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PLEASE NOTE: Our next Hotline will go out on Thursday, June 30, 2011. ROYAL BANK OF CANADA, $53.92, Toronto symbol RY, is selling its struggling U.S. retail-banking operations, which consist of 424 branches in six southeast states. The buyer, PNC Financial Services Group Inc. (New York symbol PNC), is also purchasing Royal’s U.S. credit-card operations. Royal will hang onto its U.S. wealth-management and brokerage businesses. PNC is paying $3.6 billion U.S. for these assets, with an option to pay up to $1 billion U.S. of the purchase price in PNC shares. That would give Royal a 3% stake in PNC....

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BANK OF NOVA SCOTIA, $58.48, Toronto symbol BNS, reported better-than-expected earnings this week. That’s mainly because it is putting less money aside to cover bad loans because of the improving economy. The bank also saw strong gains at its international-banking and wealth-management operations. In the three months ended April 30, 2011, Bank of Nova Scotia earned $1.5 billion. That’s up 40.7% from $1.1 billion a year earlier. Earnings per share rose 33.3%, to $1.36 from $1.02, on more shares outstanding. The latest earnings included a one-time gain of $286 million, or $0.26 a share. That’s mostly because new accounting rules forced the bank to revalue its original 18% stake in DundeeWealth Inc. in connection with its recent purchase of the remaining 82% of this company. DundeeWealth manages investments and operates a brokerage business. It also owns the Dynamic family of mutual funds, and provides financial-planning and investment advice....

H&R BLOCK INC. $16 (New York symbol HRB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 305.3 million; Market cap: $4.9 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.hrblock.com) is the world’s largest provider of income-tax-preparation services. H&R Block’s U.S. offices prepared 20.8 million tax returns between November 1, 2010 and April 18, 2011. That’s up 6.1% from 19.6 million for the same period a year earlier. Most of this growth came from a 26.8% jump in returns processed over the Internet. However, the average fee per return fell 3.3%. The stock has gained over 40% since the start of 2011, but it has fallen lately due to H&R Block’s involvement with subprime mortgages. Even though it shut down its Option One mortgage business in December 2007, holders of bonds backed by Option One’s mortgages now aim to force H&R Block to buy back these securities. The cost would likely be much higher than the company’s $4.9-billion market cap. Still, it will likely take years to settle these claims....

Bank stocks tend to account for the bulk of most investors’ Finance-sector holdings. Banks are writing down fewer loans as the economy recovers and borrowers pay back their loans, but demand for new mortgages and other loans remains weak. To diversify your Finance holdings, we recommend investing in non-bank financial-services companies, such as these six. We have a high opinion of all of them, but not all are buys right now. VISA INC. $78 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 830.1 million; Market cap: $64.7 billion; Price-to-sales ratio: 7.5; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest retail electronic-payments network. The company processes credit, debit, prepaid and commercial payments under the Visa, Visa Electron, Interlink and PLUS brands....

Channel Resources, $0.26, symbol CHU on Toronto (Shares outstanding: 89.2 million; Market cap: $23.2 million; www.channelresources.ca), holds a 90% interest in the Tanlouka gold project in Burkina Faso, in western Africa. The company also has an option to earn a 100% interest in the Fox Creek lithium/potash/brine project in Alberta. Channel encountered gold mineralization in early drilling at Tanlouka, and now has a 10,000-metre exploration drilling program underway on the property. At Fox Creek, the company is testing the viability of extracting lithium from brine-bearing underground aquifers. Channel holds cash of about $1.7 million. Right now, it is using up its cash at a rate of about $200,000 per quarter, so it has enough to continue its exploration and development at the current pace for a couple of years....

Brompton Equity Split Corp., $12.97, symbol BE on Toronto (Shares outstanding: 1.7 million; Market cap: $21.9 million; www.bromptongroup.com) mainly invests in large-cap Canadian stocks. The fund was scheduled to wind up on May 31, 2011. However, it now plans to merge with Dividend Growth Split Corp., $9.21, symbol DGS on Toronto (Shares outstanding: 4.3 million; Market cap: $40.0 million; www.bromptongroup.com), on May 18, 2011. The new Dividend Growth Split Corp., symbol DGS on Toronto, will have a termination date of November 30, 2019....

Bombardier was a favourite of momentum traders in the 1990s, and the stock peaked at over $26 in 2000. However, 9/11 and two recessions cut the company’s share price to under $3 in 2009. In response, Bombardier aggressively cut its costs. It also expanded its railcar business. That lowered its exposure to the highly cyclical aircraft industry. These moves have significantly improved Bombardier’s earnings. That’s also helping the company develop new, more fuel-efficient airplanes and high-speed trains. These new products will help Bombardier increase its sales and market share, particularly in fast-growing countries like China and Brazil. BOMBARDIER INC. (Toronto symbols BBD.A $6.90 and...

PLEASE NOTE: Our next Hotline will go out on Thursday, April 7, 2011. EBAY INC., $31.36, Nasdaq symbol EBAY, is buying GSI Commerce Inc. (Nasdaq symbol GSIC) which sells e-commerce services to over 500 businesses. GSI’s customers include major retailers, such as Toys R Us and Aeropostale, consumer-electronics makers, including Hewlett-Packard, and professional-sports leagues, such as the National Football League. GSI helps these clients process and fulfill online orders, and increase their online sales....