investment

A key part of our three-part investment approach is to downplay stocks in the broker/media limelight (the other two parts are to invest mainly in well-established companies and spread your money across the five main economic sectors). Tupperware is a good example of an out-of-the-limelight stock. Even though it started up in 1946 and is one of the world’s largest direct sellers of consumer products, few brokers cover it. The company’s independent dealers are an underappreciated asset, because they are cheaper than selling through stores and make it easier to enter new markets. Tupperware can also use its dealers to sell other products in the future. That cuts its need to expand through acquisitions....

ENCANA CORP. (Toronto symbol ECA; www.encana.com) is one of North America’s largest natural gas producers. The company is now cutting its reliance on natural gas, as rising shale gas production has cut prices from $11.50 U.S. per thousand cubic feet in 2008 to just $3.60 U.S. today. Encana plans to narrow its focus from around 30 properties to five: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico) and Tuscaloosa Marine Shale (Louisiana)....

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 investment advice. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “The best analyst research reports are full of valuable data, but that alone doesn’t mean investors should fall in line with their buy, hold or sell recommendations.”...

One of the more reassuring aspects of the rise now underway in the stock market is that the strength is concentrated in well-established companies. Investors are bidding up the prices of stocks with a history of sales and earnings, if not dividends. Speculative areas like penny stocks, new issues, junior techs and so on appear to be out of investor fashion. This contrasts sharply with, say, the income-trust boom of the mid-2000s. Back then, investors were plunging into new issue income trusts, many of which were of low investment quality. Today’s situation contrasts even more with the Internet stock mania of the late 1990s. Many of the new issue Internet stocks back then were little more than stock promotions. Chasing after low-quality investments like these becomes common when inexperienced investors enter the market. These newcomers lack the healthy sense of skepticism that you need to succeed as an investor. So they naturally zero in on the least desirable stocks on the market. Almost by definition, these are extremely risky and/or overpriced stocks that seem to offer high rewards with little risk. They generally deliver precisely the opposite....

Our view is that virtually all Canadian investors should have 20% to 30% of their portfolios in the U.S. stocks we recommend in Wall Street Stock Forecaster. These investments can provide all the foreign exposure most investors need. If you do want to add more foreign content, you could buy individual stocks. But for most investors, directly investing in foreign stocks can add an extra layer of risk and expense. As well, timely and accurate information about overseas companies is not always available, and securities regulations vary widely between countries. It can also be hard for your broker to buy shares on foreign markets without paying a premium. Tax rules and restrictions on transferring funds between nations add further uncertainty and cost. We think one of the best ways to invest in foreign (non-U.S.) markets is through exchange traded funds (ETFs). You could add some of these ETFs in reasonable quantities: perhaps 10% of your holdings if you’re a conservative investor (including 5% or so in higher-risk funds, such as emerging market ETFs)....

WAJAX CORP. (Toronto symbol WJX; www.wajax.ca) sells and services cranes, forklifts and other heavy equipment. It also provides related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions). Wajax operates through 128 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries....

THOMSON REUTERS CORP. (Toronto symbol TRI; www.thomsonreuters.com) gets 55% of its revenue by selling news and information to professionals in the banking industry. The remaining 45% comes from providing specialized information products to clients in the legal, accounting and scientific research fields....

J.P. MORGAN CHASE & CO., $57.46, New York symbol JPM, has agreed to settle a number of lawsuits with the U.S. Justice Department related to securities backed by subprime mortgages. Morgan, Bear Stearns and Washington Mutual sold these investments during the pre-2008 housing boom. When real estate values fell and borrowers defaulted on their mortgages, the value of these securities plunged. Morgan acquired Bear Stearns and Washington Mutual in 2008, after they collapsed, but it is still liable for these lawsuits, which claim these companies deliberately understated the risk of these investments. Under the settlement, Morgan will pay $9 billion in cash to federal and state agencies. In addition, it will reduce the principal owed on current mortgages, reduce the payment on other loans, and demolish abandoned properties. In all, these concessions total $4 billion....

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....

BELL ALIANT INC. (Toronto symbol BA; www.aliant.ca) sells phone and Internet services to 2.5 million customers in Atlantic Canada and rural Ontario and Quebec. It also provides wireless services through an alliance with BCE, which owns 45% of Bell Aliant....