wall street
Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks as well as questions on investment strategy and the economy. 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. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week we had a question from an Inner Circle member about a junior mining stock operating in Africa. Nevsun is one of those mining stocks that bears a good deal of political risk, with its main property located in Eritrea, in the often-troubled Horn of Africa. However, the company has a productive mine and pays a high-yielding dividend. Pat examines the chain of events that have left Eritrea one of the poorest nations on earth and looks at Nevsun’s prospects of success in this environment. ...
Nevsun Resources, $3.72, symbol NSU on Toronto (Shares outstanding: 199.3 million; Market cap: $745.6 million; www.nevsun.com), owns 60% of the Bisha copper/zinc/gold mine in Eritrea. This stake is the company’s main asset. Bisha started up in February 2011. Nevsun used the gold it extracted from the deposit’s top layer to finance construction of the project’s second phase: copper mining below that level. The mine produced 112,000 ounces of gold in 2013, although the gold deposit ran out early in the year. Nevsun transitioned to copper mining in late 2013, with full production starting up in December. Bisha will produce 180 million to 200 million pounds of copper in 2014....
DIEBOLD INC. (New York symbol DBD; www.diebold.com) is a leading maker of automated teller machines (ATMs). It also makes safes, vaults and building-security systems. The company gets 52% of its revenue from overseas....
BAXTER INTERNATIONAL INC., $72.85, Toronto symbol BAX, rose 8% this week on news that it plans to split into two separate public companies. One will focus on medical devices, such as intravenous pumps and kidney-dialysis equipment. This business’s revenue was $8.7 billion, or 57% of Baxter’s $15.3-billion total, in 2013. The other firm will make biopharmaceutical products, including vaccines and drugs for hemophilia. Its 2013 revenue was $6.6 billion....
SYMANTEC CORP., $18.20, Nasdaq symbol SYMC, fell 13% on Friday after it fired Steve Bennett, its president and CEO. The company said the decision resulted from an ongoing review and wasn’t in response to any single event. Symantec has appointed board member Michael Brown as its interim CEO. The company sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers. Symantec is in the midst of a major restructuring that mainly involves cutting jobs and streamlining its product lines and marketing operations. The plan should help the company expand its profit margin (operating income divided by revenue) to over 30.0% by 2017; in the current quarter, which ends March 31, 2014, Symantec expects its profit margin to range from 24.5% to 26.0%....
LOBLAW COMPANIES LTD., $47.01, Toronto symbol L, has received approval from competition regulators for its acquisition of Shoppers Drug Mart Corp. (Toronto symbol SC), which operates 1,253 drug stores across Canada. To win approval for the purchase, Loblaw has agreed to sell 18 stores and 9 pharmacies. It does not plan to close any of its 1,000 supermarkets. Loblaw will pay roughly $12.4 billion in cash and shares for Shoppers when the deal closes on March 28, 2014. The price is equal to 93% of its $13.3-billion market cap. After the deal closes, Shoppers shareholders will own 29% of the combined company....
NEWELL RUBBERMAID INC., $29.32, New York symbol NWL, fell 6% this week after the company warned that its earnings for the first quarter of 2014 would miss the consensus forecast. Harsh winter weather has prompted many shoppers to stay home. That has hurt sales of Newell’s household products, like trash cans, pens and food-storage containers. As well, the company had to recall 3.8 million infant car seats to fix a defective seat belt. These factors will cut Newell’s first-quarter earnings by $0.03 to $0.04 a share. As a result, it will probably earn $0.33 a share, compared to the consensus estimate of $0.35....
Tekmira Pharmaceuticals, $33.23, symbol TKM on Toronto (Shares outstanding: 19.0 million; Market cap: $626.6 million; www.tekmirapharm.com), is a biopharmaceutical firm that focuses on RNAi therapeutics. RNAi therapeutics have the potential to treat a number of human diseases by “silencing” disease-causing genes. The discoverers of RNAi, a gene-silencing mechanism that all cells use, were awarded the 2006 Nobel Prize in the physiology-or-medicine category. To be effective, RNAi treatments need special delivery systems. Tekmira believes its lipid nanoparticle (LNP) technology is the best method....