investment

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. IBM has a long history of drifting in and out of investor favour, mainly due to fear that new technologies will put it out of business. However, IBM also has long history of successfully shifting out of slowing businesses into faster-growing fields. For example, as computer prices fell in the 1990s, IBM expanded its more-profitable software and consulting operations. Later it unloaded its struggling personal computer operations, and now it’s selling its low-end server business. It will invest the proceeds in areas such as cloud computing and analytics software....

We’ve just updated and re-released one of our most popular free reports: Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. It’s ready for you to download now. With today’s low interest rates, investors are paying more attention to dividend yields. Dividend paying stocks are responding by doing their best to maintain, or even increase, their payouts. In fact, dividends can now contribute up to a third of your long-term investment returns, without even considering the tax-cutting effects of the dividend tax credit....

Some investors wonder if buying a new condominium apartment in downtown Toronto is a good idea right now. They feel Toronto is sure to prosper as an alternative to other world financial capitals like London and New York. After all, Canada has a relatively liberal immigration policy, plus a stable government, attractive corporate tax policy and so on. They assume this will attract wealthy business people who will buy Toronto condos and drive up prices. This is an example of a “top-down” investing strategy. That’s when you zero in on a market that seems likely to rise, then try to profit from it. As you probably know, we prefer the “bottom-up” approach. That’s when you focus on high-quality investments that are likely to prosper under most circumstances. Then you zero in on those that are reasonably priced. If they provide attractive income, so much the better. But it’s the quality and appeal of the investment, rather than your prediction about their market, that makes you want to buy....

Timbercreek Senior Mortgage Investment Corp., $9.34, symbol MTG on Toronto (Shares outstanding: 31.6 million; Market cap: $295.1 million; www.timbercreek.com), is a mortgage investment corporation. Mortgage investment corporations, or MICs, invest in pools of mortgages and distribute most of their profits to their shareholders. Some MICs yield 6% or 7% or more annually. They sound like conservative investments because they invest in mortgages rather than equity. However, mortgages vary widely in their investment quality and risk. MICs can earn high profits because they take on riskier mortgages. Timbercreek Senior Mortgage Investment Corp. yields 6.4%....

Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion....

Every Monday we now feature “A Stock to Sell” as our daily post. With each sell, we give you a full explanation of why we advise against investing in these stocks. This is part of our new approach offering you buy, hold and sell advice in our daily posts. You also get “Best Canadian Stocks” on Tuesday, “Our Top U.S. Stocks” on Thursday, and every Friday, our advice on one of the stocks that members of Pat’s Inner Circle have asked about in their weekly Question & Answer sessions. Eguana Technologies (symbol EGT on Toronto; www.eguanatech.com), formerly called Sustainable Energy Technologies Ltd., makes products that convert the high-current/low-voltage (DC) electricity from solar cells into high-voltage alternating current (AC) power, which is used by power grids and most industrial and consumer electronics....

IMPERIAL METALS CORP., $10.36, symbol III on Toronto, fell 38% this week after a dam broke at a tailings pond at the company’s Mount Polley gold/copper mine in B.C. The breach spilled an estimated 10 million cubic metres of wastewater and 4.5 million cubic meters of fine sand into nearby waterways. The extent of the damage to local lakes and rivers is unknown at this point, but the company will now submit an environmental impact assessment and cleanup plans to the B.C. Ministry of Environment. Estimates of the total liability for the cleanup are in the range of $225 million, or $3 per Imperial share....

Pat McKeough responds to many requests from members of his Inner Circle for advice on stock picks, 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. Beginning this week, we give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of our new approach offering you regular and specific buy, hold and sell advice in our daily posts. Every week you’ll get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday. This week we had a question from an Inner Circle member about investing in a fast food franchisee. As its name Arcos Dorados (“Golden Arches” in Spanish) indicates, this company operates McDonald’s restaurants in Latin America and the Caribbean. It is McDonald’s single largest franchisee. Pat examines the pros and cons of doing business in an area that is growing rapidly but unevenly and still faces political and economic challenges. Q: Pat: What is your opinion on Arcos Dorados? Thanks....

ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $40.21 (New York symbol FXI; buy or sell through brokers) is an exchange traded fund that aims to track the FTSE/Xinhua China 25 Index, which is made up of the 25 largest, most liquid Chinese stocks. All of the stocks in the index trade on the Hong Kong exchange. Some also trade as American Depositary Receipts (ADRs) on New York. The fund’s top holdings are Tencent Holdings, 10.2%; China Construction Bank, 8.4%; China Mobile, 8.3%; Industrial & Commercial Bank, 6.9%; Bank of China, 5.4%; China Overseas Land & Investment, 4.3%; China Life, 4.0%; Ping An Insurance, 4.0%; China Shenhua Energy, 3.9%; PetroChina, 4.2%; China Merchants Bank, 3.7%; and CNOOC Ltd., 3.7%. The fund’s holdings give it the following industry breakdown: Financials, 54.1%; Telecommunications, 14.4%; Oil and Gas, 12.1%; Technology, 10.1%; Basic Materials, 4.0%; Industrials, 1.8%; and Consumer Goods, 1.7%. Its expense ratio is 0.73%....

MANITOBA TELECOM $30.63 (Toronto symbol MBT; Shares outstanding: 77.4 million; Market cap: $2.4 billion; TSINetwork Rating: Average; Dividend yield: 5.6%; www.mts.ca) jumped to just over $33 in response to BCE’s plan to buy 100% of Bell Aliant (see box on page 57). Investors believed Manitoba Telecom could also become a takeover target. However, as part of the company’s 1997 privatization, the Manitoba government limits any single shareholder’s ownership to 20%. The shares have since moved down to where they were before BCE’s announcement. Manitoba Telecom is still a hold....