stanley

AIC AMERICAN ADVANTAGE FUND $4.04 (CWA Rating: Aggressive) (AIC Group of Funds, 1375 Kerns Road, Burlington, Ont., L7R 4X8, 1-800-263-2144; Web site: www.aicfunds.com. Buy or sell through brokers) invests mostly in U.S. stocks. It holds 99% of its assets in the financial-services area. The fund’s financial holdings break down as follows: wealth management, 26.8%; life and health insurance, 20.9%; investment banking and brokerage, 11.9%; property and casualty insurance, 11.7%; diversified financial services, 7.3%; diversified banks, 7.1%; multi-line insurance, 6.3%; and consumer finance, 4.8%. The $30-million AIC American Advantage Fund’s top 10 holdings are JP Morgan Chase, Wells Fargo, AFLAC, Hartford Financial Services, Franklin Resources, Goldman Sachs, Bank of New York Mellon Corp., MetLife, Prudential Financial and Morgan Stanley. This fund holds just 17 stocks....

These two AIC funds hold much of their portfolios in finance stocks. This sector has risen lately on better-than-expected profits and an improved outlook for the economy as a whole. We prefer diversified funds. But if you must focus on a particular sector, finance still offers sound long-term prospects. If you invest in these funds, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector. AIC AMERICAN ADVANTAGE FUND $4.04 (CWA Rating: Aggressive) (AIC Group of Funds, 1375 Kerns Road, Burlington, Ont., L7R 4X8, 1-800-263-2144; Web site: www.aicfunds.com. Buy or sell through brokers) invests mostly in U.S. stocks. It holds 99% of its assets in the financial-services area....

UNIVERSAL CANADIAN GROWTH FUND $17.65 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor St. West, Toronto, Ontario, M5S 3B5. Web site: www.mackenziefinancial.com. Tel: 1-800-387-0780; Load fund: available from brokers) holds companies that its managers believe have strong management and sound business prospects. The fund holds fewer than 40 stocks. Universal Canadian’s top holdings include Thomson Reuters, Rogers Communications, Becton Dickinson, ShawCor, John Wiley & Sons, Dun & Bradstreet, Shoppers Drug Mart, Martinrea International, Waters Corp. and Enerflex Systems. The $823.1-million fund’s breakdown by economic sector is as follows: consumer discretionary (26%), energy (16.4%), industrials (12.1%), health care (8.8%), consumer staples (6.2%), telecommunications services (5.8%), information technology (5.2%), and metals and minerals (1.3%)....

iShares CDN MSCI EAFE Index Fund, $16.33, symbol XIN on Toronto (Shares outstanding: 50.6 million; Market cap: $825.5 million), is an exchange-traded mutual fund that tries to match the return of the Morgan Stanley Capital International Europe Australasia Far East (MSCI EAFE) Index. The MSCI EAFE Index is a benchmark for international equity performance. It is made up of 21 MSCI country indexes representing the developed markets outside of North America: Europe, Australasia and the Far East. The iShares CDN MSCI EAFE Index Fund is hedged against movements of foreign currencies against the Canadian dollar. The fund’s value rises and falls with the price movements of the stocks in its portfolio. The fund’s top 10 holdings are: BP plc, HSBC Holdings plc, Nestle SA, Total SA, Toyota Motor, Vodafone Group plc, Roche Holding, Telefonica SA, Banco Santander SA and BHP Billiton Ltd....

UNITED TECHNOLOGIES CORP., $52.23, New York symbol UTX, makes a variety of products for the aerospace and construction industries. Its main subsidiaries are Pratt & Whitney (jet engines), Hamilton Sundstrand (aircraft electronics), Carrier (heating and air conditioning) and Otis (elevators). The recession continues to weigh on many of United Technologies’ clients. As a result, the company’s revenue fell 17.2% in the three months ended June 30, 2009, to $13.2 billion from $15.9 billion a year earlier. As well, United Technologies gets about 50% of its revenue from overseas operations, so unfavourable foreign-exchange rates accounted for about a third of the drop. Earnings in the quarter fell 23.5%, to $976 million, or $1.05 a share, from $1.3 billion, or $1.32 a share. However, if you exclude severance costs and other one-time items, the company would have earned $1.21 a share in the latest quarter. That beat the $1.04 that analysts were expecting....

Black & Decker Corp., $28.06, symbol BDK on New York (Shares outstanding: 60.1 million; Market cap: $1.7 billion) is a leading maker of power tools, building products and fastening systems (such as screws and bolts). Aside from Black & Decker, its major brands include DeWalt, Toast-R-Oven and Price Pfister. The company sells its products in over 100 countries. As a result, international markets accounted for 39% of its 2008 sales. Black & Decker gets 30% of its total sales from home-improvement retailers Home Depot and Lowe’s. Black & Decker has three main divisions:...

TEMPLETON GROWTH FUND $8.42 (CWA Rating: Conservative) (Franklin Templeton Management Limited, 1 Adelaide Street East, Suite 2101, Toronto, ON. M5C 3B8. 1-800-387-0830; Web site: www.templeton.ca. Buy or sell through brokers) follows the approach that paid off so well for so long under its founder and long-time manager, John Templeton. His successors aim to look for bargains, avoid fads and pay close attention to a company’s fundamentals. Templeton Growth Fund holds 40.8% of its assets in the U.S., 14.8% in the U.K., 5.0% in Germany, 4.8% in France, 4.7% in Switzerland, 4.4% in Spain, 4.4% in Singapore, 3.6% in the Netherlands, 3.0% in Japan and 2.8% in South Korea. The $2.2-billion fund’s top holdings include Oracle (U.S. software), Telefonica SA (Spanish telecommunications), Microsoft Corp. (U.S. software), United Parcel Service (U.S. package delivery), Vodafone Group (U.K. wireless), Comcast (U.S. cable TV, Internet and telephone), Singapore Telecommunications, Amgen (U.S. biotechnology), Siemens AG (German electronics and electrical engineering) and Sanofi-Aventis (Swiss pharmaceuticals)....

THE STANLEY WORKS $34 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 79.1 million; Market cap: $2.7 billion; Price-to-sales ratio: 0.6; WSSF Rating: Average) makes hand and power tools for consumer and industrial users. Its top-selling brands include Stanley, FatMax and Powerlock. It mainly sells its tools through home-improvement retailers like Home Depot.

Security products cut Stanley’s risk

Stanley has spent $2.8 billion on acquisitions since 2002. We generally take a skeptical view of companies that fuel growth this way. But most of these purchases have cut Stanley’s reliance on tools. As a result, building-security operations, including automatic doors, gates and monitoring services, now supply 35% of Stanley’s sales and 45% of its earnings....

IVY FOREIGN EQUITY FUND $25.26 (CWA Rating: Conservative) gained 2.1% over the past 10 years, which was better than 3.1% loss posted by the Morgan Stanley benchmark international index. Over the last year, Ivy Foreign Equity Fund lost 10.7%. The fund invests in companies based outside of Canada, but cuts its risk by avoiding direct investment in emerging markets. The $1.9-billion fund holds 52.8% of its assets in the U.S., 10.4% in France, 10.1% in Switzerland, 8.9% in the U.K., 3.2% in Sweden and 3.0% in Denmark. It holds 11% of its assets in cash. Ivy Foreign Equity is one of our top foreign-fund recommendations. Still, we think non-U.S. international funds should make up no more than 10% of a conservative investor’s portfolio....

IVY EUROPEAN FUND $11.87 (CWA Rating: Aggressive) holds mostly good-quality stocks. The fund has outperformed the longer-term benchmark Morgan Stanley index. Even so, we don’t see any reason to hold a mutual fund that focuses on Europe. If you want European exposure, consider the Ivy Foreign Equity Fund (see above), or the closed-end EUROPEAN EQUITY FUND $5.59. The European Equity Fund sells for a 16% discount on the current value of its assets. The fund is a buy. Ivy European Fund is a sell....