stock pickers

MITEL NETWORKS $12.03 (Toronto symbol MNW; TSINetwork Rating: Extra Risk) (613-592-2122; www.mitel.ca; Shares outstanding: 99.9 million; Market cap: $1.2 billion; No dividends paid) is now #1 in business communications products in Europe, and #3 in North American behind Avaya and Cisco, after its January 31, 2014 friendly takeover of Aastra Technologies.

Aastra, a Stock Pickers Digest recommendation, mostly makes business telephone equipment....

SHERRITT INTERNATIONAL CORP., $4.60, symbol S on Toronto, has fended off an attempt by activist investor George Armoyan and his firm, Clarke Inc. (symbol CKI on Toronto), to place three of its nominees on Sherritt’s board of directors. Together, they would have held a third of Sherritt’s nine board seats. Shareholders voted against the new directors at the company’s annual meeting on May 6. Meanwhile, Armoyan has put forward a number of proposals for Sherritt to cut costs, reduce its debt and better align what he sees as the interests of shareholders, management and the board directors....

METRO INC. $68 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 87.6 million; Market cap: $6.0 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Average; www.metro.ca) operates about 600 supermarkets in Quebec and Ontario. It also has over 250 drugstores that operate under the Brunet, The Pharmacy and Drug Basics banners. Metro continues to cut costs in response to competition from larger Canadian chains, like Loblaw and Sobeys, and big box stores like Wal-Mart and Costco. It is also converting some of its underperforming Metro outlets in Ontario to the faster-growing Food Basics discount banner. In its fiscal 2014 second quarter, which ended March 15, 2014, Metro’s earnings rose 0.5%, to $96.9 million from $96.4 million a year earlier. In the last six months, the company has spent $301.8 million on share buybacks. Due to fewer shares outstanding, per-share earnings rose 9.2%, to $1.07 from $0.98....

DEVON ENERGY CORP. (New York symbol DVN; www.dvn.com) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 57% gas and 43% oil. In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company aimed to focus on its North American projects, which include conventional production, Texas shale oil and Alberta oil sands....

DIRTT Environmental Solutions Ltd., $3.30, symbol DRT on Toronto (Shares outstanding: 68.9 million; Market cap: $230.2 million; www.dirtt.net), designs and builds customized office interiors. DIRTT stands for “doing it right this time.” The company believes its ICE 3-D software lets it deliver pre-made, customizable interiors faster and more efficiently than traditional construction methods. DIRTT first sold shares to the public at $3 each and began trading on the Toronto exchange in November 2013. In the three months ended December 31, 2013, the company’s revenue fell 1.3%, to $34.2 million from $34.7 million a year earlier. DIRTT lost $10.2 million, or $0.25 a share, compared to a loss of $419,000, or $0.01. The latest results included $836,000 of costs related to its initial public offering, as well as $4.6 million in debt-settlement expenses....

GOODYEAR TIRE & RUBBER, $25.29, symbol GT on New York, is the world’s largest tire maker, with 52 plants in 22 countries. In the quarter ended March 31, 2014, Goodyear’s sales fell 7.9%, to $4.5 billion from $4.9 billion a year earlier. North American sales declined 13.3%, to $1.9 billion from $2.2 billion. Sales also fell 13.2% in Asia and 17.7% in Latin America. That offset a slight increase in Europe. Harsh winter weather hurt North American car and truck sales, which cut demand for new tires. The weather also slowed customer traffic to retailers, which hurt sales of replacement tires. The weakening of the Brazilian, Venezuelan and Australian currencies against the U.S. dollar also lowered Goodyear’s revenue....

MITEL NETWORKS $12.03 (Toronto symbol MNW; TSINetwork Rating: Extra Risk) (613-592-2122; www.mitel.ca; Shares outstanding: 99.9 million; Market cap: $1.2 billion; No dividends paid) is now #1 in business communications products in Europe, and #3 in North American behind Avaya and Cisco, after its January 31, 2014 friendly takeover of Aastra Technologies.

Aastra, a Stock Pickers Digest recommendation, mostly makes business telephone equipment. Mitel operates in the same market as Aastra, but is focused more on software, including call centre and video-conferencing products. It is increasingly moving from selling programs that are installed at its customers’ offices to a cloud model, where it keeps its software on its own servers and sells it by subscription.

In the three months ended March 31, 2014, Mitel’s revenue rose 68.8%, to $241.5 million from $143.1 million a year ago (all figures except share price in U.S. dollars). Most of the increase came from Aastra.

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AURICO GOLD (Toronto symbol AUQ; www.auricogold.com) operates the El Chanate gold mine in Mexico, which produced 71,864 ounces in 2013. The company’s Young-Davidson gold mine in Northern Ontario reached full production in 2013, with total output of 120,738 ounces. The project’s output should rise to over 152,000 ounces this year....

YAMANA GOLD INC., $8.38, symbol YRI on Toronto, has succeeded in its joint $3.9-billion bid with Agnico Eagle Mines (symbol AEM on Toronto) for Osisko Mining (symbol OSK). Goldcorp (symbol G) has withdrawn its offer. Agnico Eagle and Yamana will now each own half of Osisko’s assets, including the Canadian Malartic gold mine in Quebec. The acquisition lets Yamana diversify beyond South America and Mexico, where it has seven mines. It should also boost the company’s per-share cash flow. Yamana Gold is still a buy....

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