stock prices

Great-West and IGM have recovered nicely from their March lows. Despite this, both remain cheap in relation to their earnings. They also stand to expand their leading market shares as weaker competitors fold. This should let them continue paying above-average dividends. GREAT-WEST LIFECO INC. $23 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 944 million; Market cap: $21.7 billion; Price-to-sales ratio: 1.0; SI Rating: Above Average) is Canada’s second-largest insurance company after Manulife Financial Corp. (Toronto symbol MFC). The company also offers wealth-management services and owns Putnam Investments, a major U.S.-mutual fund company. Power Financial Corp. (Toronto symbol PWF) owns 68.7% of Great-West’s shares. The stock market downturn cut Great-West’s assets under administration by 14.7%, to $332.9 billion as of March 31, 2009, from $390.5 billion a year earlier. Great-West’s fees rise and fall with the value of the securities it manages, so the drop hurt its earnings: In the first quarter of 2009, earnings fell 33.9%, to $326 million from $493 million a year earlier. Earnings per share dropped 41.7%, to $0.35 from $0.60, on more shares outstanding....

We continue to recommend that all investors own at least two of Canada’s big-five banks – Bank of Montreal, Royal Bank, CIBC, TD Bank and Bank of Nova Scotia. These are key safe investments for a portfolio. But these should not be the extent of your financial holdings. It is also essential to diversity within each economic sector. Other types of financial investments, such as non-bank financial companies, should play a role in your portfolio. Non-bank financial companies include property and casualty insurance companies, mutual fund companies, wealth management companies, mortgage lenders and more. It also includes life insurance companies. The best of these can be safe investments in a well-balanced portfolio. Recently, Canadian life-insurance stocks have been held back by investor concerns that the recession will continue to hurt their profits....

Like other stock markets around the world, Japanese markets remain volatile. Moreover, the slow U.S. economy continues to hurt Japan’s major export industries. However, we think that Japan’s interest-rate cuts and its recently enacted $143.7-billion U.S. stimulus package will keep stock prices rising. JAPAN EQUITY FUND $4.79 (New York symbol JEQ; CWA Rating: Aggressive) mostly invests in large-capitalization stocks on the Tokyo Stock Exchange. The fund’s top holdings include: Toyota Motor, Mitsubishi UFJ Financial Group, Honda Motor, Sony Corp., Sumitomo Corp. and Panasonic Corp. Japan Equity Fund sells for 15% less than the value of its assets. It’s a buy....

WINDSTREAM CORP. $8.31 (New York symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 436.8 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.2; WSSF Rating: Average) provides local telephone and other services to 3 million customers in 16 states. Most of its customers are in rural areas. The company has no wireless operations, so it relies on high-speed Internet services to fuel its growth. Its 1 million high-speed customers represent just 34% of its lines in service, so there’s plenty of room to expand. Windstream uses bundles of local telephone, high-speed Internet and satellite TV services to hang on to customers in the face of strong competition from cable companies. On May 11, 2009, the company agreed to buy D&E Communications, Inc. (Nasdaq symbol DECC), which has about 200,000 phone and Internet customers in central Pennsylvania. The purchase will double the size of Windstream’s Pennsylvania operations, and add $148 million to its annual revenue. The deal should close in the second half of 2009....

LIMITED BRANDS INC. $13 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 321 million; Market cap: $4.2 billion; Price-to-sales ratio: 0.5; WSSF Rating: Average) earned $0.01 a share in its first fiscal quarter, which ended May 2, 2009. That was better than analysts expectations of a loss of $0.04 a share. In the year-earlier quarter, the clothing retailer earned $0.11 a share. That figure excludes a gain on the sale of its stake in a joint venture and a writedown of its investment in another joint venture. Sales fell 10.4%, to $1.7 billion from $1.9 billion. Overall same-store sales fell 7%, consisting of a 10% drop at the Victoria’s Secret and La Senza lingerie chains and a 3% drop at its Bath & Body Works personal-care products stores. The company continues to lower its costs. These measures, which include cutting its head office staff by 10%, freezing salaries and opening fewer stores, should improve its profitability when sales rebound. Limited Brands is a buy....

Trading stocks online can look like a great way to build wealth. But it’s fraught with risks, and only really works when stock prices are rising steadily. Investors who see early success in a bull market can face devastating losses when markets retreat.

Today, you often see references to trading stocks online in the media, as if there’s something magical about entering buy and sell orders over the Internet, or making buy and sell decisions with the help of computer programs or Internet-based services.

You can, of course, cut your brokerage costs by trading stocks online through a discount broker. These brokers’ commissions tend to be lower than what you would pay by trading over the phone. However, if you are trading so much that this slight cut makes a material difference to your long-term returns, then your main problem is excessive trading, not high commissions.

Instead, we recommend that investors spend more time focusing on what they buy and how it fits in their portfolios. As their holding periods grow longer, chances are their profits will improve, as well. The Internet gives investors lots of information on publicly traded companies, including press releases, newspaper articles, company web sites and stock charts.

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Recently some readers have asked what we think of U.S. newsletters that predict a total collapse in stock prices. The short answer is that I disagree with these publishers. But the best answer has to include some industry background, and point out that I also disagree with their approach to the newsletter business. We aim to publish balanced, realistic investment advice that you can use to help you invest your money, make it grow over long periods, and generally prepare for a comfortable retirement....

The original Dun & Bradstreet split itself into two separate companies in September 2000. From then till 2007, both stocks were terrific performers. Moody’s peaked at $76 in February 2007, while Dun & Bradstreet hit $108 in July 2007. Since then, the credit crisis, which took hold in 2008, has dampened their earnings and stock prices. As well, regulators are investigating the role rating agencies played in triggering the recession. The result could be greater restrictions on their operations, including the way they are paid. However, because rating firms provide independent, publicly available opinions, constitutional free-speech guarantees help protect them from shareholder lawsuits. We feel both firms will continue to profit from their well-established brands and large customer bases. Both are also cutting costs and expanding internationally....

BROADRIDGE FINANCIAL SOLUTIONS INC. $19 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 140.4 million; Market cap: $2.7 billion; Price-to-sales ratio: 1.2; WSSF Rating: Extra Risk) sells investor communications, securities-processing and transaction-clearing services to the investment industry. The company has launched a new web site (www.theinvestornetwork.com) that lets investors discuss a wide variety of topics, but they have to register through their broker to participate. This limits fraudulent posts aimed at inflating stock prices, the company says, but is also apt to please Broadridge’s broker-clients. Broadridge also plans to let companies use this site to supplement their annual meetings. This will help them cut their investor-relations costs. Broadridge is a buy....

When stock prices go down as much as they have lately, it generally means the stock market offers some highly attractive buying opportunities. But many investors now wonder if we are headed for a period of years of weak stock markets. In fact, we’ve already gone through more than a decade of unsettled stock markets. Stock prices have dropped more than 50% and are now down to where they were in 1997. It often turns out that the best time to buy is when stock prices have plunged and a recession is clearly underway, as it is today. But some investors feel this time is different. They think things can only get worse, and that we face a replay of the 1930s depression....