investment

CHIPOTLE MEXICAN GRILL, $336.40, symbol CMG on New York, offers higher-quality food and better decor and service than many fast-food chains, and charges slightly higher prices. Under its Food with Integrity initiative, it uses naturally raised meat wherever possible. All of Chipotle’s naturally raised meat comes from animals that are raised in a humane way, never given antibiotics or hormones, and fed a pure vegetarian diet. To expand its Food with Integrity offerings, Chipotle opened a ShopHouse Southeast Asian Kitchen restaurant in Washington, D.C.’s Georgetown neighbourhood in September 2011. The company now plans to open a second location in Georgetown later this year or in early 2013....

Reductio ad absurdum (Latin: “reduction to the absurd”) is a form of argument that goes back thousands of years, to Aristotle and before. It works like this: to prove a proposition is false, you simply show that its logical implications lead to absurd conclusions. This can be a great timesaver for investors. Take, for example, foreign-exchange trading courses, for which you can pay hundreds or thousands of dollars for a day or two of instruction. The marketing materials for these courses suggest that you can make a living in as little as a few minutes a day by trading foreign exchange (or “forex,” as course promoters refer to it in the ads). Better yet, you can do it in your living room....

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 stock trading advice that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Buying nothing but stocks that are going up in price is liable to lead to more losses than gains.”...

ADOBE SYSTEMS INC. $33 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 491.8 million; Market cap: $16.2 billion; Price-to-sales ratio: 3.7; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) reported that its revenue rose 6.6% in the three months ended August 31, 2012, to $1.08 billion from $1.01 billion a year earlier.

The company is doing a good job of selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription service instead of a one-time purchase. Subscription revenue jumped 50.9% in the quarter, and now accounts for 16% of its overall revenue, up from 11% a year earlier. Adobe still gets 75% of its revenue from direct software sales. The remaining 9% comes from services and support.

Earnings rose 6.7%, to $291.2 million from $272.8 million. Earnings per share rose 5.5%, to $0.58 from $0.55, on more shares outstanding. These figures exclude several unusual items, such as restructuring charges and gains on investment sales.

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Here’s the text of the quarterly letter I sent to our Portfolio Management clients in late August: “Some of my long-time readers may recall an analysis I wrote in late 1991, for the front page of Investor’s Digest of Canada, entitled “The great bull market of the roaring nineties.” In it, I revealed that I was “more bullish than anybody I know.” I added that I was “as bullish as I’ve ever been.” My optimism back then was partly due to my view that the downfall of the Soviet Union was likely to lead to a big increase in the number of countries that were switching, or would soon switch, to some form of North American free enterprise and away from Soviet-style central planning. The former economic system has always proven way more productive than the latter. The outcome seemed obvious—more productive economies were likely to lead to higher corporate earnings and rising stock prices....

Pat McKeough responds to many personal questions on buying stocks and other investment topics 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 the Inner Circle. This week we received a question from an Inner Circle member about an American stock that is literally a household name. Like many large U.S. consumer stocks it now generates more sales internationally than at home. While it has moved forward with a new acquisition, it is also recovering from a number of product recalls....

LOBLAW COMPANIES LTD. (Toronto symbol L; www.loblaw.ca) recently formed a partnership with J.C. Penney (New York symbol JCP). Under this deal, Loblaw will build Joe Fresh casual-clothing boutiques inside 700 of Penney’s 1,100 department stores in the U.S. These outlets should open in April 2013. Penney will also sell Joe Fresh products through its website....

ALARMFORCE INDUSTRIES, $11.65, symbol AF on Toronto, reports that it attracted more customers and increased its revenue in the latest quarter. However, its earnings fell as it continued to expand its business. In the three months ended July 31, 2012, the company’s sales rose 10.9%, to $11.4 million from $10.3 million a year earlier. Even so, AlarmForce lost $6,589, or nil per share, compared to a profit of $831,342, or $0.07 a share. AlarmForce’s earnings fell because it increased its advertising spending as it expanded into Florida. It also invested more in its VideoRelay system, which it launched in October 2011. VideoRelay lets subscribers watch their homes through their computers and smartphones....

From time to time, companies set up one or more of their divisions or subsidiaries as an independent company, then hand out shares in that company to their own shareholders, as a special dividend or “spinoff”.

Many investors seem to view spinoffs as a nuisance, because they leave you with a tiny holding in a stock you didn’t choose and that you know little about....

All three of these telecom firms are using their steady cash flows to upgrade their networks with the latest technology. That’s letting them launch profitable new services, such as Internet TV and video calling, that are cutting their reliance on their shrinking telephone (or land line) businesses. These popular services are also helping all three companies maintain their high dividends. BCE INC. $44 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 773.9 million; Market cap: $34.1 billion; Priceto- sales ratio: 1.6; Dividend yield: 5.2%; TSINetwork Rating: Above Average; www.bce.ca) has 5.9 million telephone customers in Ontario and Quebec, as well as 2.1 million high-speed Internet subscribers and 2.1 million TV clients. In addition, the company’s wireless business now has 7.5 million subscribers across Canada. BCE continues to expand its media division, which includes the 28-station CTV Television Network, 30 specialty channels and 33 radio stations. The company recently agreed to buy Astral Media (Toronto symbols ACM.A and ACM.B), which owns 22 TV stations, 84 radio stations and several pay TV and specialty channels, such as The Movie Network, Family Channel and Teletoon. Astral also owns billboards and sells other outdoor advertising in Quebec, Ontario and B.C....