wall street

Few investors seem to have noticed that the U.S. dollar has moved up in the past month from $0.98 Cdn. to $1.03 Cdn. Obviously, there is a large random element in the difference in value between any two currencies, and shifts of up to 5% or more happen all the time. But this could be the start of a move that could last for years. It could add an additional 10% to 20% or more to the U.S. dollar premium over the Canadian dollar. The gain in the U.S. dollar reflects the fact that the economic fundamentals seem to be shifting in favour of the U.S. In the past few years, Canada has gained on the U.S. in economic desirability. The Harper government has focused on improving Canada’s trade relations, cutting the deficit and spurring economic growth. In contrast, the Obama administration has focused on expanding U.S. entitlement programs, while making plans to raise taxes and expand the reach of U.S. regulators. Obama has also subsidized money-losing alternative energy, while blocking growth in shale gas and oil. All this weighs on the economy....

American Depositary Receipts make foreign investing easier and safer for individual investors. The foreign company must provide detailed financial information to U.S. regulators and to the sponsor, or depositary, bank or broker. As well, since ADRs trade on U.S. stock exchanges in U.S. dollars, you don’t have to worry about currency exchange rates, foreign stock exchange rules, or language barriers. Today we highlight one of the world’s most prominent commodity stocks, an ADR with its home base in Australia, and one that made headlines in Canada when its attempted takeover of Potash Corp. of Saskatchewan (Toronto symbol POT) was blocked by Ottawa in 2010....

HEWLETT-PACKARD CO., $22.33, New York symbol HPQ, rose 4% this week after the company unveiled a new restructuring plan. It also reported better-than-expected sales and earnings. Hewlett’s plan mainly involves merging its personal computer and printer businesses into a single division. It will also cut 8% of its workforce over the next two years. The company expects to pay $3.5 billion in severance and other costs. However, these moves should save it $3.0 billion to $3.5 billion annually. Hewlett will put most of these savings toward developing new products and services. It’s particularly interested in fast-growing areas like cloud computing, analytics software (which lets companies track consumer purchasing and other data) and computer security....

J.C. PENNEY CO. INC., $26.29, New York symbol JCP, fell 23% this week after the company reported much-worse-than-expected quarterly earnings. It also suspended its $0.20-a-share quarterly dividend to conserve cash. Penney operates more than 1,100 department stores in the U.S. and Puerto Rico. It also sells goods over the Internet. The company recently began a major restructuring that includes shifting to an everyday pricing strategy. The company feels that predictable prices will spur customers to visit more often instead of waiting for items to go on sale....

Novo Nordisk A/S (ADR), $142.29, symbol NVO on New York (Shares outstanding: 452.5 million; Market cap: $64.4 billion; www.novonordisk.com), is a major Denmark-based producer of diabetes-care products, including insulin. It also makes products for hormone replacement therapy and treating coagulation disorders. The company controls 50% of the global insulin market. It gets 40% of its sales from North America, followed by the European Union, 29%; Japan and Korea, 9%; China, 8%; and other regions, 14%. Novo’s shares have moved up since late last year on higher profits and sales....

J.P. MORGAN CHASE & CO., $36.96, New York symbol JPM, fell 9% on Friday after it announced an unexpected loss at its trading division. Morgan uses complex derivatives that act like insurance contracts on the corporate bonds it holds. Due to volatile bond prices, Morgan has lost $2 billion on these hedges since the start of April 2012. The bank is now trying to get out of them, but depending on bond prices, Morgan could lose another $1 billion before it is able to do so. To put these figures in context, Morgan earned $5.4 billion, or $1.31 a share, in the three months ended March 31, 2012....

MICROSOFT CORP., $30.98, Nasdaq symbol MSFT, aims to enter the fast-growing e-book field through a new alliance with bookseller Barnes & Noble Inc. (New York symbol BKS). This week, Microsoft agreed to buy 17.6% of a subsidiary of Barnes & Noble that will operate Barnes & Noble’s Nook e-book business; Barnes & Noble will own the remaining 82.4%. This new firm will also include Barnes & Noble’s college textbook operations. Microsoft will pay $300 million for this interest. That’s equal to just 5.9% of the $5.1 billion, or $0.60 a share, that the company earned in the three months ended March 31, 2012. Still, this move should help Microsoft develop new software for the Nook e-book reader and other mobile devices. That would help it compete with the Apple iPad tablet computer and Amazon.com’s Kindle e-book reader....

We recently made IBM our #1 Stock of the Year for 2012 in our Wall Street Stock Forecaster newsletter. That’s because it’s a global leader that offers a range of technologies and services. The shares are already up 8.2%, but we still think they have lots of growth ahead, and would make a great fit in a safety-conscious investor’s portfolio. IBM $208 (New York symbol IBM; Shares outstanding: 1.2 billion; Market cap: $249.6 billion; TSINetwork Rating: Above Average; Dividend yield: 1.6%) is the world’s oldest computer company (it began operating in 1911), with operations in over 170 countries. In the three months ended March 31, 2012, IBM earned $3.1 billion. That’s up 7.1% from $2.9 billion a year earlier. The company spent $3.0 billion on share buybacks in the latest quarter, and $15 billion in 2011. Due to fewer shares outstanding, earnings per share rose 13.0%, to $2.61 from $2.31....

The ability to weather a crisis is one of the distinguishing characteristics of the blue chip stocks we recommend. This multinational, one of the last survivors of the original 12 Dow Jones stocks of 1896, suffered a sharp setback during the financial crisis of 2008-2009. But its deep resources and diverse industrial base have allowed it to stage a recovery. General Electric Co. (New York symbol GE; www.ge.com) is one of the world’s largest manufacturers. It makes equipment for generating and distributing electricity, such as turbines (31% of revenue, 32% of earnings); aircraft engines (13%, 17%); health care equipment, such as medical scanners (13%, 14%); home appliances and lighting (6%, 1%); and locomotives (3%, 4%)....

SYMANTEC CORP., $16.48, Nasdaq symbol SYMC, sells computer security technology, including anti-virus and Internet and email filtering software, to businesses and consumers. The stock fell 9% this week after Symantec cut its earnings and revenue estimates for its fiscal 2012 fourth quarter, which ended March 30, 2012. The company believes it earned $0.38 a share in the quarter, down from its previous forecast of $0.41 to $0.42. These figures exclude unusual items, such as a gain on the sale of its 49% stake in a joint venture that sells computer-security and data-storage products to businesses in China....