Verizon Communications Inc.

FRONTIER COMMUNICATIONS CORP. $9.33 (New York symbol FTR; Income Portfolio, Utilities sector; Shares outstanding: 993.9 million; Market cap: $9.3 billion; Price-to-sales ratio: 1.5; Dividend yield: 8.0%; TSINetwork Rating: Average; www.frontier.com) sells traditional telephone and high-speed Internet services to 5.6 million customers in 27 states. In July 2010, Frontier acquired Verizon’s traditional phone operations in 14 states in an all-stock deal. As a result, Verizon investors now own 68% of Frontier. The stock is up 34% since the merger. It now trades at 19.2 times Frontier’s forecast 2010 earnings of $0.49 a share. That’s a high p/e ratio for a telephone company with no wireless operations. However, the $0.75 dividend seems safe, and yields 8.0%....

DEL MONTE FOODS CO., $18.83, New York symbol DLM, has accepted a $19.00-a-share takeover offer from a private equity group led by KKR & Co. (New York symbol KKR). The company has until Janury 8, 2011, to seek a better offer. If it can’t find another buyer, the deal with KKR should close by March 31, 2011. The stock is trading at 0.9% below the offer, which indicates that investors do not expect a higher offer....

ALIMENTATION COUCHE-TARD INC., $22.47, symbol ATD.B on Toronto, has dropped its $2-billion U.S. hostile takeover bid for Casey’s General Stores (symbol CASY on Nasdaq). Couche-Tard allowed its tender offer for all of Casey’s outstanding shares to expire at 5:00 p.m. on September 30. Couche-Tard, which was offering $38.50 U.S. a share, decided not to compete with convenience-store chain 7-Eleven’s offer of $40 a share, or $2.1 billion. Casey’s now trades at $41.37, which suggests that investors expect a still higher offer, even though Couche-Tard has dropped out of the bidding. Even without the takeover, we still like Couche-Tard’s growth prospects. Meanwhile, the company has enhanced its reputation as a disciplined bidder that does not overpay for acquisitions....

Corning Inc., $17.85, symbol GLW on New York (Shares outstanding: 1.6 billion; Market cap: $27.9 billion), began making glass products in 1851. The company has a long history of innovation, including making glass bulbs for Thomas Edison’s first electric lights in 1879. In 1947, Corning became the first company to mass produce cathode-ray tubes for TV sets. Today, Corning makes advanced materials for a wide range of products at 60 plants in 13 countries. Asian customers account for about 60% of Corning’s sales. The company has five divisions:...

SARA LEE CORP. $14 (New York symbol SLE; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 662.2 million; Market cap: $9.3 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.1%; WSSF Rating: Above Average) should complete the sales of its remaining personal-care and household-product businesses by the end of 2010. Selling these operations will let Sara Lee focus on its more profitable food businesses, including making coffee, frozen bakery products and processed meats. Sara Lee will use the cash from these sales to buy back $2.5 billion to $3.0 billion of its shares over the next three years. The company’s plan to improve its productivity should also cut its annual costs by $350 million to $400 million by June 2012. Excluding unusual items, Sara Lee earned $746 million, or $1.08 a share, in the year ended July 3, 2010. Sara Lee is a buy....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on successful investing, including how to spot the best bargain stocks for your portfolio. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Spinoffs can bring two-way benefits, to the parent and the spun off division.” In a spinoff, a company sets up part of its operations as a separate public company, then hands shares in this company over to shareholders, or gives them a chance to buy these bargain stocks cheaply. Often, the spun off business and the parent both gain. Here’s why:...

Smartphones have become increasingly popular in recent years. Aside from functioning as mobile phones, these devices have many computer-like functions, including Internet access and email. There are a couple of ways for investors to profit from rising use of smartphones. The obvious approach is to buy shares of companies that make these devices. Apple and Research in Motion are the most dominant smartphone makers. However, other firms, such as Motorola, Palm and Garmin, have introduced new smartphones in recent months, as well. Another way to profit from rising use of smartphones and other wireless devices is by holding stocks of wireless carriers. Many of these firms have more revenue sources than smartphone makers. Aside from wireless operations, they may provide traditional phone, Internet and television services. This diversity lowers their reliance on a single device. In addition, they get continuing revenue from their customers. This cuts their risk....

VERIZON COMMUNICATIONS INC. $29 (New York symbol VZ, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 2.8 billion; Market cap: $81.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 6.6%; WSSF Rating: Average) owns 55% of Verizon Wireless, which is the largest wireless provider in the U.S.; U.K.-based Vodafone plc owns the other 45%. This business has 92.1 million customers in 50 states, and accounts for 60% of Verizon’s revenue. The remaining 40% comes from its wireline division, which sells local and long-distance telephone service to over 27 million customers in 28 states. In the past few years, Verizon has shifted its focus toward its wireless and high-speed Internet businesses. As part of this plan, it has spun off (or handed out shares of) many of its less-profitable operations....

FRONTIER COMMUNICATIONS CORP. $7.70 (New York symbol FTR; Income Portfolio, Utilities sector; Shares outstanding: 991.8 million; Market cap: $7.6 billion; Price-to-sales ratio: 1.1; Dividend yield: 9.7%; WSSF Rating: Average) sells Internet and traditional telephone services to 6.2 million customers in 27 states. Its clients are mainly in rural and suburban areas. The deal with Verizon tripled Frontier’s size. As well, many of these new clients are in areas with little high-speed Internet access. That gives Frontier a strong growth opportunity. As well, it can combine some of its current functions with those of the new Verizon business. That should free up cash that Frontier can use to expand its Internet operations. The $0.75 dividend, down from $1.00 before the purchase, seems safe and yields 9.7%. We’re adding Frontier to our Income Portfolio. For now, the stock is a hold.

MOTOROLA INC., $6.76, New York symbol MOT, has announced some of the details of its planned breakup into two companies. The company aims to complete the split in the first quarter of 2011. Motorola Mobility Inc. will make mobile phones and home-entertainment equipment, such as set-top boxes for receiving cable and satellite TV signals. The other company, Motorola Solutions Inc., will make communication equipment for large corporate clients, including telephone companies. Each of these businesses accounted for roughly half of Motorola’s 2009 revenue. The breakup makes sense for Motorola. That’s because its two main businesses have little overlap: The mobility business focuses on individual consumers, and the solutions business sells its products to large corporations. It also provides companies with financing for their purchases....