investment

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you specific investing advice. Each Investor Toolkit update gives you a fundamental piece of investment advice, and shows you how you can put it into practice right away. Today’s tip: “If you consider charitable donations an investment in a good cause, be prepared to look into them as carefully as you would your investments to ensure that your money is going to the right place.”...

Here’s the text of the quarterly letter I recently sent to our Portfolio Management clients:

“One of the most dependable rules of North American investing, and one I’ve often written about, is the “four-year rule”. It says that U.S. Presidents tend to get a lot friendlier toward business and investors in the second half of each four-year U.S. Presidential term. Stocks usually (but not always) rise in response.

The switch to investor-friendliness often occurs within a few weeks of the mid-term Congressional election. The next one of these takes place on Tuesday, November 4 this year. That’s when the current president will generally start to focus on the next Presidential election, which comes two years later.

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EBAY INC., $47.95, Nasdaq symbol EBAY, reported better-than-expected third quarter earnings, but its revenue missed the consensus estimate. It also lowered its earnings and revenue outlook for the current quarter. That caused the stock to fall 8% this week. In the three months ended September 30, 2014, eBay earned $848 million, up 1.3% from $837 million a year earlier. Per-share earnings rose 6.3%, to $0.68 from $0.64, on fewer shares outstanding. That beat the consensus estimate of $0.67. Revenue rose 11.8%, to $4.35 billion from $3.9 billion, but that missed consensus estimate of $4.37 billion....

DOMINO’S PIZZA INC., $84.84, symbol DPZ on New York, shot up over 12% this week after reporting strong quarterly results. The company operates the world’s largest chain of pizza stores that offer takeout and delivery. It has 10,900 outlets in the U.S. and over 70 other countries. Franchisees run most of them. In the three months ended September 7, 2014, the company’s earnings per share jumped 18.9%, to $0.63 from $0.53 a year earlier, beating the consensus estimate of $0.61....

CANADIAN PACIFIC RAILWAY LTD., $224.99, Toronto symbol CP, recently offered to merge with CSX Corp. (New York symbol CSX), the third-largest railway in the U.S. CSX has rejected the proposal. A merger would help CP ship more crude oil from producers in North Dakota’s Bakken region to refineries in the Midwest and on the U.S. east coast. It would also help CP speed up shipments, because the company would not have to transfer railcars to another railway. The combined firm would be one of North America’s largest railways. However, regulators would have likely blocked the merger or required CP and CSX to sell significant parts of their operations. Still, the prospect of a future deal adds to CP’s long-term appeal....

Pat McKeough responds to many requests from members of his Inner Circle for specific investment advice, as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week we offer you a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday. Last week we had a question from an Inner Circle member about one of North America’s leading big-box retailers. Costco has built a growing business on the membership fees it charges and its policy of buying directly from manufacturers, which helps keep prices low. Pat balances the company’s rising revenues, international expansion plans and high membership renewal rate against the intensely competitive market in which it operates. Q: Pat: What is your advice on Costco? Is it a buy right now? Thank you....

BROADRIDGE FINANCIAL SOLUTIONS $39.39 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 119.5 million; Market cap: $4.7 billion; Dividend yield: 2.7%) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 90% of all proxy votes in the U.S. and Canada. Without one-time items, Broadridge earned $114.6 million, or $1.16 a share, in its fiscal 2014 fourth quarter, which ended June 30, 2014. That’s up 1.5% from $142.4 million, or $1.15 a share, a year earlier. Overall revenue gained 2.4%, to $885.9 million from $865.1 million. Revenue from contracts that pay recurring fees rose 7% and accounted for two-thirds of the total. The remaining third comes from one-time events, such as notifications of special shareholder meetings and distributing information when mutual funds change managers....

Every Thursday we bring you “Best U.S. Stocks.” You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster.

More consumers are shopping online instead of in stores. That trend has forced some book and music stores to close and is putting pressure on electronics chains and sellers of office and computer equipment.

Even so, most consumers still prefer to shop for clothes in stores, where they can try them on before buying. That’s a plus for Nordstrom. Moreover, the company continues to invest heavily in e-commerce and make it easier for shoppers to pick up their online orders in stores.

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Your surest route to investment success is to follow our three-pronged Successful Investor approach:

1. Invest mainly in well-established, high-quality companies;
2. Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities.
3. Downplay or avoid stocks in the broker/media limelight. Stocks in the limelight instill bloated expectations in investors. When they fail to live up to these expectations, as is bound to happen eventually, downturns can be swift and brutal.

In the long run, our three-part system will provide much better results than basing investment decisions on market opinions or predictions. Of course, I still form opinions on which way the market and individual stocks are likely to move in coming months and years. Some of these opinions fall in the category of “predictions"—others are more like guesses....

Genworth MI Canada, $36.48, symbol MIC on Toronto (Shares outstanding: 95.0 million; Market cap: $3.5 billion; www.genworth.ca), has been a leading Canadian residential mortgage insurer since 1995. It provides this service through its subsidiary, Genworth Financial Mortgage Insurance Company of Canada. Right now, the company has $335 billion of insurance policies written. In the three months ended June 30, 2014, Genworth’s revenue rose 17.0%, to $160.5 million from $137.1 million a year earlier. Earnings per share gained 16.9%, to $1.04 from $0.89. Genworth continues to gain market share, and it aims to manage both its credit risk and its investment portfolio conservatively....