SAP

The German economy grew at an annualized rate of 9% in the second quarter of 2010. Unemployment has dropped for 14 consecutive months, and is now at 7.6%. That’s the lowest since 1992, and about where it was before the recession. The German economy contracted 4.7% in 2009. Germany has the largest economy in Europe, and the world’s fourth largest. It’s the second-biggest global exporter, behind China. German exports, which account for 45% of its economy, have been rising. That has helped Germany rebound while other European countries, such as Ireland, Greece, Spain and Portugal, struggle....

MANITOBA TELECOM SERVICES INC., $24.98, Toronto symbol MBT, fell 9% on Friday after the company cut its quarterly dividend by 34.6%, to $0.425 a share from $0.65. The new annual rate of $1.70 yields 6.8%. The company is the main provider of telephone services in Manitoba. Its Allstream subsidiary sells telephone, Internet and other communication services to businesses across Canada. The slow economy has cut business spending on new communication systems. That has hurt Allstream’s earnings. As well, Manitoba Telecom’s consumer businesses continue to face strong competition from cable companies....

The investment industry has created all sorts of exchange-traded funds (ETFs) in recent years. However, quality varies. All too many exist to tap into popular, but risky, themes and fads, so you need to be highly selective with your ETF holdings. ETFs offer very low management fees. In addition to low fees, the best ETFs offer well-diversified, tax-efficient portfolios of high-quality stocks. Here are five foreign ETFs we like:...

Cisco Systems Inc., $23.14, symbol CSCO on Nasdaq (Shares outstanding: 5.7 billion; Market cap: $131.9 billion), is a leading maker of hardware and software that links and manages computer networks. The company’s hardware includes routers, local-area network (LAN) and asynchronous transfer mode (ATM) switches, and dial-up access servers. (Servers are computers that manage shared files or programs on a network.) Cisco’s Internet Operating System (IOS) software ties these products together, delivers network services (which interconnect and move information between networks) and lets programs run on networks. Cisco gets about 46% of its revenue from overseas customers. The company’s revenues fell from $39.5 billion in fiscal 2008 (years end July 31) to $36.1 billion in fiscal 2009. However, now that the economy has begun to revive, many businesses have begun updating their networking equipment. As a result, Cisco’s revenue jumped 27.0% in its third quarter, which ended May 1, 2010, to $10.4 billion from $8.2 billion a year earlier. Excluding one-time items, its earnings rose 41.2%, to $2.5 billion, or $0.42 a share, from $1.8 billion, or $0.30 a share. The company bought back 87 million shares during the quarter, at a cost of $2.25 billion....

SAPUTO INC., $29.71, Toronto symbol SAP, earned $382.7 million, or $1.83 a share, in the fiscal year ended March 31, 2010. That’s up 37.2% from $278.9 million, or $1.34 a share, in the prior year. The latest earnings matched the consensus estimate. Revenue rose just 0.3% during the year, to $5.81 billion from $5.79 billion. The company raised its cheese prices during the year. However, the higher Canadian dollar hurt the contribution of Saputo’s U.S. dairy operations, which account for 33% of its revenue. Saputo plans to finish consolidating its various southern Ontario warehouses into a single new facility later this year. That should lower its costs by $6.5 million a year, starting in 2011....

One key part of our three-pronged investing program is to spread your money out across the five main sectors of the economy: Manufacturing & Industry; Resources; Consumer; Finance; and Utilities. In general, stocks in the Resources and Manufacturing & Industry sectors expose you to above-average volatility, and stocks in the Utilities and Finance sectors entail below-average volatility. Consumer stocks usually fall in the middle. That’s because consumer firms benefit from continuous and often habitual use of their products and services, so they have much more stability in their sales and earnings, no matter what the economy is doing....

SAPUTO INC. $29 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 207.2 million; Market cap: $6.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.0%; SI Rating: Average) is Canada’s largest producer of dairy products, including milk, butter and cheese. It also makes snack cakes and tarts. Aside from Saputo, the company’s main brands are Neilson, Stella and Dairyland. The company also has operations in the U.S., Argentina and Europe. In the three months ended December 31, 2009, Saputo’s earnings jumped 80.4%, to $104.3 million, or $0.50 a share. A year earlier, it earned $57.8 million, or $0.28 a share. That’s mainly because of contributions from its Neilson Dairy subsidiary, which Saputo bought from George Weston Ltd. (Toronto symbol WN) on December 1, 2008. The higher earnings came despite a 20% increase in milk prices over the past year. (Milk is the main raw material of Saputo’s dairy businesses, which provide 98% of its earnings.) The company has been able to offset most of these extra costs by raising its selling prices for cheese in Canada....

Food ingredient costs have been rising, and that’s starting to weigh on these four food companies. However, all four have strong brands and loyal customers. That should let them pass on most of these extra costs. These companies have also been finding ways to improve their productivity. We like all four, but only three are buys right now. TIM HORTONS INC. $34 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 176.2 million; Market cap: $6.0 billion; Price-to-sales ratio: 2.7; Dividend yield: 1.5%; SI Rating: Average) is one of Canada’s largest fast-food restaurant chains. Its 3,015 outlets mainly serve coffee and donuts. The company also has 563 stores in the U.S. Franchisees operate 99.5% of Tim Hortons’ coffee-and-donut shops. The company gets about two-thirds of its revenue from supplying these outlets with coffee, baked goods and related items. (Rents and franchise fees account for the remaining third of its revenue.) Tim Hortons owns its own bakeries and warehouses. That gives it strong quality control, and lets it use its buying power to negotiate better ingredient costs....

Investor concerns continue to mount over high debt levels in many European countries. That’s especially true of the so-called PIIGS countries (Portugal, Italy, Ireland, Greece and Spain). Right now, the European Union and International Monetary Fund are working on a bailout of Greece. However, negotiations are moving slowly, mainly because Germany, which would shoulder most of the bailout, is insisting that the Greek government sharply cut its spending before any restructuring can go forward.

Most European economies still need considerable reform

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Exchange-traded funds (ETFs) have gained popularity in recent years, mainly because many ETFs offer very low management fees. In addition to low fees, the best ETFs offer well-diversified, highly tax-efficient portfolios. However, quality varies. The investment industry has created all sorts of ETFs. All too many exist to tap into popular, but risky, themes and fads, so you need to be highly selective with your ETF holdings. Here are five foreign ETFs we like:...