symantec

SYMANTEC CORP. $12 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 836.0 million; Market cap: $10.0 billion; WSSF Rating: Average) makes software that helps protect computers from viruses and electronic attacks. Its best-known product is the top-selling Norton Anti-Virus program. Symantec continues to make acquisitions that strengthen its current products. For example, it recently purchased UK-based MessageLabs, which offers online software that helps users protect their email and instant messaging services from spam and junk emails. To put the $695 million purchase price in context, Symantec earned $311.2 million in its second fiscal quarter ended October 3, 2008, up 18.5% from $262.6 million a year earlier. Per-share earnings grew 27.6%, to $0.37 from $0.29, on fewer shares outstanding. These figures exclude unusual items. Sales grew 7.0%, to $1.5 billion from $1.4 billion....

Many technology stocks have plunged 50% or so in the past three months. That’s due to fears that the slowing economy will prompt businesses and consumers to buy fewer computers and cellphones. We feel proven tech leaders, such as these six, have a lot of appeal. They all have plenty of cash for research, and little debt. New products from this research will give them a competitive advantage, and spur their sales as the economy rebounds. As well, all six now trade for about 10 times earnings, down from 30 to 40 times a few years ago. Their p/e’s should eventually creep up, as their research spending pays off. That could lead to big gains for patient investors. But only some are buys right now....

One of the brightest signs in today’s market is that many great stocks now trade below 10 times earnings. That’s especially true of high-quality technology issues, since they spend so heavily on research, which gets written off against earnings like a routine expense. Low p/e ratios are also particularly appealing at times when interest rates are low, as they are now. Of course, earnings could drop next year and push up those p/e ratios. Stock prices could move lower, for a variety of reasons. But that’s always a risk. To profit best, you need to invest mainly in well-established companies that are likely to recover from the economic downturn and go on to produce still higher earnings in the future. KINGSWAY FINANCIAL SERVICES, $5.98, symbol KFS on Toronto, met on November 21 with representatives of New York-based money management company and shareholder activists, The Stilwell Group....

SYMANTEC CORP. $14 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 839.1 million; Market cap: $11.7 billion; WSSF Rating: Average) has agreed to acquire UK-based MessageLabs for $695 million in cash. MessageLabs offers online software that helps users protect their email and instant messaging services from spam and junk emails. Symantec plans to use MessageLab’s technology to develop other online security products. Symantec holds cash of $2.3 billion or $2.70 a share, so it can easily afford this purchase. Symantec is a buy. J.C. PENNEY CO. $20 (New York symbol JCP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 222.1 million; Market cap: $4.4 billion; WSSF Rating: Average) plans to launch two new lines of women’s clothing by noted fashion designers Allen B. Schwartz and Charlotte Ronson. The company hopes these moderately priced brands will help it lure increasingly cost-conscious shoppers away from high-end boutique clothing shops....

SYMANTEC CORP. $14.04 (Nasdaq symbol SYMC; SI Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 839.1 million; Market cap: $11.8 billion) is acquiring privately held UK-based MessageLabs for $695 million in cash. MessageLabs offers online software that helps users protect their email and instant messaging services from spam. MessageLabs gives Symantec exposure to this growing niche market. Symantec also plans to use MessageLab’s technology to develop other online security products. As well, it aims to sell its other products to MessageLabs’ customers. With over 19,000 customers, Message- Labs generated $145 million in sales in the year ended July 31, up 20% from a year earlier. To put that in context, Symantec had revenues of $1.7 billion in the latest quarter....

This downturn is going a lot further down that I ever expected. I still see it as a financial panic, rather than an indicator of the depth of the recession that now seems to have started. In other words, the market drop reflects a drying up in lending activity and fear of a depression, rather than a drying up in business activity. In the depths of a market downturn, some observers always predict that we are on the verge of another 1930s depression. In the 1930s, however, the U.S. and other governments did all the wrong things. They raised taxes, raised tariffs and did nothing to halt bank failures. The U.S. and other governments are doing all the right things to revive lending and credit, in my view. They are injecting funds into the financial system, arranging takeovers of failing financial companies, and moving to protect depositors. Eventually these efforts will pay off. Lending will then swiftly revive, and the market will go through a sharp recovery. There is no way to tell when that will happen, but you can bet that it will spur widespread disbelief, and warnings that it is just a temporary reprieve and that the downturn will soon resume....

CAMECO CORP. $24.07 (Toronto symbol CCO; SI Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 344.6 million; Market cap: $8.3 billion) has paid $28 million U.S. for an 11% stake in Govi High Power Exploration. Govi explores for uranium in Niger in west Africa. Cameco’s interest could rise to 48% by 2012 if it invests a further $212 million U.S. Govi Exploration holds exploration properties near the existing Arlit mine in Niger, as well as 2,400 square kilometers near Agadiz. Niger is among the world’s top five uranium producing countries. Cameco is already the world’s largest uranium producer, through its operations in the Athabasca Basin. The Niger acquisition lets it diversify in a small way outside that area....

ADOBE SYSTEMS INC. $44.28 (Nasdaq symbol ADBE; SI Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 530.5 million; Market cap: $23.5 billion) develops, sells and supports computer software products and technologies that let users create paper documents, and create and manipulate electronic documents. It’s a leader in graphic arts and desktop publishing software. Adobe’s two main software products are Acrobat (electronic documents) and PhotoShop (photo editing). Both products dominate their respective markets. In the three months ended May 30, 2008, Adobe’s revenues rose 19.0%, to $886.9 million from $745.6 million. (All figures in U.S. dollars.) The increase came from strong sales of its Creative Suite 3 products and Acrobat software. Growing demand in Europe and Japan helped offset soft sales in North America. Earnings per share excluding one-time items rose 35.1%, to $0.50 from $0.37.

Plenty of funds for development

Adobe holds cash of $1.9 billion or roughly $3.45 a share. Debt of $350.0 million is a low 16% of its market cap of $21.6 billion. That gives it lots of room to finance new product development. The company spends a high 19% of sales on research....

HEWLETT-PACKARD CO. $47.06, New York symbol HPQ, gained 5% this week after it reported earnings that exceeded consensus forecasts. In its third fiscal quarter ended July 31, 2008, earnings rose 21.1% to $0.86 a share from $0.71 a year earlier. Most of the gains came from lower operating costs. Revenue rose 10.2%, to $28.0 billion from $25.4 billion, thanks to strong sales of notebook computers. Growing demand for software and services is also helping Hewlett offset its reliance on printers. As well, the company benefited from the weak U.S. dollar, which makes its products more affordable in overseas markets. Hewlett-Packard is a buy....

SYMANTEC CORP. $14 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 839.1 million; Market cap: $11.7 billion; WSSF Rating: Average) has agreed to buy U.K.-based MessageLabs for $695 million in cash....