wall street

As the stock market rebounded in 2009 from one of the worst crises in years, Pat McKeough was invited by Jonathan Chevreau of the Financial Post to appear on his ‘Wealthy Boomer’ telecast. In a two-part interview, Pat aired his views on a wide variety of investment subjects. Now, with the stock market coming off last autumn’s lows, we think it’s an appropriate time to replay the interview, entitled “40 stocks to retire on” on YouTube. Pat discusses not only specific solutions for volatile markets, but also how his investment advice applies in all market conditions. Here is part one of the interview (part two will be posted on Monday, February 20).
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Desalination is the process of removing excess salt and other minerals from seawater. It’s also used where saltwater has entered underground freshwater aquifers. Right now, there are more than 14,500 desalination plants operating in over 120 countries. In all, these plants produce more than 45.4 billion litres of fresh water a day. About three-quarters of these plants are in the Middle East. That’s because desalination plants are very expensive to build, so they’re only really cost-effective where there is no fresh water. When fresh water is available, it can be pumped up to 1,600 kilometres and still cost less per litre than water from a desalination plant. The world’s largest desalination plant is the Jebel Ali Desalination Plant in the United Arab Emirates. This plant can produce 829 million litres of water per day. By comparison, the largest desalination plant in the U.S. is in Tampa Bay, Florida. That plant can produce 94.6 million litres of water per day....

NCR CORP., $21.14, New York symbol NCR, jumped 11% this week after it agreed to sell its DVD rental business, which operates through automated kiosks, to Coinstar Inc. (Nasdaq symbol CSTR) for $100 million. NCR has also agreed to provide Coinstar with maintenance services, hardware and software. That will boost NCR’s profits by $25 million over the deal’s five-year term. The sale should close in the third quarter of 2012. Meanwhile, NCR reported better-than-expected earnings for 2011. During the year, the company earned $49 million, or $0.31 a share. That’s down 58.8% from $119 million, or $0.72 a share, in 2010. However, if you exclude writedowns and other unusual items, NCR would have earned $1.92 a share in 2011. That beat the consensus estimate of $1.83....

Poseidon Concepts rents its fluid-handling tanks to over 100 customers in the oil and gas industry. Poseidon has just issued 6.3 million new shares.

Our view is that virtually all Canadian investors should have 20% to 30% of their portfolios in U.S. stocks, like the ones we recommend in Wall Street Stock Forecaster. We feel now is a good time to hold high-quality U.S. stocks, and we see U.S. dollar exposure as a plus—a valuable form of diversification. Another option is to add some foreign exchange traded funds (ETFs), such as those we recommend in Canadian Wealth Advisor, to your portfolio in reasonable quantities, perhaps 10% of your holdings if you are a conservative investor (including 5% or so in higher-risk funds, such as emerging market ETFs)....

ABB LTD. ADRs, $21.91, New York symbol ABB, has agreed to buy Thomas & Betts Corp. (New York symbol TNB), which makes a range of industrial products, including heating and air conditioning equipment, electrical connectors and transmission towers for power companies. ABB will pay $3.9 billion for Thomas & Betts when the deal closes later this year. To put that in perspective, ABB earned $2.3 billion, or $1.02 per ADR (each American Depositary Receipt represents one ABB common share) in the nine months ended September 30, 2011. This purchase nicely complements ABB’s current lineup of electrical products. As well, Switzerland-based ABB can use Thomas & Betts’ distributors to sell more of its products in the U.S. Moreover, ABB feels that combining purchasing and other overlapping functions could cut its yearly costs by $200 million by 2016....

Question: I would like your opinion on Africa Oil and Cabo Drilling. As always, your pearls of wisdom are very insightful and greatly appreciated.

Tech stocks continue to make headlines. Often, this is due to the competitive race to get new products on the market. Sometimes, it is due to the spectacular rise—or spectacular fall—of a tech stock’s share price. But successful investors look beyond the headlines, to a company’s measurable strengths and weaknesses, to judge its long-term prospects, as we do today with one of the best-known names in the industry. GOOGLE INC. (Nasdaq symbol GOOG; investor.google.com) is the world’s leading Internet search engine. The search service is free, but it provides a platform for Google to sell ads on its websites. Ads account for 96% of its total revenue....

INTERNATIONAL BUSINESS MACHINES CORP., $190.46, New York symbol IBM, is our “Stock of the Year” for 2012. The company continues to benefit from its decision in the 1990s to focus on selling its expertise instead of computer hardware. IBM now gets most of its revenue from steady and predictable long-term contracts. That cuts its risk. The company is now using its strong profits to expand into promising new areas, such as online data storage and software that helps businesses analyze customer spending patterns. As well, IBM’s strong reputation is helping in expand in Asia and Latin America. That cuts its reliance on slower-growing regions like North America and Europe....

Pat McKeough responds to many personal questions on specific stocks and other investing topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. This week, the subject of tech stocks came up as one Inner Circle member asked about a company that makes software that is vitally important for computers and mobile devices, but also faces a highly competitive market....