stock split

The more you know about investing, the more successful you will be. That has been Pat McKeough’s approach through four decades as an investor and investment counsellor. He regularly presents his views on specific investment topics—and specific stocks—on video in order to share the insights he has gathered over the years. Today’s topic is one of the world’s leading tech stocks. In the contest to see which company would become the dominant Internet search engine, Google (symbol GOOG on Nasdaq) was the clear winner. It has built upon that foundation. Four years ago, the company launched its Android operating system for smartphones and tablet computers. This year, it purchased cellphone maker Motorola Mobility. Now it has announced a key re-organization that will make its richly-priced shares more liquid. We give an explanation of Google’s share initiative followed by Pat’s commentary. ...

Google’s shares have soared over 500% since it became a public company in 2004. Even so, we feel it still has plenty of growth ahead. The company is using its strong earnings from its world-leading Internet search business to invest in a variety of promising projects. Some, such as driverless cars and eyeglasses with embedded computer displays, have limited commercial appeal. However, other recent projects like its Android software for mobile devices have become important contributors to Google’s growth. Even after its big jump in the past few years, the stock remains attractive in relation to its earnings....

GOOGLE INC. $677 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 327.0 million; Market cap: $221.4 billion; Priceto- sales ratio: 5.1; No dividends paid; TSINetwork Rating: Above Average; www.google.com) is the world’s top Internet search engine, with about two-thirds of this market. The company has held on to its lead because its well-developed search technology gives it a big advantage over its competitors.

Google does not charge for its searches. Instead, it makes money by selling advertising on its websites. It mainly does this through its AdWords program, which lets advertisers bid on certain search words or phrases. The company then charges advertisers when users click on their ads. Google gets around 97% of its revenue from advertising.

The company also offers free access to all or part of its other services, including Gmail (email), YouTube (videos), Google Books (electronic books), Google Talk (Internet-based phone calls), Google+ (social networking) and Google Chrome (an Internet browser). These services help draw more users to Google’s sites, which lets the company sell more ads and charge higher ad rates.

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Energy Fuels Inc., $0.24, symbol EFR on Toronto (Shares outstanding: 214.3 million; Market cap: $51.4 million; www.energyfuels.com), is buying the U.S. assets of Denison Mines Corp., $1.44, symbol DML on Toronto (Shares outstanding: 384.7 million; Market cap: $554.0 million; www.denisonmines.com), for $106 million in Energy Fuels shares. Energy Fuels says that its three largest shareholders—Dundee Resources Ltd., Pinetree Capital Ltd. and Mega Uranium Ltd.—who together own about 22.7% of its shares, have indicated their willingness to support the deal. Energy Fuels also plans to seek shareholder approval to implement a 10-for-1 reverse stock split....

Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. This past week, an Inner Circle member wondered about one of Canada’s most successful growth stocks. The shares for this athletic wear firm have done very well for this investor, but he asks Pat if he should be cautious about the high share price....

lululemon athletica Inc., $76.72, symbol LLL on Toronto (Shares outstanding: 143.6 million; Market cap: $11.0 billion; www.lululemon.com), is a Vancouver-based designer and seller of yoga-inspired athletic wear and accessories. lululemon first sold shares to the public at $9 each, and began trading on Toronto in July 2007. (Note: All per-share figures adjusted for a 2-for-1 stock split in July 2011.) Dennis “Chip” Wilson founded lululemon in 1998, after noticing that more women were taking up yoga and other physical activities. Wilson had 20 years of experience making surfing and snowboard clothing. He believed that the all-cotton fabrics then used for yoga were inappropriate....

GOOGLE INC., $624.60, Nasdaq symbol GOOG, currently has two share classes: the class A shares, which have one vote each, and the class B shares, which have 10 votes each. Only the class A shares are listed and traded. This week, the company announced that it would create a new share class: the non-voting class C shares, which will trade on Nasdaq. Existing class A and B shareholders will receive one class C share for each share they currently hold, for an effective 2-for-1 stock split. The proposal requires the approval of shareholders voting as a single group at the company’s annual meeting on June 21, 2012. Insiders control about 92% of the class B shares, which gives them 66% of the total votes, so the plan should pass easily....

lululemon athletica Inc., $52.11, symbol LLL on Toronto (Shares outstanding: 108.0 million; Market cap: $5.6 billion; www.lululemon.com), is a Vancouver-based designer and seller of yoga-inspired athletic wear and accessories. Part of its brand image is that it doesn’t capitalize the first letters in the words making up its corporate name. lululemon first sold shares to the public at $9 each, and began trading on Toronto in July 2007. (Note: All per-share figures adjusted for a 2-for-1 stock split in July 2011.) The shares also trade in the U.S. on the Nasdaq market under the symbol LULU. Dennis “Chip” Wilson founded lululemon in 1998, after noticing that more women were taking up yoga and other physical activities. Wilson had 20 years of experience making surfing and snowboard clothing. He believed that the all-cotton fabrics then used for yoga were inappropriate....

When a company splits its shares, it is simply cutting itself up into a different number of pieces, without changing its fundamental value.

TOP ships, $3.96, symbol TOPSD on Nasdaq (Shares outstanding: 3.1 million; Market cap: $13.7 million; www.topships.org), transports crude oil, petroleum products and dry-bulk commodities such as iron and steel products, fertilizers and forest products by ship. The company consolidated its shares on a one-for-ten basis on June 24, 2011. Beginning on that date, the company’s shares began trading under the symbol TOPSD, to indicate that the reverse stock split had occurred. They will trade under this symbol for 20 trading days, then they will revert to the original TOPS symbol....