oil prices

THE TUPPERWARE BRANDS CORP. $26 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 61.1 million; Market cap: $1.6 billion; WSSF Rating: Above average) makes high-quality products for the home and kitchen, including plastic food and beverage containers and children’s educational toys. The company also makes a wide range of beauty products, including cosmetics, bath oils and fragrances. Major brands include Tupperware, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo and Swissgarde. Unlike most manufacturers of consumer products, Tupperware prefers to sell its products through independent dealers instead of traditional stores. These dealers hold “Tupperware parties” in homes, offices and other locations to demonstrate products and take orders for merchandise. Parties also give dealers an opportunity to recruit new dealers, and make it easier to expand sales in less-developed countries with few retail stores or distribution networks. Tupperware parties may seem old-fashioned, but Tupperware’s revenue grew at a compounded annual rate of 11.5%, from $1.1 billion in 2002 to $1.7 billion in 2006. Profits before unusual items fell from $1.30 a share (total $76.2 million) in 2002 to $0.82 a share ($47.9 million) in 2003, as the company ended a relationship with Target Stores. Profits improved steadily to $1.54 a share ($94.2 million) in 2006....

Some of the most profitable investments you’ll ever make come with hidden or widely under-valued assets such as brand names. Successful brands can help maintain and expand sales of existing products, and aid in the marketing of new ones. A good example is Tupperware. Its brand of plastic food-storage containers became world famous in the 1950s. But the much joked about Tupperware party is also an overlooked asset. It keeps the company’s marketing costs low, and could provide it with a competitive selling edge in a variety of industries. Tupperware is now using this unique selling model in the beauty products business. One day it could use it sell totally unrelated products such as mutual funds....

SHAWCOR LTD. $29 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 74.0 million; Market cap: $2.1 billion; SI Rating: Average) makes coatings that protect oil and natural gas pipelines from corrosion. The company also inspects and repairs pipelines, and makes drilling equipment. In 2006, income from continuing operations rose 13.6%, to $1.25 a share (total $92.9 million) from $1.10 a share ($82.8 million) a year earlier. If you disregard an unusual tax recovery in 2005, income would have grown 44%. Most of the gain came from new, more profitable pipeline coating contracts and ongoing cost controls. Cash flow per share rose 7.3%, to $1.90 from $1.77. Revenue grew 5.0%, to $1.06 billion from $1.01 billion. The company gets 75% of its revenue from customers outside of Canada, and the higher Canadian dollar cut its 2006 revenue by $41.5 million....

Our approach to investing focuses on high-quality companies with long histories of rising sales and earnings. From there, we classify stocks as “Conservative” or “Aggressive” depending on a variety of factors, such as the prospects of the industry it operates in and its ability to retain customers and attract new ones. We also take into account its exposure to certain regions and currencies. Here are three manufacturing companies from our Aggressive Growth Portfolio, although only two are buys right now. These stocks are still suitable for conservative investors, but we advise all investors to limit stocks like these to no more than a third of your portfolio. GENNUM CORP. $12 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.8 million; Market cap: $429.6 million; SI Rating: Above average) makes chips and other equipment that let broadcasters store, manipulate and transport video signals without losing picture quality....

CHEVRON CORP. $70 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.2 billion; Market cap: $154.0 billion; WSSF Rating: Above average) is the second-largest integrated oil company in the United States, after ExxonMobil Corp. The company produces oil and natural gas in 35 countries, and refines oil into gasoline and petrochemical products. It also operates 26,500 gas stations. The U.S. accounts for 30% of Chevron’s total production. In the three months ended December 31, 2006, Chevron’s earnings fell 6.5% to $1.74 a share (total $3.8 billion) from $1.86 a share ($4.1 billion) a year earlier. Revenue fell 11.3%, to $47.7 billion from $53.8 billion....

The Resources and Commodities sector of the economy has gone through a once-in-a-generation price boom in the past few years. Investors generally expect booming demand from India and China to keep prices high. However, this sector has always been highly volatile and subject to sudden downdrafts. We feel the best way to cut your resource risk is to stick with high-quality companies such as these three. They all have a broad range of income streams, which helps them stay profitable, even if prices fall. Hidden or little appreciated assets should fuel their growth for decades. They also have the flexibility to adjust production in the face of lower prices, which conserves cash for dividends and stock repurchases. CHEVRON CORP. $70 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.2 billion; Market cap: $154.0 billion; WSSF Rating: Above average) is the second-largest integrated oil company in the United States, after ExxonMobil Corp....

The U.S. economy grew at a rate of 3.5% in the fourth quarter of 2006, beating consensus forecasts of 3.0%. That’s down from growth of 5.6% in the first quarter of 2006, but up from 2.6% in the second quarter and 2% in the third quarter. The growth in the latest quarter was led by a 4.4% increase in consumer spending, and a 10.0% annualized increase in net exports. The rise came despite sharply slower housing markets. Auto production slowed as well. Without falling housing construction and auto output, growth would have been 5.9%. In contrast, the Canadian economy will likely show growth of only 1.5% or less in the fourth quarter when final figures are reported. That’s down from 1.7% in the third quarter of 2006, 2.0% in the second quarter, and 3.8% in the first quarter....

IMPERIAL OIL LTD. $38 (Toronto symbol IMO; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is Canada’s largest oil company, based on reserves and production. It also operates refineries, and 2,000 gas stations under the “Esso” banner. ExxonMobil Corp. owns roughly 70% of Imperial’s shares. This puts it in a strong position to weather the current downturn in oil prices. Imperial’s revenue fell from $17.3 billion in 2001 to $17.0 billion in 2002, but jumped to $28.2 billion in 2005 thanks to rising oil prices. Income slipped from $1.26 billion in 2001 to $1.22 billion in 2002. However, per-share earnings rose from $1.06 to $1.08 due to fewer shares outstanding. Earnings rose to $2.53 a share (total $2.6 billion) in 2005. Cash flow per share fell from $1.71 in 2001 to $0.41 in 2002, but grew to $3.07 in 2005. Revenue in 2006 probably fell to around $26 billion, as energy prices moved down. However, the company needs natural gas to run its Alberta oil sands projects, so it benefits from lower gas prices. Consequently, Imperial’s earnings in 2006 should grow to around $2.90 a share ($2.8 billion). The stock trades at 13.1 times that estimate. The $0.32 dividend yields 0.8%....

INTEL CORP. $20.82, Nasdaq symbol INTC, earned $0.26 a share in the fourth quarter of 2006, down 35.0% from $0.40 a year earlier. The company began expensing stock options in 2006, which cut its earnings in the most recent quarter by $0.04 a share. Restructuring costs also weighed on earnings in the latest quarter. Revenue fell 4.9%, to $9.7 billion from $10.2 billion, due to a price war with rival chipmaker Advanced Micro Devices. But Intel spent 17% of its 2006 revenue of $6.10 a share on research, so it’s more profitable than it looks. The company is phasing out older chips in favor of its more powerful dual-core and quad-core chips. But Intel is still ramping up production of these new products. The costs of running plants below full capacity cut its gross profit margin in the fourth quarter to 49.6% of revenue, from 61.8% a year earlier. Intel feels its margins will hover around 50% in 2007. The news spooked investors, and the stock fell roughly 7%. But Intel’s new chips should help it win back market share it lost to AMD in the past two years, particularly as next month’s release of the new Microsoft Windows Vista operating system spurs computer sales....

ARKANSAS BEST CORP. $39.75, Nasdaq symbol ABFS, has struggled in the past few months, as weaker sales of consumer and industrial goods hurt demand for its trucking services. Rising fuel costs and upgrades to its fleet also squeezed profits. But the stock jumped several dollars this week, partly in response to the dive in oil prices, which will cut its fuel costs. In addition, retailers will soon have to re-stock their stores after the busy Christmas buying season. The stock is still cheap at just 11 times earnings, while the $0.60 dividend yields 1.5%. Arkansas Best is a buy for aggressive investors. IDEARC INC. $29.53, New York symbol IAR, was a wholly owned subsidiary of Verizon Communications until November 2006, when Verizon spun off Idearc through a special dividend of one Idearc share for every 20 Verizon shares they held....