thomson reuters

TRANSCONTINENTAL INC., $14.65, Toronto symbol TCL.A, is the largest commercial printer in Canada and Mexico, and the fourth-largest in North America. It also publishes newspapers and magazines, and has over 300 web sites. The stock rose 3% after the company reported better-than-expected earnings this week. Transcontinental also raised its dividend for the second time in the past six months. In its 2011 second quarter, which ended April 30, 2011, Transcontinental’s revenue rose 0.9%, to $514.7 million from $510.0 a year earlier. Excluding unusual items, earnings rose 17.6%, to $40.1 million from $34.1 million a year earlier. Earnings per share rose 16.7%, to $0.49 from $0.42, on more shares outstanding. That beat the consensus estimate of $0.44 a share....

CGI GROUP INC., $20.70, Toronto symbol GIB.A, is Canada’s largest provider of computer-outsourcing services. The company’s services can automate certain routine functions, such as accounting and buying supplies. That makes its clients more efficient, and lets them focus on their main businesses. In its fiscal 2011 second quarter, which ended March 31, 2011, CGI earned $117.0 million. That’s up 43.4% from $81.6 million a year earlier. Due to fewer shares outstanding, earnings per share rose 50.0%, to $0.42 from $0.28. If you exclude a tax gain, the company would have earned $0.40 a share in the latest quarter. That beat the consensus earnings estimate of $0.38 a share. Revenue rose 24.5%, to $1.1 billion from $910.4 million a year earlier. If you exclude the negative impact of exchange rates, revenue would have risen 27.9%. Canadian revenue rose 4.3%, and U.S. revenue jumped 67.3%, mainly because the company won a number of new contracts from the U.S. federal government....

Dividend 15 Split Corp., $12.30, symbol DFN on Toronto (Shares outstanding: 13.6 million; Market cap: $167.3 million; www.dividend15.com), is a split-share investment corporation that holds shares of 15 companies: BCE Inc., CI Financial Corporation, Bank of Nova Scotia, Thomson Reuters, National Bank of Canada, TransAlta Corporation, Sun Life Financial, Canadian Imperial Bank of Commerce, TransCanada Corporation, Manulife Financial, TD Bank, Royal Bank of Canada, Bank of Montreal, Telus Corporation and Enbridge. The company can also invest up to 15% of its portfolio in other stocks. Dividend 15 Split Corp. has two share classes: Dividend 15 Split Corp. capital shares (Toronto symbol DFN), and Dividend 15 Split Corp. preferred shares (Toronto symbol DFN.PR.A)....

These three companies all have large overseas operations. That exposes them to a wide variety of risks, including volatile currency-exchange rates and political unrest. However, all three are focusing on fast-growing markets. That enhances their long-term prospects. THOMSON REUTERS CORP. $38 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 833.7 million; Market cap: $31.7 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.thomsonreuters.com) has two main divisions: Markets (which supplied 58% of its 2010 revenue and 49% of its earnings) sells financial-information products to banks and other financial institutions. Professional (42%, 51%) sells specialized information to professionals in the legal, accounting, scientific and health-care fields. Thomson Reuters took its present form when the Ontario-based Thomson Corp. bought the U.K.-based Reuters news agency for $17 billion U.S. in cash and shares (all amounts except share price and market cap in U.S. dollars) in April 2008....

BANK OF NOVA SCOTIA $54 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $54.0 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.scotiabank.com) will get $47 million in earnings from its Mexican subsidiary in its current quarter. To put this in context, Bank of Nova Scotia earned $1.1 billion, or $0.98 a share, in the three months ended July 31, 2010. The Mexican operation’s latest earnings are down 10.2% from a year earlier, largely because it wrote down the value of certain securities it holds. Without these writedowns, its earnings would have risen 11%. Bank of Nova Scotia is a buy....

THOMSON REUTERS INC. $38 continues to see weak demand from its clients in the finance sector. But sales of information products to other professionals, such as lawyers and doctors, continue to rise. Still, the company’s overall revenue fell 1.8% in the three months ended June 30, 2010, to $3.2 billion from $3.3 billion a year earlier (all amounts except share price in U.S. dollars). The company is also spending more on developing new products. That’s partly why its earnings per share fell 19.0%, to $0.47 from $0.58. Hold. CANADA BREAD CO. LTD. $44 earned $0.84 a share in the three months ended June 30, 2010. That’s down 5.6% from $0.89 a year earlier. Sales fell 7.8%, to $402.1 million from $435.9 million. The higher Canadian dollar hurt the contribution of the company’s bakery operations in the U.S. and U.K. Canada Bread also increased its advertising spending to promote new products. Hold. LOBLAW COMPANIES LTD. $43 will close its distribution centre in Halifax in October 2010. The closure will simplify its operations in Atlantic Canada, and lower its operating costs. The company still has five distribution facilities to serve its 123 supermarkets in Atlantic Canada. Buy.

THOMSON REUTERS CORP. $37 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 831.1 million; Market cap: $30.8 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.3%; SI Rating: Above Average) has two main divisions: Markets (60% of revenue), which sells financial information to banks and other financial institutions; and Professional (40%), which sells specialized information to professionals in the legal, accounting, scientific and health-care fields. The company gets about 60% of its revenue from North and South America, followed by Europe (30%) and Asia (10%). In the three months ended March 31, 2010, Thomson’s revenue rose 0.3%, to $3.14 billion from $3.13 billion a year earlier (all amounts except share price and market cap in U.S. dollars). Earnings fell 9.3%, to $304 million from $335 million. Earnings per share fell 10.0%, to $0.36 from $0.40, on more shares outstanding....

TRANSCANADA CORP., $34.78, Toronto symbol TRP, has set aside $22 billion for new growth projects. The company already spent $10 billion of these funds. It will spend the remaining $12 billion over the next four years. TransCanada will invest some of these funds in the Keystone pipeline, which will pump crude oil from Alberta to refineries in Illinois. Keystone should begin operating later this year. The company will also build new natural-gas-fired power plants in Ontario and Arizona. As well, it plans to refurbish reactors at the Bruce nuclear-power station in Ontario (TransCanada owns 48.8% of these reactors), and build new wind farms in eastern Canada....

THOMSON REUTERS CORP. $34 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 829.7 million; Market cap: $28.2 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.5%; SI Rating: Above Average) has two main divisions: Markets accounts for 60% of revenue, and sells financial-information products to banks and other financial institutions. Professional (40% of revenue) sells specialized information to professionals in the legal, accounting, scientific and health-care fields. The company gets about 60% of its revenue from the Americas, followed by Europe (30%) and Asia (10%). The financial crisis prompted banks and brokerage firms to cut spending on information products. As a result, Thomson Reuters’ revenue fell 3.7% in the third quarter of 2009, to $3.2 billion from $3.3 billion a year earlier (all amounts except share price and market cap in U.S. dollars). Earnings fell 8.5%, to $0.43 a share (or a total of $359 million), from $0.47 a share (or $392 million). Thomson is taking advantage of the slump in the financial industry to expand its operations. For example, it will pay an undisclosed sum for breakingviews.com, a privately held web site that supplies financial news and commentary....

The credit crisis and recession weighed heavily on these three information providers. They have also been hurt by competition from free information on the Internet. All three have cut their costs in response. That puts them in a good position to increase their earnings as the economy rebounds and advertising revenues grow again. As well, all are leaders in their niche industries and regions. That gives them an advantage over their competitors. We continue to see all three companies as buys for long-term gains....