investment

TELUS CORP., $31.97, Toronto symbol T, gained 3% this week in response to media reports that U.S.-based Verizon Communications (New York symbol VZ) may postpone its plan to enter Canada’s wireless market. Verizon is a recommendation of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks. Verizon is reportedly interested in buying two smaller Canadian wireless carriers, Mobilicity and Wind Mobile, and bidding on new wireless frequencies, or spectrum. For technical reasons, Verizon may prefer to buy the new spectrum at an auction to be held in January 2014 before acquiring the two companies. Telus gets 53% of its revenue and 67% of its earnings from wireless services. That makes it particularly vulnerable to new competition from Verizon. Telus’s stock will likely remain volatile until Verizon’s intentions become clearer....

We’ve long recommended Canadian Tire, even in the face of strong competition from Wal-Mart and other big U.S. retailers. That’s due to its hidden assets, which investors tend to overlook.

The company is now taking steps to unlock the value of these assets....

RIOCAN REAL ESTATE INVESTMENT TRUST $24 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 302.6 million; Market cap: $7.3 billion; Price-to-sales ratio: 4.5; Dividend yield: 5.9%; TSINetwork Rating: Average; www.riocan.com) owns 348 retail properties in Canada, including 15 under development....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice on Canadian stocks and other investments 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....

J.C. PENNEY CO. INC. $13 (New York symbol JCP; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 220.4 million; Market cap: $2.9 billion; Price-to-sales ratio: 0.2; Dividend suspended in May 2012; TSINetwork Rating: Extra Risk; www. jcpenney.com) operates more than 1,100 department stores in the U.S. and Puerto Rico. It also sells goods online.

Over a year ago, the company switched to an everyday low prices strategy. It felt the move would entice shoppers to come into its stores more often and not wait for clearance sales.

However, the plan alienated Penney’s regular customers. In response to a sharp drop in its sales, the company switched back to its original marketing strategy.
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BROADRIDGE FINANCIAL SERVICES INC. $30 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 119.1 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.8%; 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 2013 fiscal year, which ended June 30, 2013, Broadridge’s earnings rose 10.6%, to $236.0 million from $213.4 million in fiscal 2012. Earnings per share rose 12.6%, to $1.88 from $1.67. These figures exclude unusual items, such as writedowns and costs to integrate recent acquisitions.

Revenue rose 5.5%, to $2.4 billion from $2.3 billion. Revenue from the company’s Investor Communications division (which supplies 73% of the total) rose 7.7%. Broadridge held on to 99% of its existing customers. It also continues to do a good job of signing clients to long-term deals that generate recurring revenue.
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THE BOEING CO. (New York symbol BA; www.boeing.com) is a leading maker of passenger jets....

Overall, investors lose more money to conflicts of interest than to any other single risk. That’s not a comment about the average broker’s sense of ethics. It’s simply a matter of frequency of exposure times risk per exposure. For example, suppose you tell your broker that you have some money and you want to invest it aggressively. He could suggest buying, say, some stock in Google. It’s a relatively young company in a fast-changing field, and it’s non-dividend-paying, so it’s somewhat aggressive as an investment. It has substantial profit potential, however, since it is the leader by far in a field with a lot of growth ahead. But if the broker advises you to buy Google, you’d only have to buy it once, and you might pay a commission of, say, 2% to 3% of the stock’s price. The broker is far better off financially if he advises you to try your luck in stock options. (These are investment products that give you the right but not the obligation to buy a stock for a fixed price, within a fixed time period.) In stock options, you’d pay a higher percentage commission on your outlay, perhaps 3% to 10%. Also, your stock options would have a limited life—they would expire in a fixed period of weeks or months. Then you would pay another commission to replace them....

ALGONQUIN POWER & UTILITIES CORP. (Toronto symbol AQN; www.algonquinpower.com) has nearly tripled in size over the last year through a series of acquisitions....

BELLATRIX EXPLORATION (Toronto symbol BXE; www.bellatrixexploration.com) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 69% of its output; the remaining 31% is oil....