investment

AGILENT TECHNOLOGIES INC. (New York symbol A) plans to break itself into two publicly traded companies. One of these businesses will keep the Agilent name and focus on testing equipment for medical-research labs. The second company will make testing systems for improving electronics, such as cellphones and computer equipment....

Gold has dropped over 30% from its high near $1,800 U.S. an ounce in September 2012 to $1,228 today. That’s partly because the U.S. Federal Reserve has indicated that it is likely to scale back its bond-purchasing program, known as quantitative easing. Slowing down the growth in the money supply will reduce the likelihood of a sharp increase of future inflation. Since many investors buy gold as a hedge against inflation, its price has weakened. The best way for aggressive investors to invest in gold is to buy shares of companies with rising production that will give them steady cash flow even if gold prices fall further. Here is our assessment of one of the gold stocks we cover for Stock Pickers Digest....

TIM HORTONS $62.68 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 147.1 million; Market cap: $9.1 billion; Dividend yield: 1.7%) operates 3,500 coffeeand- donut shops in Canada, 817 in the U.S. and 33 in the Persian Gulf.

In the three months ended September 30, 2013, Tim Hortons’ sales rose 2.9%, to $825.4 million from $802.0 million a year earlier. Same-store sales gained 1.7% at its Canadian outlets and 3.0% in the U.S. Earnings per share rose 6.9%, to $0.77 from $0.72.

The company continues to benefit from recently introduced menu items, such as panini sandwiches. It also raised its prices to cover higher ingredient costs. At the same time, it’s working on simplifying its menu displays and speeding up service, both in-store and at the drive-through.
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ALIMENTATION COUCHE-TARD, $77.60, symbol ATD.B on Toronto, rose over 6% this week after reporting its latest quarterly earnings. In the three months ended October 13, 2013, the company’s sales fell 3.0%, to $9.0 billion from $9.3 billion a year earlier (all figures except share price in U.S. dollars). The year-ago quarter included 92 days of results from Norway’s Statoil Fuel & Retail ASA, which Couche-Tard bought for $2.7 billion in June 2012, while the latest quarter included just 84 days. The shorter period was due to an adjustment to align Statoil’s accounting period with Couche-Tard’s. That was the main reason for the lower revenue. Excluding that, the company benefited from higher fuel volumes and merchandise sales. Couche-Tard gets about 30% of its revenue by selling merchandise....

GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $32.0 billion; Price-to-sales ratio: 1.3; Dividend Yield: 3.8%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is one of Canada’s largest insurance companies, with $705.1 billion of assets under administration. It also sells mutual funds and retirement planning and wealth management services. Power Financial (Toronto symbol PFC) owns 68.1% of Great-West.

In July 2013, the company completed its $1.75- billion purchase of Irish Life Group, Ireland’s largest pension manager and life insurance provider.

If you exclude costs to integrate Irish Life, Great-West would have earned $583 million in the three months ended September 30, 2013. That includes $41 million from Irish Life. This new business should contribute $215 million to Great- West’s annual earnings by the end of 2014.
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RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 303.2 million; Market cap: $7.6 billion; Price-to-sales ratio: 6.5; Dividend yield: 5.6%; TSINetwork Rating: Average; www.riocan.com) started up in 1993 and is now Canada’s largest REIT. It currently owns all or part of 295 retail properties, including 15 under development. These holdings account for 85% of its rental revenue. The remaining 15% comes from 51 malls in the U.S.

RioCan continues to expand beyond suburban big-box-style shopping centres. Mostly through joint ventures with other property developers, it has added mixed-use retail, office and residential buildings, mainly in densely populated urban areas.

RioCan’s revenue declined 0.8%, from $764 million in 2008 to $758 million in 2009. Some of the trust’s tenants went bankrupt during the recession, but it mostly offset that by adding new properties. RioCan’s revenue recovered to $882 million in 2010 and rose to $1.1 billion in 2012, as it took advantage of lower property values and interest rates to expand its portfolio.
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ISHARES CDN REIT SECTOR INDEX FUND $15.46 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of each REIT is limited to 25% of the ETF’s value.

iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 5.0%.

The ETF’s largest holding is RioCan REIT at 19.5%, followed by H&R REIT (14.9%), Dundee REIT (8.0%), Canadian REIT (7.4%), Calloway REIT (6.7%), Allied Prop. REIT (5.9%), Boardwalk REIT (5.8%), Canadian Apt, REIT (5.7%), Cominar REIT (5.6%), Artis REIT (4.7%), Chartwell REIT (4.6%), Granite REIT (4.4%), Dundee Intl. REIT (2.3%), Northern Property REIT (2.3%) and Crombie REIT (1.8%).
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Pat McKeough responds to many requests from members of his Inner Circle for specific advice on 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. This week an Inner Circle member asked us about a pharmaceutical firm whose shares recently had a strong run. Tekmira specializes in RNAi therapeutics which can “silence” disease-causing genes. The company is developing two drugs, one for Ebola and one for cancer. Pat looks at the progress of Tekmira’s drug trials and examines the company’s cash balance and its ability to continue developing its treatments in the years ahead. ...

ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $37.54 (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 and 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 the New York exchange.

The fund’s top holdings are China Mobile, 9.6%; China Construction Bank, 9.0%; Industrial & Commercial Bank, 8.0%; Tencent Holdings, 7.1%, Bank of China, 6.1%; China Overseas Land & Investment, 4.1%; PetroChina, 4.1%, Agricultural Bank of China, 4.0%; and CNOOC, 3.9%.

The fund’s holdings give it the following industry breakdown: Financials, 56.0%; Telecommunications, 16.0%; Oil and Gas, 12.1%; Technology, 7.1%, Basic Materials, 3.7%; and Consumer Goods, 3.2%. Its expense ratio is 0.74%.
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TRANSCANADA CORP. $47.15 (Toronto symbol TRP; Shares outstanding: 707.0 million; Market cap: $33.0 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.transcanada.com) has completed the purchase of two more Ontario solar power facilities from Canadian Solar (Nasdaq symbol CSIQ) for $470 million.

TransCanada now owns three of the nine solar farms it agreed to buy from Canadian Solar in December 2011. It expects to take possession of the remaining six by the end of 2014.

The company has 20-year deals to sell the power from these nine solar farms, which cuts the risk of this investment.
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