stanley

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

Expanding through acquisitions is riskier than internal growth. However, some companies have a strong history of buying and integrating new businesses, and making them more profitable. A top example is Stanley, which has spent over $3.0 billion on acquisitions since 2002, not including last year’s $4.7-billion, all-stock purchase of rival toolmaker Black & Decker....

Stanley Black & Decker Inc., New York symbol SWK, makes power and hand tools and security devices. It took its current form on March 12, 2010. That’s when Stanley Works bought the Black & Decker Corp. for about $4.5 billion in stock. Stanley shareholders own 50.5% of the combined company, and Black & Decker investors own the remaining 49.5%. In 2010, the U.S. stock’s earnings per share rose 35.5%, to $4.12 from $3.04. This excludes one-time merger costs. Sales improved in both the U.S. and internationally, especially in Latin America. Sales in Canada and Australia declined slightly. Adding Black & Decker’s pre-merger sales in early 2010 to sales of the merged company in 2010 results in $9.3 billion total sales for 2010. Stanley Black & Decker expects that figure to rise by 5% to 6% in 2011....

CGI Group Inc., $19.54, symbol GIB.A on Toronto, is Canada’s largest provider of computer-outsourcing services. The company’s services help its customers automate certain routine functions, such as accounting and buying supplies....

CGI GROUP INC., $19.17, Toronto symbol GIB.A, is Canada’s largest provider of computer-outsourcing services. The company’s services help its customers automate certain routine functions, such as accounting and buying supplies. That makes its clients more efficient, and lets them focus on their main businesses. In its fiscal 2011 first quarter, which ended December 31, 2010, CGI earned $126.6 million. That’s up 13.8% from $111.2 million a year earlier. The company paid $81.0 million to buy back shares during the quarter. Due to fewer shares outstanding, earnings per share rose 21.6%, to $0.45 from $0.37. That easily beat the consensus earnings estimate of $0.34 a share. As a result, the stock gained 5% this week. Revenue rose 22.7%, to $1.1 billion from $913.0 million a year earlier. If you exclude the negative impact of exchange rates, revenue would have risen 25.9%. Canadian revenue rose 0.5%, but U.S. revenue jumped 77.1%, because the company won a number of new federal government contracts. The U.S. gain also reflects the contribution of Stanley Inc., which CGI bought last year. Stanley provides computer-outsourcing services to military and civilian agencies of the U.S. government....

CGI Group is more speculative than most of our other recommendations. It does not pay a dividend, and its major shareholders control the company through multiple-voting shares. Its aggressive growth-by-acquisition strategy also adds risk. It’s true that each of these factors is something of a negative, but each is minor compared to CGI’s strong growth prospects. That’s why we picked CGI as our Stock of the Year in January 2010. The stock has gained 20.0% since then. We still feel CGI has years of growth ahead, particularly because its services help cash-strapped governments and businesses cut costs. It also trades at a low multiple to earnings. That’s why we are once again picking CGI as our Stock of the Year for 2011....

ISHARES MSCI JAPAN INDEX FUND $10.48 (American Exchange symbol EWJ; buy or sell through a broker; us.ishares.com) is an exchange-traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index. The fund’s top holdings include: Toyota Motor, 4.4%; Honda Motor Co., 2.7%; Mitsubishi UFJ Financial Group, 2.7%; Canon, 2.4%; Sumitomo Mitsui Financial, 1.8%; Takeda Pharmaceutical Co., 1.6%; Tokyo Electric Power Co., 1.5%; Sony Corporation, 1.5%; Mitsubishi Corporation, 1.4%; and Mizuho Financial Group, 1.4%. The fund’s industry breakdown is as follows: Industrials, 20.0%; Consumer Discretionary, 19.1%; Financials, 16.7%; Information Technology, 13.3%; Materials, 7.6%; Utilities, 5.9%; Health Care, 5.6%. Consumer Staples, 5.3%; Telecommunication Services, 4.1%; and Energy, 1.5%....

The quality of exchange-traded funds (ETFs) varies widely. 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, the best ETFs offer well-diversified, tax-efficient portfolios of high-quality stocks. Here are five foreign ETFs we like:...

DEL MONTE FOODS CO., $18.83, New York symbol DLM, has accepted a $19.00-a-share takeover offer from a private equity group led by KKR & Co. (New York symbol KKR). The company has until Janury 8, 2011, to seek a better offer. If it can’t find another buyer, the deal with KKR should close by March 31, 2011. The stock is trading at 0.9% below the offer, which indicates that investors do not expect a higher offer....

TUPPERWARE BRANDS CORP. $48 (www.tupperwarebrands.com) has raised its quarterly dividend by 20.0%, to $0.30 a share from $0.25. The new annual rate of $1.20 yields 2.5%, and the stock now trades at just 13.3 times its likely 2010 earnings. Best Buy. CONAGRA FOODS INC. $21 (www.conagra.com) earned $0.34 a share in the three months ended August 31, 2010. That’s down 10.5% from $0.38 a year earlier. The company is spending more on advertising and promotions. This was the main reason for the decline. However, this spending should spur sales, particularly as ConAgra launches new products, such as low-sodium soups. As well, the company raised its quarterly dividend by 15.0%, to $0.23 a share from $0.20. The new annual rate of $0.92 yields 4.4%. Best Buy. STANLEY BLACK & DECKER INC. $61 (www.stanleyblackanddecker.com) earned $164.6 million in the three months ended September 30, 2010, up 166.3% from $61.8 million a year earlier. That’s mainly because of toolmaker Black & Decker, which Stanley bought in March 2010 for stock. Because of the extra shares outstanding, earnings per share rose 26.0% in the quarter, to $0.97 from $0.77. Big mergers such as this rarely go as smoothly as planned, but Stanley is making good progress absorbing this new business. Buy.