investment

WAL-MART STORES INC. $59 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.4 billion; Market cap: $200.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart.com) is buying 51% of Yihaodian, a Chinese company that sells groceries, clothing, consumer electronics and other goods over the Internet.

Wal-Mart did not say how much it is paying for this investment, but it already owns a minority stake in Yihaodian. This familiarity cuts the risk of an unpleasant surprise. As well, Wal-Mart’s expertise will help this company expand sales and cut costs. The deal should close later this year.

This is the latest in a series of acquisitions that have expanded Wal-Mart’s overseas operations. That’s helping it offset slower growth in the U.S., which accounts for 60% of its overall sales.

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Pat McKeough responds to many personal questions on specific stocks and other investing topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. This week, one Inner Circle member asked about one of the largest telecommunications firms on the world stock market. Pat looks at the prospects and potential pitfalls ahead for a company that seeks to expand its presence in international markets. ...

FAIRFAX FINANCIAL HOLDINGS $417.01 (Toronto symbol FFH: TSINetwork Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.9 million; Market cap: $8.3 billion; Dividend yield: 2.4%) now owns 5.12% of Research in Motion, symbol RIM on Toronto. RIM is a recommendation of our Successful Investor newsletter. RIM has appointed Thorsten Heins as its new chief executive officer and a director of the company. Previously, he was RIM’s chief operating officer. The company’s founders and former co-CEOs, Jim Balsillie and Mike Lazaridis, will remain directors. As well, the company has appointed Prem Watsa as a director. Mr. Watsa is the chairman and founder of Fairfax Financial Holdings....

INTACT FINANCIAL CORP. $60.00 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 129.6 million; Market cap: $7.8 billion; Dividend yield: 2.7%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power. In the three months ended December 31, 2011, Intact’s revenue rose 48.7%, to $1.58 billion from $1.06 billion. That was mainly due to AXA Canada, which Intact bought from Paris-based ASX Group for $2.6 billion last year. AXA Canada is the country’s sixth-largest home, auto and commercial insurer. It also gives Intact a presence in Quebec, B.C. and Atlantic Canada....

As the stock market rebounded in 2009 from one of the worst crises in years, Pat McKeough was invited by Jonathan Chevreau of the Financial Post to appear on his ‘Wealthy Boomer’ telecast. In a two-part interview, Pat aired his views on a wide variety of investment subjects. Now, with the stock market coming off last autumn’s lows, we think it’s an appropriate time to replay the interview, entitled “40 stocks to retire on” on YouTube. Pat discusses not only specific solutions for volatile markets, but also how his investment advice applies in all market conditions. Here is part one of the interview (part two will be posted on Monday, February 20).
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Pure Industrial REIT, $4.54, symbol AAR.UN on Toronto (Units outstanding: 50.5 million; Market cap: $229.3 million; www.piret.ca), owns industrial properties across Canada. As of September 30, 2011, the real estate investment trust owned 62 buildings containing 4.1 million square feet of leasable area. Pure Industrial has 38% of its leasable area in Ontario, 25% in Alberta, 15% in B.C., 10% in Manitoba, 5% in Quebec, 4% in Saskatchewan and 3% in New Brunswick. Pure Industrial’s largest tenants by square footage are TransForce (a major Canadian trucking company), Advance Engineered Products, Kingspan Insulated Panels (a subsidiary of Kingspan Group plc) and RSAC Canada and Reliance Metals Canada (which are both subsidiaries of multinational metals processor Reliance Steel & Aluminum)....

Annaly Capital Management, $16.53, symbol NLY on New York (Shares outstanding: 1.0 billion; Market cap: $16.5 billion; www.annaly.com), is a New York City-based real estate investment trust that owns and manages a portfolio of mortgage-backed securities. Annaly uses leverage to enhance its returns. It can borrow up to $10 for every $1 of capital invested. Right now, its leverage ratio is 7.66. This, however, also heightens its risk. Annaly has gained from predicting lower interest rates and positioning its portfolio to benefit from that prediction. However, no one can consistently foresee interest rate trends. When the company guesses wrong, as it inevitably will, its use of leverage will tend to balloon its losses. Its policy of investing only in highly liquid AAA mortgage securities will help limit the damage, but bond ratings have been less accurate recently than they have been in the past....

NCR CORP., $21.14, New York symbol NCR, jumped 11% this week after it agreed to sell its DVD rental business, which operates through automated kiosks, to Coinstar Inc. (Nasdaq symbol CSTR) for $100 million. NCR has also agreed to provide Coinstar with maintenance services, hardware and software. That will boost NCR’s profits by $25 million over the deal’s five-year term. The sale should close in the third quarter of 2012. Meanwhile, NCR reported better-than-expected earnings for 2011. During the year, the company earned $49 million, or $0.31 a share. That’s down 58.8% from $119 million, or $0.72 a share, in 2010. However, if you exclude writedowns and other unusual items, NCR would have earned $1.92 a share in 2011. That beat the consensus estimate of $1.83....

WESTJET AIRLINES LTD., $13.34, symbol WJA on Toronto, reports that its revenue rose 12.9% in the three months ended December 31, 2011, to $781.5 million from $692.2 million a year earlier. Demand for the company’s flights remains high, and it has entered into new partnerships with other airlines; these were the main reasons for the higher revenue. Earnings fell 4.3%, to $35.6 million from $37.2 million. Higher fuel prices were the main reason for the decline. However, earnings per share were unchanged at $0.26 due to fewer shares outstanding. The company has also raised its quarterly dividend by 20%, to $0.06 from $0.05. The shares now yield 1.8%....

Poseidon Concepts rents its fluid-handling tanks to over 100 customers in the oil and gas industry. Poseidon has just issued 6.3 million new shares.