option

We first recommended Stanley Works at $30 in our August, 2003 issue. We liked the strong earnings potential of its brands, and its expansion into less cyclical industries like building security services. The company also has a long history of rising dividends. Stanley reached a high of $64.25 in July this year, but has since moved down with slowing housing and renovation markets. However, it’s diversifying its product lines and expanding overseas. The stock is also cheap in relation to earnings, cash flow and sales. THE STANLEY WORKS $51 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 82.2 million; Market cap: $4.2 billion; WSSF Rating: Average) makes a wide variety of hand and power tools for consumers and industrial users....

DUNDEE CORP. $23 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 75.4 million; Market cap: $1.7 billion; SI Rating: Average) is reorganizing its operations, and selling certain assets. Dundee is a holding company with subsidiaries in three main areas: wealth management, real estate and resources. Dundee’s main subsidiary is 56.3%-owned DundeeWealth Inc., which offers wealth management services and owns the Dynamic family of mutual funds. In September 2006, Dundee- Wealth launched Dundee Bank of Canada, a Schedule I Chartered Bank. DundeeWealth has now agreed to sell Dundee Bank to Bank of Nova Scotia for $260 million. Scotiabank has also purchased new shares of DundeeWealth for $348 million. That gives Scotiabank an 18% stake....

We feel most investors should hold the bulk of their investment portfolios in securities from wellestablished companies. However, you may also want to hold some aggressive stocks. Most of our aggressive recommendations have a strong hold on niche markets. This approach cuts your risk by zeroing in on companies like these five, whose strong long-term prospects will help them overcome the inevitable downturns. However, we see only four of them as buys at this time. ARBOR MEMORIAL SERVICES INC. $30 (Toronto symbol ABO.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 10.6 million; Market cap: $318.0 million; SI Rating: Average) owns 41 cemeteries, 27 crematoria, three reception centres located on cemetery premises and 93 funeral homes in eight provinces....

H.J. HEINZ CO. $45 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 319.2 million; Market cap: $14.4 billion; WSSF Rating: Above average) is one of the world’s biggest food companies. Overseas markets supply roughly half of Heinz’s sales. Its flagship product, Heinz Ketchup, accounts for over 60% of ketchup sales in the United States. The company also makes other condiments, as well as frozen and canned foods and baby food. Heinz’s revenue grew from $8.2 billion in 2003 to $8.9 billion in 2005, but fell to $8.6 billion in 2006 (fiscal years end April 30). Earnings before unusual items rose from $2.03 a share (total $713.4 million) in 2003 to $2.34 a share ($827.7 million) in 2005, but fell to $2.18 a share ($750.2 million) in 2006....

CENTERRA GOLD $5.93 (Toronto symbol CG; SI Rating: Speculative) (416-204-1953; www.centerragold.com; Shares outstanding: 216.2 million; Market cap: $2.5 billion) dropped recently after it said it now expects 2007 gold production at its Kumtor mine in Kyrgyzstan to fall about a third below previous forecasts. The pit wall at Kumtor has developed structural problems. That means Centerra will have to remove more waste than previously planned when it expands the pit. That will block access to high-grade ore until the second quarter of 2008. Centerra now forecasts 2007 gold production of about 300,000 ounces at Kumtor, compared with its previous forecast of nearly 450,000 ounces. Despite the technical problems, Centerra is still a buy for aggressive investors....

NCR CORP. $49.77, New York symbol NCR, has fixed the terms of its planned spin-off of subsidiary Teradata Corp. NCR stockholders will receive a special dividend of one Teradata common share for each NCR share they own. The dividend is a tax-free distribution. NCR stockholders will only have to pay capital gains taxes on Teradata when they sell the stock. Teradata will trade on New York, symbol TDC. The stock will begin trading on a “when issued” basis on September 14. Regular trading begins October 1. Teradata makes computers and software that capture and store large quantities of a business’s data, such as its sales and inventory. Analyzing this data to identify buying habits and trends helps Teradata clients make better decisions and expand profits....

NVIDIA CORP. $44 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 362.9 million; Market cap: $16.0 billion; WSSF Rating: Average) makes graphic chips for computers, video game players and cellphones. These chips make games run smoother, and video images appear more lifelike. Option problems forced Nvidia to cut its reported pre-tax income between 1999 and 2006 by about $150 million. In its first fiscal quarter ended April 29, 2007, Nvidia’s earnings grew 37.5%, to $0.33 a share (total $132.3 million) from $0.24 a share ($92.1 million) a year earlier. Revenue rose 23.8%, to $844.3 million from $681.8 million, thanks to strong demand for its new high-end video chips....

AUTODESK INC. $44 (Nasdaq symbol ADSK; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 231.2 million; Market cap: $10.2 billion; WSSF Rating: Average) makes software that engineers and architects use to design machinery and buildings. The company has completed its review of its stock option plan, which cut its pre-tax earnings by an aggregate of $34.8 million from January 1988 to August 2006. It is now up-to-date with its financial reporting. In its first fiscal quarter ended April 30, 2007, Autodesk earned $0.34 a share (total $83.3 million), up 70.0% from $0.20 a share ($48.5 million) a year earlier. If you disregard unusual items, it would have earned $0.44 a share in the latest quarter. Revenue rose 16.7%, to $508.6 million from $436.0 million....

Autodesk and Nvidia had to restate their reported earnings for the past few years to correct errors related to the timing of executive stock options. Fixing these accounting errors is a plus, but both stocks face some business uncertainty. AUTODESK INC. $44 (Nasdaq symbol ADSK; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 231.2 million; Market cap: $10.2 billion; WSSF Rating: Average) makes software that engineers and architects use to design machinery and buildings. The company has completed its review of its stock option plan, which cut its pre-tax earnings by an aggregate of $34.8 million from January 1988 to August 2006. It is now up-to-date with its financial reporting....

DOW JONES & CO. INC. $55.00, New York symbol DJ, moved a step closer to selling itself to News Corp. after its directors advised stockholders to accept News Corp.’s $60-a-share cash offer. However, the deal requires the approval of the Bancroft family, which controls 64% of Dow Jones’ voting power through class B shares that carry 10 votes each. The family will probably make a final decision next week. So far, no other bidder for Dow Jones has emerged. If the family turns down the News Corp. offer, the stock will probably drop back to its pre-bid level of about $35. That would increase the likelihood of a class-action lawsuit, but that would probably be more an annoyance than an economic threat. The family isn’t obliged to sell simply because an offer came in above the market. We feel investors should hold....