investment

BROADRIDGE FINANCIAL SERVICES INC. $37 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 119.4 million; Market cap: $4.4 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 85% of all proxy votes in the U.S.

In its fiscal 2014 second quarter, which ended December 31, 2013, Broadridge earned $31.2 million, up 43.1% from $21.8 million a year earlier. Earnings per share rose 47.1%, to $0.25 from $0.17, on fewer shares outstanding.

Revenue gained 5.6%, to $520.6 million from $493.2 million. Revenue from contracts that pay Broadridge recurring fees (two-thirds of the total) rose 9% and accounted for almost all of the overall gain. The remaining third comes from one-time events, such as special shareholder meetings and distributing information when a mutual fund changes managers.
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CISCO SYSTEMS INC. $22 (Nasdaq symbol CSCO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.2 billion; Market cap: $114.4 billion; Priceto- sales ratio: 2.5; Dividend yield 3.4%; TSINetwork Rating: Average; www.cisco.com) plans to invest $1 billion over the next two years on building a new cloud-computing service, which will let businesses lease data processing and storage systems instead of buying their own.

This is a small investment for Cisco, which earned $2.5 billion, or $0.47 a share, in its latest quarter. However, cloud computing could become an important new business for Cisco, and cut its reliance on selling routers and other networking hardware.

Demand for cloud services is growing fast, as they let corporations and government agencies cut their computing costs. Moreover, these big clients are more likely to trust wellestablished suppliers like Cisco instead of other cloud competitors like Amazon.com, which cater mainly to smaller businesses. (Note— Amazon is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investments.)
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Pat McKeough responds to many requests from members of his Inner Circle for specific 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 one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....

FAIR ISAAC CORP. (New York symbol FICO; www.fairisaac.com) makes FICO Scores, the computer program that dominates the market for software that businesses use to evaluate customer creditworthiness. The company is also profiting by selling software that helps credit card issuers control fraud and analyze cardholders’ spending patterns....

Every now and then, a question comes in that raises an important point about some aspect of investing. Our first question this week (see below) provides a perfect example of theme investing. Theme investors zero in on something that’s going on in the world—in business, politics, technology or society as a whole—and try to cash in on it, directly or indirectly. You can get lucky with theme investing, but there’s a large element of risk. Interest in the theme may slump sooner than you expected. Or, your enthusiasm for the theme may lead you to drop your guard. It may spur you to put money in stocks or other investments that are drastically over-priced or fundamentally flawed. For example, the rising price of gold was a popular investing theme during much of the first decade of this century. As gold rose from under $300 to more than $1,800 per ounce, it presented a wide variety of profit-making opportunities. But the rising price of the metal was no guarantee of profit. Gold-themed investments—collectors’ coins, penny stocks, gold-based futures and options trading—gave promoters lots of ways to create low-quality investments to sell to gold-seeking investors....

SUN LIFE FINANCIAL (Toronto symbol SLF; www.sunlife.ca) sells savings, retirement, pension and life insurance products to individuals and corporations....

CAMPBELL SOUP CO. (New York symbol CPB; www.campbellsoupcompany.com) is the world’s largest maker of canned soups. It also makes Prego canned pasta and sauces, Pepperidge Farm cookies and V8 vegetable juices. Wal-Mart accounts for 19% of its sales....

DOMINO’S PIZZA INC., $79.34, symbol DPZ on New York, is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 10,800 outlets in the U.S. and over 70 other countries. Franchisees run most of them. In the three months ended December 29, 2013, the company’s earnings per share rose 21.9%, to $0.78 from $0.64 a year earlier, beating the consensus estimate of $0.76. Sales gained 5.0%, to $566.5 million from $539.7 million. Same-store sales rose 7.0% internationally and 3.7% in the U.S. Domino’s continues to boost its sales by aggressively promoting its new pizza recipes. It’s also profiting as more customers order online and through smartphone apps. In addition, Domino’s still has lots of growth potential overseas....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice on buying stocks 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 one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....

SUN LIFE FINANCIAL $38.90 (Toronto symbol SLF; Shares outstanding: 609.4 million; Market cap: $23.7 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.sunlife.ca) sells savings, retirement, pension and life insurance products to individuals and corporations.

Sun Life mainly operates in Canada, the U.S....