recent acquisitions

J.C. PENNEY CO. INC., $26.29, New York symbol JCP, fell 23% this week after the company reported much-worse-than-expected quarterly earnings. It also suspended its $0.20-a-share quarterly dividend to conserve cash. Penney operates more than 1,100 department stores in the U.S. and Puerto Rico. It also sells goods over the Internet. The company recently began a major restructuring that includes shifting to an everyday pricing strategy. The company feels that predictable prices will spur customers to visit more often instead of waiting for items to go on sale....

THE CHURCHILL CORP. $12.40 (Toronto symbol CUQ; TSINetwork Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.3 million; Market cap: $301.3 million; Dividend yield: 3.9%) reports that its revenue rose 9.4% in the three months ended March 31, 2012, to $333.3 million from $304.7 million a year earlier. That’s because the industrial services company’s mining and oil sands clients increased their construction activity. Even so, earnings fell 46.6%, to $3.1 million, or $0.13 a share, from $5.8 million, or $0.24 a share. That was mostly due to lowprofit- margin contracts that the company took on as part of its recent acquisitions, or when its markets were more competitive in late 2008, 2009 and early 2010. Most of these unfavourable deals should be completed by the end of this year. Churchill is still a buy.

STANTEC INC., $31.53, symbol STN on Toronto, sells a range of consulting, project delivery, design and technology services. The company’s clients operate in a variety of industries, including transportation, construction and oil and gas. Stantec has over 11,000 employees in 170 locations throughout North America. It also has four international offices. In the three months ended March 31, 2012, the company’s revenue rose 7.4%, to $439.1 million from $408.7 million a year earlier. Acquisitions were part of the reason for the gains; Stantec is also working on a number of new projects. Earnings rose 4.5%, to $24.9 million, or $0.55 a share, from $23.8 million, or $0.52....

These three media companies continue to cut their costs and streamline their businesses in response to rising competition from free information on the Internet. The resulting savings have kept them profitable and let them maintain—or raise—their dividends. They have also been making acquisitions, often at bargain prices. THOMSON REUTERS CORP. $30 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 829.2 million; Market cap: $24.9 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.thomsonreuters.com) gets 58% of its revenue and 48% of its earnings by selling news and information products to professionals in the banking industry and the legal (25%, 32%), accounting (10%, 11%) and scientific research (7%, 9%) fields. Over 85% of the company’s revenue comes from products it sells under subscriptions and contracts. That gives it predictable revenue streams and cuts its risk. As well, more of its customers are switching from printed to electronic products; that’s lowering its printing and postage costs....

Partners REIT, $7.49, symbol PAR.UN on Toronto (Units outstanding: 18.2 million; Market cap: $136.3 million; www.partnersreit.com), owns 22 retail properties in B.C., Alberta, Manitoba, Ontario and Quebec. In all, these shopping centres contain 1.7 million square feet of leasable space. Partners’ properties include malls and shopping centres that are mostly located in smaller cities, such as London, Ontario, and Selkirk, Manitoba. Its largest tenants include Canadian Tire, Shoppers Drug Mart, Sears, Rona and Metro. Partners completed its purchase of NorRock Realty Finance Corporation earlier this year. NorRock holds a portfolio of mortgage loans and investments connected to Canadian commercial real estate. After it closed the deal, Partners consolidated its units on a one-for-four basis....

THE CHURCHILL CORP. $12.40 (Toronto symbol CUQ; TSINetwork Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.3 million; Market cap: $301.3 million; Dividend yield: 3.9%) reports that its revenue rose 9.4% in the three months ended March 31, 2012, to $333.3 million from $304.7 million a year earlier. That’s because the industrial services company’s mining and oil sands clients increased their construction activity.

Even so, earnings fell 46.6%, to $3.1 million, or $0.13 a share, from $5.8 million, or $0.24 a share. That was mostly due to lowprofit- margin contracts that the company took on as part of its recent acquisitions, or when its markets were more competitive in late 2008, 2009 and early 2010. Most of these unfavourable deals should be completed by the end of this year.

Churchill is still a buy.

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MICROSOFT CORP., $30.98, Nasdaq symbol MSFT, aims to enter the fast-growing e-book field through a new alliance with bookseller Barnes & Noble Inc. (New York symbol BKS). This week, Microsoft agreed to buy 17.6% of a subsidiary of Barnes & Noble that will operate Barnes & Noble’s Nook e-book business; Barnes & Noble will own the remaining 82.4%. This new firm will also include Barnes & Noble’s college textbook operations. Microsoft will pay $300 million for this interest. That’s equal to just 5.9% of the $5.1 billion, or $0.60 a share, that the company earned in the three months ended March 31, 2012. Still, this move should help Microsoft develop new software for the Nook e-book reader and other mobile devices. That would help it compete with the Apple iPad tablet computer and Amazon.com’s Kindle e-book reader....

In addition to Pfizer, medical device makers like these three offer another way to profit from aging baby boomers and rising health care spending. However, not all are buys right now. BAXTER INTERNATIONAL INC. $55 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 556.3 million; Market cap: $30.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.4%; TSINetwork Rating: Average; www.baxter.com) makes medical products, such as intravenous pumps and kidney dialysis equipment. It also makes vaccines and drugs. Half of the company’s sales come from single-use products that continually need to be reordered. Baxter earned $569 million in the first quarter of 2012. That’s down 0.2% from $570 million a year earlier. The company spent $575 million on share buybacks during the quarter. Because of fewer shares outstanding, earnings per share rose 3.1%, to $1.01 from $0.98....

VeriFone Systems Inc., $52.77, symbol PAY on New York (Shares outstanding: 106.7 million; Market cap: $5.6 billion; www.verifone.com), manufactures and develops technology that makes electronic payments faster and more secure. The company makes many different kinds of point-of-sale equipment, including cash registers, card and cheque readers, and receipt printers. VeriFone also makes software that manages online transactions. Seventy per cent of the top 200 retailers in the U.S., including Wal-Mart, Macy’s, Safeway and Whole Foods, use VeriFone’s products. The company also has a number of clients beyond retailers, including banks and government agencies. VeriFone began operating in 1981. It first sold shares to the public on May 4, 2005, for $10.00 each....

INVACARE CORP. $16 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.9 million; Market cap: $526.4 million; Price-to-sales ratio: 0.3; Dividend yield: 0.3%; TSINetwork Rating: Average; www.invacare.com) makes mobility and home-care products, including wheelchairs and motorized scooters.

The stock is down 54% from its July 2011 peak of $35. That’s mainly due to production problems at its wheelchair plant in Elyria, Ohio.

On previous inspections, the Food and Drug Administration (FDA) found that this plant violated some of its regulations. However, these violations are not related to the safety or performance of Invacare’s products.

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