recent acquisitions
Our recommendations in software stocks have delivered huge gains in the past few years. But many now face growing competition from free software on the Internet, or they trade at high p/e’s. Computer makers are also demanding lower prices for pre-installed programs to keep the costs of new computers down. We still hold a high opinion of these top software makers, but we advise against new buying right now. AUTODESK INC. $38 (Nasdaq symbol ADSK; WSSF Rating: Average) makes AutoCAD, the world’s top selling computer aided design program. About 4 million architects and engineers in over 100 countries use it to design and test new buildings and products. This business supplies nearly 90% of its revenue. The remainder comes from programs that filmmakers use to create special effects....
GREAT-WEST LIFECO INC. $29 (Toronto symbol GWO; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $174.1 billion. Power Financial Corp. owns 75% of the company’s stock. In the three months ended September 30, 2005, Great-West earned $421 million, up 1.7% from $414 million a year earlier. However, per-share income remained unchanged at $0.47 a share. If you exclude a restructuring charge and extra provisions for claims related to hurricanes in the United States, the company would have earned $0.51 a share in the most recent quarter. Revenue rose 5.1%, to $5.2 billion from $4.95 billion. Most of Great-West’s recent earnings growth comes from its Canadian operations (45% of revenue), mainly due to expense reductions following the acquisition of rival insurer Canada Life Financial in 2003. So far, Great-West has cut its annual costs by $407 million. That’s 23% ahead of its original target. It should finish absorbing these operations in early 2006, and ultimately save $420 million....
Many investors limit their holdings in the Finance sector of their portfolio to Canada’s big five banks. While we have a high opinion of the banks, and recommend that every investor own at least one of them, we also advise investors to look beyond them. Here are three non-bank financial services stocks that we see as buys for long-term gains. However, only two are suitable for conservative investors. GREAT-WEST LIFECO INC. $29 (Toronto symbol GWO; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $174.1 billion. Power Financial Corp. owns 75% of the company’s stock....
H.J. HEINZ COMPANY $35 (New York symbol HNZ; WSSF Rating: Above average) rose more than 25-fold from the early 1980s through 1998. In the next couple of years, it dropped by nearly half. It has spent much of the current decade between $30 and $40. Its next big move is likely to be upward. Heinz is one the world’s biggest food companies, with sales in over 200 countries. It’s best known for its Heinz ketchup, which has 60% of the American retail market and 80% of the restaurant market. Other products include soups, beans, pasta sauces (Classico), frozen potatoes (Ore-Ida) and baby food (Plasmon). Overseas markets account for 55% of Heinz’s sales, and 45% of its profit. Heinz’s sales fell from $9.4 billion in 2000 (fiscal years end April 30) to $8.2 billion in 2002, after it spun off several slow-growth brands such as North American tuna and pet food to Del Monte Foods Inc. Sales improved to $8.9 billion in 2004....
Investing mainly in well-established companies is one of the three cornerstones of our investing philosophy (the other two are spreading your money out across the five main economic sectors, and focussing on investments that are outside the current media/broker limelight). Well-established companies generate enormous gains over periods that stretch into decades. But their pace of growth varies. They can and often do swing back and forth between stagnation and explosive growth. But even during lackluster times, they build their potential for gain, and pay dividends. H.J. HEINZ COMPANY $35 (New York symbol HNZ; WSSF Rating: Above average) rose more than 25-fold from the early 1980s through 1998. In the next couple of years, it dropped by nearly half. It has spent much of the current decade between $30 and $40. Its next big move is likely to be upward....