stock picks

Long-time readers know that we are constantly reevaluating our stock picks. Here are 12 stocks that have only limited growth prospects for the foreseeable future. We now see them all as sells. TETHYS PETROLEUM $1.42 (Toronto symbol TPL) produces and explores for oil and gas in Central Asia. Operating in that region adds significant political and legal risk to the company’s already uncertain prospects. Sell. PULSE SEISMIC $2.23 (Toronto symbol PSD) buys, sells and licenses seismic data to clients in western Canada. Pulse’s thin-trading shares have risen 50% on higher oil and gas drilling activity. Now would be good time to take profits. Sell....

Dorel Industries, symbol DII.B on Toronto, makes a wide range of products, including bicycles, ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs (including Eddie Bauer and Disney Baby licensed products); home furnishings, including chairs, tables, bunk beds, futons and step stools; and recreational products. In the three months ended December 30, 2010, the stock pick’s sales fell 1.0%, to $539.5 million from $545.3 million a year earlier. The home furnishing division’s sales declined 19.6%. That’s mainly because of slower sales in the U.S. The juvenile division’s sales dropped 5.0%, mainly due the rising Canadian dollar and lower sales in the U.S. However, the stock pick’s recreational/leisure division’s sales climbed 17.2%, due to strong sales of new products, including a new Schwinn bike....

J.C. Penney, symbol JCP on New York, operates 1,100 department stores in the U.S. and Puerto Rico. It also sells its goods over the Internet. In its 2010 fiscal year, which ended January 29, 2011, the U.S. stock pick’s sales rose 1.2%, to $17.8 billion from $17.6 billion in 2009. Its same-store sales increased 2.5%. The company launched a number of new brands in 2010. As well, online sales rose 4.4%, to $1.5 billion from $1.3 billion. The stock pick’s earnings per share jumped 48.6%, to $1.59 from $1.07 in 2009. Penney is doing a good job of managing its inventories. That cuts the need for costly clearance sales. It is also renovating about a third of its stores, including building more in-store boutiques devoted to specific brands....

Canada Bread Company Ltd., symbol CBY on Toronto, is Canada’s second-largest producer of baked goods after Weston Bakery. It also makes specialty pastas and sauces. The company’s main brands include Dempster’s, New York Bakery, Tenderflake, and Olivieri. Earnings fell 21.3% to $61.0 million, or $2.40 a share, in the fiscal year ended December 31, 2010. In 2009, it earned $77.5 million or $3.05 a share. If you exclude one-time items, such as restructuring expenses and costs to build a new bakery in Hamilton, Ontario, earnings per share fell 10.9% to $2.85 from $3.20. The new facility is expected to begin operating by July 1, 2011. Sales fell 6.9% to $1.6 billion from $1.7 billion. The strength of the Canadian dollar against the British pound and the U.S. dollar lowered the contribution of the company’s operations in the U.K. and the U.S. Prices of its ingredients, especially wheat, are also rising. However, the company is increasing its selling prices to offset rising costs....

Computer Modelling Group, symbol CMG on Toronto, sells software to clients in the oil and gas industry. It also provides consulting services. The company is one of the small cap stock picks we analyze in our Stock Pickers Digest newsletter. Computer Modelling’s software and services help its clients generate more cash flow by getting as much oil as possible from their existing wells. The company makes mostly recurring revenue from software licences and consulting contracts. That gives it long-term stability....

Tim Hortons, symbol THI on Toronto symbol THI, sold its half of Maidstone Bakeries business to Aryzta AG of Switzerland last year for $475 million. That helped the company buy back $341.1 million of its stock under its current repurchase program, which ended February 17, 2011. Under its new program, the company plans to spend up to $445 million on share repurchases over the next year. Meanwhile, the growth stock pick’s sales rose 4.0%, to $2.5 billion in 2010 from $2.4 billion in 2009. During the year, the company opened 149 new restaurants in Canada. That brings its total number of Canadian stores up to 3,148. Same-stores sales in Canada rose 4.9%. In the U.S., Tim Hortons opened 44 restaurants and 52 self-serve kiosks. It now has 602 U.S. outlets. Same-store sales in the U.S. rose 3.9%. The company’s earnings for 2010 jumped 110.5%, to $624.0 million from $296.4 million in 2009. Earnings per share rose 118.3%, to $3.58 from $1.64, on fewer shares outstanding. This was mostly due to a $361.1-million gain on the sale of Maidstone. New restaurants and menu items also contributed to the higher earnings....

Western Union Co. (New York symbol WU) provides money-transfer and foreign-exchange services in over 200 countries. In 2010, Western Union reported revenue of $5.2 billion. That’s up 2.1% from $5.1 billion in 2009. If you exclude the negative impact of exchange rates, revenue would have risen 3%. The company earned $909.9 million in 2010, up 7.2% from $848.8 million in 2009. During the year, Western Union spent $584 million on share buybacks. Due to fewer shares outstanding, the growth stock pick’s earnings per share rose 12.4% to $1.36 from $1.21 the year before. If you exclude one-time items, including restructuring expenses, earnings per share would have risen 10.1%, to $1.42 from $1.29....

Saputo Inc. (symbol SAP on Toronto) is Canada’s largest producer of dairy products, including milk, butter and cheese. The company also makes snack cakes and tarts. Aside from Saputo, the Canadian stock pick’s main brands include Neilson, Stella and Dairyland. The company also has operations in the U.S., Argentina and Europe. Saputo is one of the stock picks we analyze in our Successful Investor newsletter. In its third quarter, which ended December 31, 2010, Saputo earned $111.8 million, or $0.55 a share. That fell short of the consensus earnings forecast of $0.57 a share. Even so, the latest earnings are up 7.2%, from $104.3 million, or $0.50 a share, a year earlier. The company reported revenue of $1.54 billion in the latest quarter, up 3.0% from $1.48 billion....

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....