. The family isn’t obliged to sell simply because an offer came in above the market. We feel investors should hold....

APPLE INC. $124.49, Nasdaq symbol AAPL, hit a new all-time high this week after it confirmed that it will start selling its new iPhone on June 29. The new device combines a mobile phone, a digital music player and a camera. At around $500, the iPhone is more expensive than competing models, but Apple’s marketing skill and reputation for ease of use generally let it charge premium prices for its products. Strong consumer interest should help Apple reach its one-year sales target of 1% of the world mobile phone market. We continue to hold a high opinion of Apple and its products. But its high price in relation to earnings (p/e of 40) and revenue (about $24 a share) limits its appeal right now. Apple is still a hold....

DOW JONES & CO. INC. $53 (New York symbol DJ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 83.8 million; Market cap: $4.4 billion; WSSF Rating: Above average) continues to trade below News Corp.'s takeover offer of $60-a-share, as it looks like enough members of the Bancroft family plan to oppose it. The family controls 82.4% of the company’s class B shares, which carry 10 votes per share. If you include their regular stock holdings, they control 64.2% of the company’s total votes. The stock will probably make little progress unless News Corp. raises its bid, or Dow Jones finds another buyer. The stock is a hold. GANNETT CO. INC. $58 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 234.7 million; Market cap: $13.6 billion; WSSF Rating: Above average) also moved up on speculation that it could become a takeover target. Unlike Dow Jones, it has no controlling stockholder. But it owns several under-appreciated media assets, including USA Today, the nation’s largest newspaper by circulation....

TORSTAR CORP. $22 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.5 million; Market cap: $1.7 billion; SI Rating: Above average) earned $0.20 a share (total $15.7 million) in the first quarter of 2007, nearly triple the $0.07 a share (total $5.9 million) it earned a year-earlier. However, the year-earlier earnings did include a $3.7 million (pre-tax) restructuring charge. Revenue rose 5.7%, to $377.4 million from $357.1 million. Most of the gains come from Torstar’s community newspaper division and Internet sites, which offset flat growth at its flagship newspaper, The Toronto Star. The company now plans to redesign The Toronto Star, including narrowing its size. That should save it $4 million a year. The stock moved up after Fairfax Financial Holdings Inc. acquired about 18% of Torstar’s non-voting ‘B’ shares. A takeover offer for Dow Jones, owner of The Wall Street Journal, has also helped draw attention to the value of strong newspaper brands....

DOW JONES & CO. INC. $55.80, New York symbol DJ, jumped 55% after News Corp. offered to buy the company for $60.00 a share, probably in some combination of cash and News Corp. stock. News Corp. owns several media properties, including Fox Broadcasting and the New York Post. It feels The Wall Street Journal and other Dow Jones publications and web sites will strengthen the new business-news cable channel it plans to launch later this year. The Bancroft family owns 82.4% of Dow Jones’ class B shares, which carry 10 votes each. This plus their regular common stock holdings gives them 64.2% of the total votes. Right now, roughly half of the family’s members oppose the News Corp. offer. However, a formal rejection could trigger a lawsuit accusing the company’s directors of breaching their fiduciary duty to act in the best interests of all stockholders....