investment

CHESAPEAKE ENERGY $19.04 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848 -8000; www.chkenergy.com; Shares outstanding: 662.3 million; Market cap: $12.6 billion; Dividend yield: 1.8%) has moved up from its low of $13.32 in mid-May. That’s mainly because activist investor Carl Icahn has gotten involved in the company’s restructuring. Icahn, who has a long history of pushing companies to make changes that increase shareholder value, has acquired a 7.6% stake in Chesapeake. Pressure from Icahn has already prompted Chesapeake to announce that it will replace four of its eight board members with nominees of its largest shareholders—Icahn and Southeastern Asset Management Inc., which holds a 13.6% stake. Icahn now plans to push for cost-cutting measures and a more conservative approach to spending. His proposals will likely include cutting drilling budgets and selling certain pipelines and gas-processing plants....

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 advice on the fundamentals of successful 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: “Those who wish to trade stocks online should be very wary of the promises offered by automated stock trading systems.”...

Pat McKeough responds to many personal questions on specific 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. This past week, an Inner Circle member asked about one of the Canadian dividend stocks that was an income fund before the trust tax of 2011. This company raises revenue in a variety of ways, including the franchising of its company-owned gas stations, which allows it to collect commissions without high overhead. ...

This is the latest in a series of video interviews in which Pat McKeough gives his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies, including those for retirement planning, and still others focus on events that are affecting the markets and the economy. In today’s video, he replies to the many questions he receives on how much money people need to retire on. As he tells his personal Wealth Management clients, Pat explains, determining how much you need for your retirement is a lot more than just a matter of dollars and cents.
Q: Pat, we hear a lot these days about how much money people need to retire on. What do you tell your Wealth Management clients when they ask you about this?...

CANADIAN PACIFIC RAILWAY LTD. $73 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.9 million; Market cap: $12.5 billion; Price-to-sales ratio: 2.4; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.cpr.ca) has attracted a lot of media attention lately. That’s mainly due to efforts by a U.S.-based investment firm that wants to improve its performance and possibly spark a takeover offer. In our three-part Successful Investor portfolio strategy, we advise investors to invest mainly in well-established companies, spread your money out across the five main economic sectors, and downplay stocks that are in the broker/media limelight, which can bloat investor expectations. Downturns can be brutal when stocks fail to live up to those inflated expectations. So, investors have asked why we chose a #1 stock that’s in what they see as ‘the limelight’. The difference is in the definition....

These three industrial stocks are more volatile than our more conservative picks, like CP Rail and CN Rail (see page 61). Even so, their rising sales, healthy balance sheets and strong reputations in niche markets help temper their risk. All three also trade at attractive multiples to earnings. Moreover, they all kept paying dividends during the recession. However, we only see two as buys right now. SNC-LAVALIN GROUP INC. $39 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 161.1 million; Market cap: $6.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.snclavalin.com) is a leading Canadian engineering and construction company. It specializes in large-scale public works projects, such as roads, bridges, transit systems and water-treatment plants....

Great-West and IGM have moved down lately due to concerns over slowing economic growth and volatile stock markets. However, both companies are leaders in their fields, and both are cheap in relation to their earnings. They also have long histories of raising their dividends. GREAT-WEST LIFECO INC. $21 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 949.8 million; Market cap: $19.9 billion; Price-to-sales ratio: 0.7; Dividend Yield: 5.9%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s largest insurance company, with $523.0 billion of assets under administration. It also sells mutual funds, as well as retirement-planning and wealthmanagement services. Canada accounts for 53% of the company’s earnings, followed by Europe (31%) and the U.S. (16%). In the three months ended March 31, 2012, Great-West’s earnings rose 8.7%, to $451 million, or $0.48 a share. A year earlier, it earned $415 million, or $0.44 a share. Revenue rose 3.9%, to $6.5 billion from $6.3 billion....

BCE INC. $42 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 773.6 million; Market cap: $32.5 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.2%; TSINetwork Rating: Above Average; www.bce.ca) is joining a consortium of investors, including the Ontario Teachers’ Pension Plan, to buy privately held Q9 Networks Inc., which provides data-storage and web-hosting services to businesses across Canada. Q9 has 11 data centres in Ontario, Alberta and B.C. This investment will help BCE take advantage of growing demand from business clients for reliable cloud-computing services. BCE already operates six data centres. It will open a seventh later this year. BCE will pay $180 million for a 30% stake in Q9 when the deal closes, probably by the end of 2012. The purchase price is equal to 31% of the $580 million, or $0.75 a share, that BCE earned in the three months ended March 31, 2012....

From time to time, I read articles saying that growing numbers of financial advisors and stockbrokers are abandoning the traditional buy-and-hold strategy. For instance, one article stated that some brokers were taking new approaches more in tune with the new “macro-economic climate.” That sounds suspiciously like just another way of trying to guess what will happen next....

Electronic Arts Inc., $12.82, symbol EA on Nasdaq (Shares outstanding: 317.9 million; Market cap: $4.1 billion; www.ea.com), makes video games for a wide variety of devices, including computers, video game consoles (such as the Sony PlayStation, Microsoft Xbox and Nintendo Wii) and mobile devices (including Apple’s iPhone and iPad). The company sells a number of sports-based titles that it reissues annually. It has licensing deals with most major professional sports organizations, including the National Football League, FIFA (soccer), Major League Baseball and the National Hockey League. Electronic Arts also develops its own game franchises. It constantly releases sequels and new versions that give it ongoing revenue. Top-selling examples include The Sims (a life-simulation game), Need for Speed (a car-racing game) and Battlefield (a war game). As well, the company makes games based on popular movie and literary characters such as Harry Potter....