high quality stocks

FIDELITY TRUE NORTH FUND $31.32 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies. Fidelity True North Fund’s top holdings include high-quality stocks such as Manulife Financial, TD Bank, Suncor Energy, Rogers Communications, En- Cana, Bank of Montreal, Nexen, Telus Corporation and Royal Bank. The fund now invests 9.8% of its assets outside of Canada. The fund’s breakdown by economic segment is: 29.1% in Financials, 27.3% in Energy, 11.0% in Materials, 8.8% in Telecommunication services, 6.8% in Information technologies, 5.2% in Industrials, 4.7% in Consumer discretionary and 1.6% in Consumer staples....

Here are three Fidelity funds that hold much of their portfolios in one specific sector. We generally advise against investing in funds that concentrate in one economic sector. For example, a fund concentrating in financial services is particularly vulnerable to any setbacks in the sector or interest-rate rises. However, all of these Fidelity funds stick with high-quality stocks. If you do invest in these funds, be sure to adjust the rest of your portfolio so these funds won’t overly concentrate your holdings in any one sector. FIDELITY FOCUS CONSUMER INDUSTRIES FUND $18.65 (CWA Rating: Aggressive) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) invests mainly in U.S. consumer goods and services companies. Consumer spending is a key part of the U.S. economy, accounting for approximately two-thirds of activity....

Rising prices for steel, copper and other raw materials have weighed on profits at all American industrial companies in the past few years. Higher oil prices have also made it more expensive to operate factories and transport goods to customers. The best way to profit from this uncertainty is to focus on high-quality stocks with unique products, high market shares and other factors that give them special appeal. These four industrial stocks have struggled lately, but we see them as a “heads-you-win, tails-you-break-even” situation. That means they should thrive during cyclical peaks, and keep losses to a minimum in economic downturns....

BMO Dividend and Royal Dividend hold mostly high-quality stocks. These stocks sometimes run into deep trouble and go through lengthy struggles, just like lesser investments. Eventually, though, most solve their problems and go on to thrive anew. Both funds hold a high proportion of their assets in financial services stocks. However, if you must focus on something, finance is a relatively stable sector. If you do invest in these funds, be sure to adjust the rest of your portfolio so these funds won’t overly concentrate your holdings in the financial sector....

Investors often ask how long they should hang on to a disappointing stock, even if it’s not an outright loser. There is no single answer to the question. We do our best to look at as much information as possible, and to weigh each tidbit of information according to how much impact we expect it to have. That way, you can develop a realistic outlook. If you try to analyze a mass of information without breaking it down into manageable pieces, you can get caught up in the crescendo of negative emotion that often occurs when a stock is hitting a low that will turn out to be its bottom. Here are some points you can apply when deciding if you should sell, hold or buy more....

Here are five large funds run by each of Canada’s big-five banks. Each holds the kind of conservative, well-balanced portfolios of high quality stocks we like. All five have a high weighting in Financial services and Energy stocks. However, they stick with high-quality issues with sound fundamentals, so these concentrations don’t add a lot of risk. Each has its quirks, but overall they are well positioned for low-risk returns. TD CANADIAN EQUITY FUND $30.40 (CWA Rating: Conservative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies with strong growth potential. TD Canadian Equity Fund’s 10 largest holdings are Bank of Nova Scotia, Suncor Energy, Royal Bank, TD Bank, Rogers Communications, Canadian Oil Sands Trust, CN Railway, Tim Hortons, Canadian Natural Resources and Teck Cominco....

The U.S. economy grew at a rate of 3.5% in the fourth quarter of 2006, beating consensus forecasts of 3.0%. That’s down from growth of 5.6% in the first quarter of 2006, but up from 2.6% in the second quarter and 2% in the third quarter. The growth in the latest quarter was led by a 4.4% increase in consumer spending, and a 10.0% annualized increase in net exports. The rise came despite sharply slower housing markets. Auto production slowed as well. Without falling housing construction and auto output, growth would have been 5.9%. In contrast, the Canadian economy will likely show growth of only 1.5% or less in the fourth quarter when final figures are reported. That’s down from 1.7% in the third quarter of 2006, 2.0% in the second quarter, and 3.8% in the first quarter....

FIDELITY TRUE NORTH FUND $27.95 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies. Fidelity True North Fund’s top holdings include high-quality stocks such as Manulife Financial, Nexen, TD Bank, Sun Life Financial, Canadian Natural Resources, Bank of Nova Scotia, Telus Corporation, Rogers and Talisman Energy. The $6.2-billion Fidelity True North Fund’s one-year gain is 20.2%, compared to a gain of 20.6% for the S&P/TSX over the same period. The fund’s MER is 2.55%....

FIDELITY TRUE NORTH FUND $27.95 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies. Fidelity True North Fund’s top holdings include high-quality stocks such as Manulife Financial, Nexen, TD Bank, Sun Life Financial, Canadian Natural Resources, Bank of Nova Scotia, Telus Corporation, Rogers and Talisman Energy. The $6.2-billion Fidelity True North Fund’s one-year gain is 20.2%, compared to a gain of 20.6% for the S&P/TSX over the same period. The fund’s MER is 2.55%....

Our focus on high-quality stocks attracts an above average number of takeover offers. Besides Falconbridge, two more of our long-time favourites are now the target of buyout offers: INCO LTD. $85.50 (Toronto symbol N; Conservative Growth Portfolio; Resources sector; SI Rating: Average) is the world’s largest producer of nickel. It recently dropped a plan to merge with U.S.-based copper producer Phelps Dodge Corp. It now seems likely that an $86.00-a-share all-cash offer from Brazilian mining firm Companhia Vale do Rio Doce (CVRD) will succeed. We first recommended Inco at $41 in our January, 1995 issue, and the CVRD offer works out to a gain of 109.8%....