stock pickers

Higher commodity prices and an improving global economy have pushed up the prices of many junior mining stocks recently. And we think the best juniors have the potential to go even higher. (In a recent Stock Pickers Digest hotline, we updated our buy/sell/hold advice on a junior mine that’s risen more than 50% in the past six months, Baffinland Iron Mines. It’s got an iron-ore project with strong potential on remote Baffin Island. Read on for further details.) Despite the strong potential of top junior mining stocks, it’s important to remember that these stocks are among the riskiest you can buy. That’s why we think it’s a mistake to load your portfolio up with these highly volatile companies. Instead, make sure your investments are diversified by spreading your holdings out across the five main economic sectors (Manufacturing & Industry, Resources & Commodities, the Consumer sector, Finance and Utilities)....

NISSAN MOTOR CO., $17.50, symbol NSANY on Nasdaq, has set a price for its LEAF electric vehicle, which will be the first electric car to be widely sold in the U.S. Nissan plans to ship the LEAF to selected U.S. dealers in December, and sell the car nationwide in 2011. The LEAF will carry a manufacturer’s suggested retail price of $32,780 U.S. When you include a $7,500 federal tax credit, the car’s price will fall to $25,280. The LEAF will also be eligible for further rebates in California and some other states. Nissan will offer a lease program starting at $349 a month, not including tax credits....

Right now, gold is trading at roughly $1,125 U.S. an ounce. That’s down from its all-time high of $1,214.80 U.S., which it reached in late 2009. But it’s still far above the fall 2008 price of roughly $700 U.S. We think gold could well move higher in the long term, although it will continue to be volatile. Rising gold would be mainly driven by investor fears that low interest rates and government stimulus spending will spur inflation. That could prompt many investors to seek security by investing in gold. The best way to profit from rising gold is by sticking with gold stocks, particularly shares of gold-mining companies with rising production, positive cash flow and strong prospects. Even so, because of their volatile nature, we continue to recommend that gold stocks only make up a limited portion of your portfolio’s resources segment....

Our Successful Investor Stock Picker Fund is one of four “pooled funds” we offer as part of our Successful Investor Wealth Management service. The fund takes its name from our Stock Pickers Digest newsletter, which focuses on investments that would be suitable for your aggressive portfolio. Our pooled funds operate like traditional mutual funds. They give us a way to offer investment management to investors with smaller portfolios. They also give investors with larger portfolios a way of investing in specialized areas of the market.

Our Successful Investor Stock Picker Fund brings a conservative approach to aggressive investing

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WESTJET AIRLINES $13.49 (Toronto symbol WJA; SI Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 138.8 million; Market cap: $1.9 billion; No dividends paid) fell 3% on news that Sean Durfy will resign as the company’s chief executive officer. His replacement is Gregg Saretsky, WestJet’s executive vice-president of operations. Sudden resignations like this always add to a stock’s uncertainty. However, the new CEO has 25 years of experience in the Canadian airline industry. As well, the change will have little impact on WestJet’s low air fares and strong focus on customer service. These benefits continue to help it lure customers away from Air Canada, its chief rival. In 2009, WestJet’s share of Canada’s air-travel market rose to 38% from 36% in 2008....

FAIRFAX FINANCIAL HOLDINGS $373.55 (Toronto symbol FFH: SI Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.4 million; Market cap: $7.2 billion; Dividend yield: 2.7%) plans to buy the 91.7% of Zenith National Insurance Corp. (New York symbol ZNT) that it doesn’t already own for $1.4 billion U.S. To help pay for the purchase, Fairfax has raised $200 million U.S. by issuing new shares. Zenith has two wholly owned subsidiaries: Zenith Insurance Company and ZNAT Insurance Company. These firms sell workers’ compensation insurance to businesses across the U.S. Sharply higher layoffs during the economic slowdown have hurt Zenith’s business. Fairfax has taken advantage of its strong financial position to buy other insurers whose share prices have dropped with the slow economy. It recently paid $960 million U.S. for the 27.4% of Odyssey Re Holdings Corp. that it didn’t already own....

Aura Minerals, $3.96, symbol ORA on Toronto (Shares outstanding: 191.4 million; Market cap: $757.9 million), has bought three producing gold mines from Yamana Gold, which is a recommendation of our Stock Pickers Digest newsletter. Aura is also considering moving forward with projects on two of its copper properties: It may restart the Aranzazu mine in Mexico. It could also develop the Arapiraca project in Brazil. The company holds cash of $75 million, which it recently raised in a share issue. That cash balance, plus its producing mines and development prospects, give it speculative appeal....

ALIMENTATION COUCHE-TARD INC., $18.41, symbol ATD.B on Toronto, has more than 3,500 convenience stores in the U.S., and is the largest convenience-store operator in Canada, with over 2,000 outlets. The Canadian stores operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. Couche-Tard sells fuel at 70% of its stores. The stock fell 8% this week after the company reported lower-than-expected earnings. In its third quarter, which ended January 31, 2010, Couche-Tard’s earnings fell 22.9%, to $54.8 million, or $0.29 a share. A year earlier, it earned $71.1 million, or $0.36 a share. (All figures except share price in U.S. dollars.) The latest quarter’s earnings fell well short of the consensus earnings estimate of $0.38 a share. Earnings mainly fell due to lower profit margins on gasoline sales at the company’s U.S. outlets....

No matter what kind of investing approach you follow, we feel that you can improve your overall results — and cut your risk — by avoiding these 5 common investment errors. 1. Failing to follow a realistic stock market trading strategy: Some investors, particularly newcomers, plan to buy a few hot stocks (or funds, or options or futures), and double or triple their money in a few years. Then they’ll settle into a low-risk investing style that may only return an average 10% to 12% yearly. But if you could make 200% or 300% in a few years, why would you quit? If you could do it once, you should be able to do even better as you gain experience. Of course, if you doubt that you can keep it up indefinitely, you should also question whether you can pull it off the first time. The best stock market trading style for most investors is one that will work for them more-or-less indefinitely. You’ll want to be sure it suits your circumstances and temperament, that it won’t take up too much of your time, and that it doesn’t require luck or extraordinary circumstances for success....

The p/e ratio (the ratio of a stock’s price to its per-share earnings) is one of many handy investing tools. Typically, you calculate p/e’s using a stock’s current price and its earnings for the previous 12 months. The general rule is that the lower a stock’s p/e, the better. And a p/e of less than, say, 10, represents excellent value. A low p/e implies more profit for every dollar you invest. There’s no doubt that p/e ratios are an important part of many investors’ decision making. These financial ratios are published regularly on the Internet and in newspapers, and are widely followed....