recent acquisitions

TRILOGY ENERGY CORP., $35.29, symbol TET on Toronto, owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. About 71% of Trilogy’s production is natural gas. The remaining 29% is oil. In the three months ended September 30, 2011, Trilogy produced an average of 29,035 barrels of oil equivalent per day (including natural gas). That was up 29.3% from 22,462 barrels a day a year earlier. Trilogy’s daily production should rise to an average of 30,000 barrels for all of 2011. Cash flow per share rose 82.1%, to $0.51 from $0.28 a year earlier; the production increase and higher oil prices were the main reasons for the gain....

Enghouse Systems, $9.84, symbol ESL on Toronto (Shares outstanding: 25.6 million; Market cap: $251.9 million; www.enghouse.com), operates through two divisions: The interaction management division, which supplies 90% of the company’s revenue, sells software to manage call centres. The asset management business (10% of revenue) provides engineering software that is used by utilities, computer and telecommunications companies. In the three months ended July 31, 2011, revenue at Enghouse rose 22.2%, to $31.8 million from $26.0 million a year earlier. That’s mainly due to the company’s recent acquisitions. These include two firms acquired in April 2011: the Mettoni Group, a maker of call-centre software (purchased for $23 million U.S.), and CosmoCom, a seller of customer interaction management software ($20 million U.S.). Earnings per share rose 38.5%, to $0.18 from $0.13. The company’s balance sheet is strong. It holds cash of $88 million, or $3.49 a share, and has no debt....

EBAY INC. $31 (www.ebay.com) saw its earnings per share jump 20% in the three months ended September 30, 2011, to $0.48 from $0.40 a year earlier. These figures exclude unusual items, such as costs to integrate recent acquisitions. Revenue rose 31.9%, to $3.0 billion from $2.2 billion, mainly due to strong growth at its PayPal online payments business. Best Buy. LIMITED BRANDS INC. $43 (www.limitedbrands.com) will spend $590 million to upgrade its stores and open new outlets in fiscal 2013, which ends January 31, 2013. That’s up 38.8% from the $425 million it spent on capital improvements in fiscal 2012. Most of these funds will go toward opening new Victoria’s Secret lingerie stores outside the U.S. Limited held cash of $1.0 billion, or $3.44 a share, on July 31, 2011, so it can easily afford to expand. Buy. MTS SYSTEMS INC. $36 (www.mts.com) has raised its quarterly dividend by 25.0%, to $0.25 a share from $0.20. The new annual rate of $1.00 yields 2.8%. Buy.

GOOGLE INC., $591.68, Nasdaq symbol GOOG, continues to profit as advertisers shift from publications to online ads.

In the three months ended September 30, 2011, Google’s revenue jumped 33.4%, to $9.7 billion from $7.3 billion a year earlier. If you deduct commissions that the company paid to its marketing partners, its revenue would have risen 37%, to $7.5 billion. That beat the consensus revenue estimate of $7.2 billion.

Google charges advertisers every time a user clicks on one of their ads. In the latest quarter, paid clicks rose 28%, while the average cost advertisers pay per click rose 5%.

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BANK OF NOVA SCOTIA, $53.11, Toronto symbol BNS, continues to benefit from its growing banking operations in the Caribbean, Latin America, South America and Asia. In the three months ended July 31, 2011, the bank’s earnings rose 19.1%, to $1.2 billion from $1.0 billion a year earlier. Earnings per share rose 13.3%, to $1.11 from $0.98, on more shares outstanding. If you exclude certain one-time items, the bank would have earned $1.14 a share in the latest quarter. That beat the consensus estimate of $1.12 a share. Revenue rose 13.6%, to $4.3 billion from $3.8 billion. Bank of Nova Scotia continues to set aside less money to cover bad loans: loan-loss provisions fell 12.0%, to $243 million from $276 million a year earlier....

Intel Corp., symbol INTC on Nasdaq, is the world’s largest computer-chip maker. About 80% of all computers use its chips. In the three months ended July 2, 2011, the tech stock’s revenue of $13.0 billion. That’s up 21.1% from $10.8 billion a year earlier. The company’s recent acquisitions of McAfee Inc. and Germany’s Infeon Wireless Solutions (now Intel Mobile Communications) contributed $1.0 billion to Intel’s revenue, or 7.7% of the total. The tech stock’s earnings rose 10.0% in the quarter, to $3.2 billion from $2.9 billion. Earnings per share rose 15.7%, to $0.59 from $0.51, on fewer shares outstanding. These figures exclude costs related to integrate acquisitions and other one-time items....

BANK OF MONTREAL, $61.82, Toronto symbol BMO, continues to benefit as more borrowers pay back their loans on time. However, demand for new loans is slowing, and its credit-card customers are making fewer purchases. As well, other banks are paying higher interest rates to attract depositors. That is forcing Bank of Montreal to raise its rates in response. Even so, Bank of Montreal’s revenue rose 5.5%, in its 2011 second quarter, which ended April 30, 2011, to $3.2 billion from $3.05 billion a year earlier. Earnings rose 7.5%, to $800 million from $745 million a year earlier. Earnings per share rose 6.3%, to $1.34 from $1.26, on more shares outstanding. Without unusual items, such as costs related to its upcoming $4.1-billion, all-stock purchase of U.S.-based banking firm Marshall & Ilsley Corp. (New York symbol MI), earnings per share would have risen 5.5%, to $1.35 from $1.28. On that basis, the latest earnings beat the consensus estimate of $1.31 a share. Bank of Montreal expects to complete the Marshall & Ilsley purchase by July 31, 2011....

HEWLETT-PACKARD CO., $35.98, New York symbol HPQ, reported better-than-expected quarterly results this week. However, the company also warned that its earnings growth could slow in the current quarter, because more consumers are switching to tablet computers like the Apple iPad. That’s hurting sales of laptop and desktop computers. The stock fell 11% in response to the warning. In its 2011 second quarter, which ended April 30, 2011, Hewlett earned $2.7 billion. That’s up 3.2% from $2.6 billion a year earlier. Earnings per share rose 13.8%, to $1.24 from $1.09, on fewer shares outstanding. These figures exclude one-time items, such as costs to integrate recent acquisitions. On this basis, the latest earnings beat the consensus estimate of $1.21 a share....

MACY’S INC. $25 (www.macys.com) reported that sales rose 1.6% at its 850 department stores in March 2011, to $2.21 billion from $2.17 billion in March 2010. Same-store sales rose 0.9%. The company expects same-store sales to rise by 8% to 9% in April 2011 from a year earlier, due to a cosmetics promotion and the later Easter holiday. Buy. STATE STREET CORP. $47 (www.statestreet.com) sells accounting and administrative services to large institutional investors, such as mutual funds and pension plans. The company continues to benefit from its recent acquisitions and improving financial markets. In the first quarter of 2011, State Street earned $0.88 a share, up 17.3% from $0.75 a year earlier. Buy. IDEXX LABORATORIES INC. $81 (www.idexx.com) is seeing improving demand for its veterinary products. However, at over 30 times its projected 2011 earnings, the stock is vulnerable to an earnings setback or other bad news. Hold.

We’ve long recommended that all Canadian investors own two or more of the big five Canadian bank stocks. That’s mainly because of their importance to Canada’s economy. Like most stocks, the top five banks slumped deeply during the 2007-2009 market downturn and financial crisis. But since the market turnaround of March 2009, several of the top five have recovered and gone on (at least briefly) to all-time highs. Few other stock groups have done as well. (In a recent Successful Investor Hotline, we updated our buy/sell/hold advice on Toronto-Dominion Bank, which is the second biggest of the big-five Canadian bank stocks, after Royal Bank. Read on for further details.)...