ALCOA INC. $13 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 974.4 million; Market cap: $12.7 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.9%; WSSF Rating: Average) will invest $900 million in a joint venture it has formed with Saudi mining firm Ma’aden to build an aluminum plant in Saudi Arabia. To put this figure in context, Alcoa lost $924 million, or $1.06 a share, in 2009. Alcoa will own 20% of this project, but will control 40% through a partnership with other investors. The plant will make aluminum cans and construction products. That will help Alcoa take advantage of several new infrastructure projects in Saudi Arabia, including a railway and a deep-water port. The plant also has access to low-cost electricity. Production should begin in 2013....

LA-Z-BOY INC. $11 (New York symbol LZB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 51.6 million; Market cap: $567.6 million; Price-to-sales ratio: 0.5; No dividends paid since March 2009; WSSF Rating: Speculative) makes upholstered reclining chairs and sofas. It also imports wooden furniture, such as tables and entertainment centres. The company sells its products through both large department stores and 311 La-Z-Boy Furniture Gallery stores. The company owns 68 of these outlets. Franchisees own the remaining 243. Weak U.S. housing markets have hurt new-furniture demand. The company responded with an aggressive cost-cutting plan that included laying off 25% of its workforce, shifting production to low-cost countries, such as Mexico, and closing unprofitable stores....

INVACARE CORP. $25 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.3 million; Market cap: $807.5 million; Price-to-sales ratio: 0.5; Dividend yield: 0.2%; WSSF Rating: Average) makes wheelchairs, motorized scooters and other mobility and home-care products. The company may have to pay $12 million to $14 million a year in new taxes. That’s because the U.S. Senate recently passed health-care reform legislation that would impose a sales tax on medical-device makers like Invacare. To put this new tax in context, Invacare earned $16.7 million, or $0.52 a share, in the three months ended September 30, 2009. If the proposed tax becomes law, Invacare would look to offset it by shifting more of its production overseas. It would also cut employee benefits and research spending....

SONY CORP. ADRs $33 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.0 billion; Market cap: $33.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.4%; WSSF Rating: Average) plans to start selling TV sets than can project three-dimensional (3D) images. Demand for these sets will probably be small, at least at first. But Sony has a long history of successfully introducing new technologies, so these sets could become as popular as today’s high-definition models. The company will also use its 3D technology in its TV shows, movies and video games. That should showcase the benefits of its new TV sets when they go on sale later this year. Sony is a buy.

DUN & BRADSTREET CORP. $80 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 52.0 million; Market cap: $4.2 billion; Price-to-sales ratio: 2.5; Dividend yield: 1.7%; WSSF Rating: Average) is the world’s largest provider of credit reports on individual companies. Its database contains information on 150 million businesses in over 200 countries. Companies use these reports to make lending and buying decisions, and lower their credit losses. The company gets two-thirds of its revenue from credit reports. It gets the rest by selling other information products, including software that helps companies manage their customer data and web sites.

Aggressive cost cuts paid off

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WESTERN UNION CO. $18 has raised its dividend by 500%. The new annual rate of $0.24 yields 1.3%. The money-transfer specialist will also buy back $1 billion of its shares over the next three years. That’s equal to 8% of its market cap. Best Buy. TENNANT CO. $25 has increased its dividend by 7.7%. The new annual rate of $0.56 yields 2.2%. However, it needs a sustained economic recovery to spur sales of its cleaning equipment. Hold. TIM HORTONS INC. $29 has opened a coffee-and-donut shop at Naval Station Norfolk, the world’s largest naval base, located in Norfolk, Virginia. The new store broadens Tim Hortons’ connection with the military, and continues its U.S. expansion. Tim Hortons has around 3,000 locations in Canada, and over 500 in the U.S. Buy....

INTERNATIONAL BUSINESS MACHINES CORP., $125.50, New York symbol IBM, is our Stock of the Year for 2010. IBM is the world’s largest computer company, with operations in over 170 countries. It specializes in making large mainframe computers for business and government clients. However, the key to its appeal is that it is shifting from manufacturing to designing computer systems and managing them on behalf of its clients. IBM gets dependable revenue streams from the resulting long-term maintenance contracts....

IMPERIAL METALS, $16.33, symbol III on Toronto, jumped 13% this week. That’s after the Supreme Court of Canada ruled that the company’s Red Chris copper/gold project in B.C. can proceed. Environmental groups had challenged the project because the federal government accepted permits issued by the B.C. government without conducting its own environmental assessment. Drilling at Red Chris continues to reveal very high grades of copper and gold. A feasibility study shows that the project contains enough reserves to support a mine with a 25-year life. The mine would eventually replace declining production at Imperial’s Mount Polley and Huckleberry mines....

WESTJET AIRLINES $13.45 (Toronto symbol WJA; SI Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 138.8 million; Market cap: $1.9 billion; No dividends paid) has invested heavily in new planes and a state-of-the-art computer reservation system. But unlike most airlines, it has done so without taking on too much debt. That, plus its stellar reputation for customer service, makes it our Stock of the Year for 2010. WestJet serves 67 destinations in North America and the Caribbean. The company operates a fleet of 86 Boeing Next-Generation 737s. These planes feature more legroom, leather seats and television screens built into the back of each seat. But most important, the planes are roughly 30% more fuel efficient than older planes. And WestJet is scheduled to receive 49 additional 737s through 2016. In the three months ended September 30, 2009, revenue fell 16.4%, to $600.6 million from $718.4 million. Earnings fell 45.7%, to $31.4 million, or $0.24 a share, from $57.9 million, or $0.45. Cash flow fell just 5.5%, to $107.7 million, or $0.82 a share, from $113.9 million, or $0.89 a share. Although the recession hurt the company’s results, this marked WestJet’s 18th consecutive quarter of profitability....

At left we announce our Stock Pickers Digest #1 stock for 2010. In choosing a #1, I look for a stock that seems to offer above-average if not great returns, but with below-average risk. Our #1’s have generally done well, and many were top performers. Autodesk, our #1 pick in 2004 for Stock Pickers Digest (and for Wall Street Stock Forecaster, our U.S. stocks newsletter), was the #1 performer among all 500 stocks in the S&P 500 that year! We’ll reveal our #1 pick for Wall Street Stock Forecaster in our Hotline on January 22, 2010. It’s sure to be different from our #1 Stock Pickers Digest selection, since Wall Street Stock Forecaster doesn’t analyze Canadian stocks....