merger

ALCOA INC., $8.69, New York symbol AA, reported better-than-expected revenue and earnings this week. However, aluminum demand in China is slowing. That caused the stock to fall 4%. In the three months ended September 30, 2012, Alcoa lost $143 million, or $0.13 a share. That’s partly because the company agreed to pay $85 million to settle a lawsuit that accused it of overcharging for raw materials. If you exclude all unusual items, Alcoa would have earned $0.03 a share in the latest quarter. That beat the consensus estimate of nil per share. A year earlier, the company earned $172 million, or $0.15 a share. Revenue fell 9.1%, to $5.8 billion from $6.4 billion. Aluminum shipments rose 3.1%, but average prices dropped 17.4%. The company also cut its production by 1.5%. But even so, the latest revenue figure beat the consensus estimate of $5.5 billion....

Most successful investors know better than to invest any money in the stereotypical “hot stock tip” —the gotta-act-quick buy recommendation that comes from a friend (or a friend of a friend). Stocks like these are supposedly sure to make you a lot of money, but they virtually never succeed. Some of these recommendations start out as honest opinions of investors who know just enough to jump to conclusions about a stock’s outlook. However, some of these naïve investors may have come under the influence of dishonest stock promoters and professional swindlers. Of course, you may feel your work gives you special expertise for investing in your own industry. Lots of tech company workers, for instance, feel that way. They have strong feelings about which tech firms are most likely to thrive and which are apt to fail. But the strength of that feeling can mislead you, for a couple of reasons....

STANLEY BLACK & DECKER INC. (New York symbol SWK; www.stanleyblackanddecker.com) is one of the world’s largest makers of hand and power tools for consumers. Its top-selling brands include Stanley, Black & Decker, FatMax and Powerlock. This business supplied 51% of Stanley’s 2011 sales and 46% of its earnings. The company’s building-security division makes locks, automatic doors and gates. It also monitors properties for its clients, typically through closed-circuit audio and TV systems. This division accounts for 25% of Stanley’s sales and 27% of its earnings....

STANLEY BLACK & DECKER INC. $62 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.9 million; Market cap: $10.6 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.6%; TSINetwork Rating: Average; www.stanleyblackanddecker.com) is one of the world’s largest makers of hand and power tools for consumers. Its top-selling brands include Stanley, Black & Decker, FatMax and Powerlock. This business supplied 51% of Stanley’s 2011 sales and 46% of its earnings. The company’s building-security division makes locks, automatic doors and gates. It also monitors properties for its clients, typically through closed-circuit audio and TV systems. This division accounts for 25% of Stanley’s sales and 27% of its earnings. The remaining 24% of sales and 27% of earnings comes from selling specialized tools to industrial users, such as auto mechanics and construction firms....

STANLEY BLACK & DECKER INC. $62 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.9 million; Market cap: $10.6 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.6%; TSINetwork Rating: Average; www.stanleyblackanddecker.com) is one of the world’s largest makers of hand and power tools for consumers. Its top-selling brands include Stanley, Black & Decker, FatMax and Powerlock. This business supplied 51% of Stanley’s 2011 sales and 46% of its earnings.

The company’s building-security division makes locks, automatic doors and gates. It also monitors properties for its clients, typically through closed-circuit audio and TV systems. This division accounts for 25% of Stanley’s sales and 27% of its earnings.

The remaining 24% of sales and 27% of earnings comes from selling specialized tools to industrial users, such as auto mechanics and construction firms.

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STANLEY BLACK & DECKER INC., $63.31, New York symbol SWK, is considering selling its consumer-hardware and home-improvement operations. These businesses make bath fixtures and other home accessories under brands such as Baldwin, Kwikset and Price Pfister. Stanley acquired these operations as part of its merger with rival toolmaker Black & Decker Corp. in March 2010. The company could receive $1.5 billion from these sales. That’s equal to 14% of its $10.8-billion market cap. Stanley will probably use the cash to add to its lineup of industrial tools and security devices, including locks, automatic doors and gates....

Volta Resources, $0.75, symbol VTR on Toronto (Shares outstanding: 155.4 million; Market cap: $116.6 million; www.voltaresources.com), is mainly focused on exploring its Kiaka gold project, located in Burkina Faso, and moving towards a development decision. Volta was formed from the 2008 merger of Birim Goldfields Inc. and Goldcrest Resources Ltd. The company believes that the deposit could hold as much as 4.3 million ounces of gold. As well, ongoing drilling continues to reveal strong gold mineralization, and indicates that the boundaries of the deposit still have room for extension. Volta has completed a pre-feasibility study on the Kiaka project that envisions an open-pit mine with initial capital costs of $609.7 million. The mine would have annual production of 340,000 ounces of gold over a mine life of 10.3 years....

BANK OF MONTREAL, $54.50, Toronto symbol BMO, reported higher-than-expected earnings for its latest quarter. In the bank’s fiscal 2012 second quarter, which ended April 30, 2012, its earnings rose 27.5%, to $982 million from $770 million a year earlier. That mainly reflects the contribution from U.S. banking firm Marshall & Ilsley Corp., which Bank of Montreal bought for $4.0 billion in stock in July 2011. Because of the extra shares the bank issued to pay for Marshall & Ilsley, its earnings per share rose at a slower pace of 15.2%, to $1.44 from $1.25. These figures exclude unusual items, such as costs to integrate the new acquisition. On this basis, the latest earnings beat the consensus forecast of $1.36 a share....

Drug makers should see strong gains over the next few years, particularly due to the aging population. However, they still face challenges. For example, they must continually invest large sums to develop new drugs as patents expire on older ones. New drugs can also take years to win regulatory approval. As well, the pharmaceutical business is extremely competitive, and new, more effective products could come along at any time. To cut your risk, we recommend that you focus on leaders like Pfizer. The company recently lost the exclusive rights to its top-selling Lipitor cholesterol drug, but it has plenty of other promising products on the horizon. Its strong balance sheet is also helping it increase its research spending and buy other drug makers. PFIZER INC. $23 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 7.5 billion; Market cap: $172.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.pfizer.com) is the world’s largest pharmaceutical drug maker. Its top-selling brands include Lipitor (for high cholesterol), Lyrica (epilepsy), Celebrex (arthritis pain), Viagra (erectile dysfunction), Xalatan (glaucoma), Norvasc (hypertension) and Zyvox (bacterial infections). The company is also the world’s fifth-largest maker of over-the-counter drugs. Its major brands include Advil (pain relief), Centrum (vitamins) and Robitussin (cough syrup)....

PENGROWTH ENERGY CORP. $8.96 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 360.3 million; Market cap: $3.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 9.4%; TSINetwork Rating: Average; www.pengrowth.com) has a long history of using acquisitions to expand, which adds risk. However, these purchases have increased its reserves and cash flow.

Its latest acquisition is NAL Energy Corp. (Toronto symbol NAE). NAL investors will receive 0.86 of a Pengrowth common share for each share they hold. That will give them 26% of the combined company. The deal should close by May 31, 2012.

Adding NAL’s properties in Alberta and B.C. (54% natural gas and 46% oil) will increase Pengrowth’s projected 2012 production by about 16%, to between 86,000 and 89,000 barrels of oil equivalent a day.

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