investment

Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. The group administers over $2 trillion U.S. in 170 mutual funds. Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds aren’t available in all provinces. Canadians can, however, buy Vanguard exchange traded funds (ETFs) that trade on stock exchanges. We don’t recommend all of Vanguard’s ETFs, but here are two we do see as low-fee buys....

RIOCAN REAL ESTATE INVESTMENT TRUST $25.67 (Toronto symbol REI.UN; Units outstanding: 306.7 million; Market cap: $7.9 billion; TSINetwork Rating: Average; Dividend yield: 5.5%; www.riocan.com) is Canada’s largest real estate investment trust (REIT), with interests in 340 shopping malls containing over 81 million square feet of leasable area. That total includes 47 U.S. malls with over 13 million square feet. In the three months ended June 30, 2014, RioCan’s revenue increased 8.5%, to $295 million from $272 million a year earlier. Cash flow per unit rose 5.0%, to $0.42 from $0.40. RioCan continues to see growth opportunities in Canada and the U.S. In 2013, it spent $849 million on 32 properties. In the first half of 2014, it added four more for a total of $45 million....

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.

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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. CONAGRA FOODS INC. (New York symbol CAG; www.conagrafoods.com) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter, Orville Redenbacher popcorn and Reddiwip whipped cream. Consumers account for 70% of ConAgra’s sales. Businesses, like restaurants and other food makers, provide the remaining 30%. Sales rose 9.8%, from $12.1 billion in 2010 to $13.3 billion in 2012 (fiscal years end May 31). In January 2013, ConAgra paid $4.75 billion for Ralcorp Holdings, the largest maker of private label food in the U.S. The purchase lifted ConAgra’s sales to $15.5 billion in 2013 and to $17.7 billion in 2014. Private label foods now supply 26% of ConAgra’s total sales....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on a wide range of investing topics. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Tip of the week: “When you focus on investment quality and favour growth stocks over momentum stocks, you multiply your chances of success with aggressive stocks.”...

In the 1950s, some shoe stores kept a specialized x-ray machine on the sales floor. The ads on the store window said you could use the machine to check the fit on a new pair of shoes before buying them. Critics called it a gimmick to speed up shoe sales, and warned about the risk of needless exposure to x-rays. Something like this happens today in the investment business. For instance, finance industry marketers have discovered that the Exchange Traded Fund or ETF is a potent selling tool. It can attract buyers for all sorts of investments that would otherwise have little chance of success. Our first question this week provides an example....

The Direxion iBillionaire Index ETF, $25.40, symbol IBLN on New York (Units outstanding: 1.4 million; Market cap: $35.6 million; www.direxioninvestments.com), is designed to profit from copying the moves of billionaire investors, such as Warren Buffett, Carl Icahn, Daniel Loeb and David Tepper. The ETF began trading on August 1, 2014. Its MER is 0.65%—lower than most mutual funds, but high for an ETF. The Direxion iBillionaire Index ETF selects up to 10 billionaire investors from a pool of 50, based on their personal net worth, source of wealth, stock turnover and performance over time. It then selects stocks from their investment firms or hedge funds....

Corrections Corp. of America, $35.15, symbol CXW on New York (Shares outstanding: 116.4 million; Market cap: $4.1 billion; www.cca.com), is a real estate investment trust that owns and manages prisons. It also provides rehabilitation, educational, health care and recreational services in these facilities. The trust is one of the largest prison operators in the U.S., behind only the federal government and three states. It owns or controls 52 correctional and detention facilities and manages 12 more under government contracts. In all, it has about 84,500 beds in 19 states and the District of Columbia. Corrections Corp. jumped from about $32 to today’s price in early August 2014. That reflected heightened investor interest in for-profit prison stocks in the wake of a flood of illegal immigrants, including children, crossing the U.S.-Mexico border....

Pacific Tycoon (www.pacifictycoon.com) is a Hong Kong-based firm that promises to buy shipping containers on your behalf—with a minimum initial investment of $4,100 U.S.—and then lease them out for you. It offers two options:

1. Under option one, Pacific Tycoon guarantees you a minimum return of 12% a year, payable monthly, on a long-term lease for your container. The company will also buy your container back from you at the price you paid if you let them lease it for you for three years.
2. Option two is a “maximized rental agreement,” where Pacific Tycoon rents your container to shippers with “urgent demands due to lack of container availability.” This aims for returns of 30% a year.

We see a number of risks with Pacific Tycoon....

KKR & Co. L.P. (formerly Kohlberg Kravis Roberts & Co. L.P.), $22.37, symbol KKR on New York (Shares outstanding: 415.5 million; Market cap: $17.9 billion; www.kkr.com), is an asset manager with 14 offices across North America, Europe, the Middle East, Asia and Australia. The company serves three main markets: private (investment funds); public (leveraged loans, high-yield bonds, special situation assets, distressed assets, and rescue, debtor-in-possession and exit financings); and capital (debt/equity financing). KKR had $98.0 billion of assets under administration on June 30, 2014, down from $102.3 billion three months earlier. However, that was because the company took advantage of strong financial markets to sell some of its investments at a profit. These moves included the sale of Oriental Brewery Co. to Anheuser-Busch InBev and helicopter-services firm Avincis to Babcock International Group....