stock pickers
FORDING CANADIAN COAL TRUST $35.59 (Toronto symbol FDG.UN; SI Rating: Average) has gained roughly 40% since early April, partly due to growing demand for coal from Chinese steel makers. Right now, these companies get most of their coal from Australia. However, some Australian ports are having trouble coping with the rising volumes, and Chinese companies are looking to alternative sources, such as Canada. Fording did reach as high as $37 recently after Teck Cominco announced a friendly takeover bid for Aur Resources (a pick of our Stock Pickers Digest newsletter, with a gain of 1,285% since we first recommend it at $3 in 2002)....
TRIMBLE NAVIGATION $29.68 (Nasdaq symbol TRMB; SI Rating: Speculative) (408-481-6914; www.trimble.com; Shares outstanding: 119.5 million; Market cap: $3.5 billion) (adjusted for a 2-for-1 split in February, 2007) makes GPS devices and technology for four main markets: 1) Engineering and construction is the biggest contributor to revenue for Trimble, at 68% of revenues. This segment includes a joint venture with Caterpillar Inc. 2) Agriculture GPS products (15% of sales) let farmers cut costs and increase yields by, say, precisely plowing, seeding or fertilizing fields, even at night....
We’ve had great success with our GPS picks over the last few years. These companies have continued to find new uses for GPS, including navigation maps on cell phones, devices that let farmers more accurately and even remotely work their fields, training devices for runners to measure distance and times and antitheft devices for cars and other property. The Global Positioning System (GPS) is a 24 satellite navigation system run by the U.S. government that lets users precisely determine their geographic location and speed anywhere in the world. The European Union is now in the later stages of developing its own Global Navigation Satellite System (GNSS). It expects this system, called Galileo, to be fully operable in 2010 to 2012, with up to 30 satellites orbiting the earth....
IPSCO INC. $170.41 (Toronto symbol IPS; SI Rating: Average) (800-667-1616; www.ipsco.com; Shares outstanding: 47.2 million; Market cap: $8.0 billion) may now have a second potential bidder, Nasdaq-listed Steel Dynamics, the fifth-largest U.S. steel maker. The other possible buyer is reportedly Evraz Group SA, Russia’s biggest steel company. IPSCO jumped recently after the company announced that it has entered into discussions that could lead to a sale of the company. The stock is up 61% since we recommended it in the February, 2007 issue of Stock Pickers Digest at $106 a share. IPSCO is too economically sensitive for us to want to recommend it at current prices, especially since it owes much of its recent strength to takeover speculation....
VERIGY LTD. $24.63 (Nasdaq symbol VRGY; SI Rating: Speculative) (1-800-447- 8378; www.verigy.com; Shares outstanding: 59 million; Market cap: $1.5 billion) designs and makes test systems used in computer-chip production. Verigy shares jumped in late February after it reported earnings of $0.28 a share in the three months ended January 31, 2007, up 12% from $0.25 a year earlier. Revenues fell 2.9%, to $165 million from $170 million. The stock has risen 43% since we first recommended it at $17.17 in the November, 2006 issue of Stock Pickers Digest. Thanks to its balanced product portfolio, Verigy posted stronger results, despite overall weakness in the semiconductor (computer chip) test industry. The company holds cash of $300 million, or $5.10 a share, and has no debt. Verigy spends around 14% of revenues on research and development....
It was great to see the Saturday, February 3, 2007 Globe & Mail Report on Business ranked Stock Pickers Digest as Canada’s top investor newsletter in 2006. (The Successful Investor, our flagship newsletter for less aggressive investors, was #3 in the Globe’s analysis.) We achieved this ranking despite a couple of formidable obstacles that we faced this past year. First, we advise Canadians to invest up to 30% or so of their money in U.S. stocks. However, the U.S. dollar moved down in relation to the Canadian dollar in the first half of 2006. This hurt our U.S. recommendations and detracted from our overall results. Second, the resources sector provided much of the market’s 2006 gains. Here too, diversification weighed on our results....
TRIMBLE NAVIGATION $55 (Nasdaq symbol TRMB; SI Rating: Speculative) (408- 481-6914; www.trimble.com; Shares outstanding: 55.7 million; Market cap: $3.1 billion) is acquiring @ROAD $7.35 (Nasdaq symbol ARDI; SI Rating: Speculative) (510-668-1638; www.atroad.com; Shares outstanding: 62.2 million; Market cap: $457.3 million) for $7.50 a share, for a total of $496 million. Both stocks are recommendations of Stock Pickers Digest. @Road shareholders will receive $5 per share in cash, and the remaining $2.50 per share in a mixture of cash and/or stock, in a ratio yet to be determined by Trimble. @Road develops GPS products for managing mobile work forces. Trimble makes GPS devices and technology for four main markets: Engineering & construction (68% of sales), Agriculture GPS products (15%), GPS Components (11%) and products for mobile workforces (6% of sales)....
As you probably know, our Successful Investor business model has two parts. We publish investment advice through The Successful Investor Inc., and we manage investor portfolios through Successful Investor Wealth Management Inc. (These two companies are affiliated by common ownership; I own both but keep them separate for regulatory purposes.) This two-business model has advantages for our subscribers. The problems we encounter as money managers, and the solutions we come up with, help us to give our readers unbiased, practical advice. This serves as a counterweight to advice you may encounter elsewhere that is based on misapplied theory, or tainted by conflicts of interest.
Good problem to have
For instance, an investor recently told me that he sold half of his Canadian Pacific stock after it doubled for him. His broker didn’t object and in fact complimented him on his conservative approach....
Our Successful Investor Hotline is a key part of our three-part service (including the monthly advisory and Portfolios supplement). The goal of our Hotline is to keep you up to date with our market outlook and changes in our advice. The Hotline is available to our subscribers by phone and email. We update it 44 or more times per year. To make our Hotline even more useful, we have begun including it in our Index of stocks and subjects that we analyzed in the year to date. The latest edition of the Index goes out with this issue....
After a market rise like the one we’ve had in the past few years, investors often wonder, “When should I sell?” The answer depends as much on the stocks you hold as on the market outlook. Some stocks are made to be traded. That includes many of the more speculative stocks we analyze in Stock Pickers Digest, our affiliated publication which focuses on riskier, more aggressive investments than we do here in Wall Street Stock Forecaster. United Technologies (see below) has more than doubled for us since we first recommended buying it in April 2000 (we called it a “dull industrial with exciting prospects”). That alone may spur some investors to sell. But United has many of the earmarks of a well-established company with great long-term potential — one that is worth hanging on to through a market setback....