investment

Pat McKeough responds to many requests for stock market advice and other questions on investment and the economy from the members of his Inner Circle. 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 a question about a stock whose prospects depend on the continued growth of 3D printing. Pat looks at the company’s attempts to spur further growth by aggressively promoting the sale of 3D home printers and by convincing industrial clients to adopt 3D printing. ...

HEWLETT-PACKARD CO. $20 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.9 billion; Market cap: $38.0 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.7%; TSINetwork Rating: Average; www.hp.com), like IBM (see left), wants to cut its reliance on selling computer hardware....

FAIR ISAAC CORP. $44 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.5 million; Market cap: $1.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 0.2%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness....

ENBRIDGE INC. (Toronto symbol ENB; www.enbridge.com) gets 90% of its revenue from pipelines that pump oil and gas from western Canada to eastern Canada and the U.S. The remaining 10% mainly comes from distributing gas to 2 million consumers in Ontario, Quebec and parts of New York State....

No doubt you’ve often read here that we recommend a three-pronged investment strategy:

1. Invest mainly in well-established companies with a history of sales and earnings, if not dividends;
2. Spread your money out across the five main economic sectors: Manufacturing & Industrial; Resources & Commodities; Consumer Goods & Services; Finance; Utilities;
3. Downplay or avoid stocks in the broker/media limelight. This limelight spurs investors to build up excessive expectations for these stocks. When the limelight stocks fail to live up to these excessive expectations, stock-price downturns can be sudden and brutal.

Recently a member asked a good question about item #3. He said, “You advise investors to downplay or avoid the broker/media limelight stocks, yet you continue to advise buying Google. I can’t think of a stock that’s more in the limelight than Google. It’s in the media every day. How does this square with your third principle?”...

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network....

SHERRITT INTERNATIONAL (Toronto symbol S; www.sherritt.com) is a natural resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 356 megawatts of power generation capacity in Cuba, with an additional 150 megawatts starting up this year. The company is a major nickel producer, with operations in Cuba and Canada. As well, it is now starting up its 40%-owned Ambatovy mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and is Canada’s largest thermal coal producer....

MAPLE LEAF FOODS INC. (Toronto symbol MFI; www.mapleleaf.ca) is Canada’s largest food processing company. It mainly sells its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. Through 90.0%-owned Canada Bread, the company also makes fresh and frozen bread, pastries and pasta. Maple Leaf is starting to see the benefits of a major restructuring plan, which includes building new plants and eliminating unprofitable products. It’s also installing a new computer system that will give its managers more timely information....

YAMANA GOLD INC., $11.81, symbol YRI on Toronto, owns seven operating gold mines in Brazil, Chile, Mexico and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold project in Argentina and has three other properties in advanced stages of development. The stock fell 11% this week in response to concerns that Cyprus may sell some of its gold reserves as it deals with its financial crisis. Investors, who typically buy gold as a hedge against inflation, are also worried that the U.S. Federal Reserve may scale back its quantitative easing policy, which would slow inflation. As a result, gold prices fell from around $1,500 U.S. an ounce to today’s price of $1,401. We feel Yamama’s high-quality mines give it an edge over other junior gold companies. It also plans to increase its production by at least 20% in 2013. Moreover, Yamana’s strong balance sheet is a plus: its debt of $765.9 million (as of December 31, 2012) is a low 8.6% of its $8.9-billion market cap. The company also held cash of $349.6 million, or $0.46 a share....

Pat McKeough responds to many personal questions on investing in stocks and other questions on investment and the economy from the members of his Inner Circle. 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. In the past week, we had a question from an Inner Circle member on a company that makes metal products, chiefly for transportation. Trinity Industries relies heavily on shipments of industrial products and natural resources, and Pat looks at whether it can continue to push up its revenue and profits in a sluggish economy. ...