Broadridge is unique in the financial sector. For over 40 years, the company has built up its investor-communications business and now dominates this niche industry. Its securities-clearing division makes short-term loans to brokers, which exposes it to some credit risk. But these loans are safer than subprime mortgages or credit-card debt. The company should also continue to profit as more banks and brokers look to outsource their routine transaction-processing tasks to save money. Moreover, it gains from the ongoing drop in computer costs. The stock fell from $24 in late 2007 to a low of $9.21 last November, during the financial crisis. It has now recouped most of last year’s share-price decline. We feel it has more gains ahead. BROADRIDGE FINANCIAL SOLUTIONS INC. $20 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 139.3 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.3; WSSF Rating: Extra Risk) provides communication, processing and other back-office services to the investment industry. By outsourcing these activities to Broadridge, its clients can focus on their main businesses. Its clients include 250 banks, 500 mutual-fund families and over 5,000 publicly listed companies....

Economics questions are everywhere these days. Do we face a double-dip recession? Is the economy headed for the proverbial “seven lean years”? Should Obama launch another stimulus package? This brings to mind a famous quote from Peter Lynch, world champion mutual-fund manager of the 1980s and 1990s: “If you spend a dozen minutes a year worrying about the economy, you’ve wasted 10 minutes.” Lynch’s point is heresy to economists, but gospel to successful investors....

The recession has prompted most businesses to put off buying new equipment and lower their spending on certain services. That has hurt the earnings of these five companies, which sell specialized products and services to corporate clients. But since these products and services help businesses cut costs, their long-term prospects remain bright. We see all but one as buys. XEROX CORP. $8.72 (New York symbol XRX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 869.1 million; Market cap: $7.6 billion; Price-to-sales ratio: 0.5; WSSF Rating: Average) makes copiers, laser printers and other high-end publishing equipment. The company spends about 5% of its revenue on research. Over the past few years, this has let it develop new colour printers that have helped its customers cut their paper use. It has also produced other innovations, such as its proprietary solid-ink technology, which is less expensive on a per-page basis than traditional ink cartridges....

NVIDIA CORP. $14 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 547.8 million; Market cap: $7.7 billion; Price-to-sales ratio: 2.7; WSSF Rating: Average) continues to spend a high 25% of its revenue on developing new chips....

JONES APPAREL GROUP INC. $16 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 85.4 million; Market cap: $1.4 billion; Price-to-sales ratio: 0.4; WSSF Rating: Average) gets about half of its sales by selling its clothing through department stores. In the second quarter of 2009, Jones’ sales fell 3.1%, to $803.9 million from $829.4 million a year earlier. However, earnings rose 41.2%, to $23.3 million, or $0.29 a share, from $16.5 million, or $0.20 a share. These figures exclude the cost of closing some stores and severance. The company plans to close 240 of its 370 stores over the next two years. Most of these small outlets are in less-popular malls. This should save Jones $4 million this year, $15 million next year and $21 million in 2011. However, the stock could suffer if the current recovery stalls. Jones Apparel Group is a hold.

MCGRAW-HILL COMPANIES LTD. $32 (New York symbol MHP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 314.8 million; Market cap: $10.1 billion; Price-to-sales ratio: 1.6; WSSF Rating: Average) will make over 100 of its college textbooks available to users of the Kindle and Kindle DX electronic-book readers sold by online bookseller Amazon.com. That’s on top of the over 3,000 McGraw-Hill business, medical and technical titles that Amazon now sells through its Kindle store. This could become a significant market for McGraw-Hill. Students will probably prefer to carry a Kindle, which can hold the contents of hundreds of textbooks, instead of regular books. As well, e-books are cheaper to publish than textbooks. This would increase McGraw-Hill’s profit margins. McGraw-Hill is a buy.

Both BHP and Alcoa have been cutting costs in response to lower prices for aluminum and other metals. This puts them in a strong position to grow when prices recover. We continue to view both as suitable choices for conservative investors who are seeking long-term gains. BHP BILLITON LTD. ADRs $63 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.8 billion; Market cap: $176.4 billion; Price-to-sales ratio: 3.5; WSSF Rating: Average) is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, aluminum, manganese, diamonds and titanium. In its latest fiscal year, which ended June 30, 2009, BHP’s revenue fell 15.6%, to $50.2 billion from $59.5 billion a year earlier. Lower resource prices were the main reason for the drop. Earnings before unusual items fell 30.2%, to $10.7 billion from $15.4 billion. Earnings per ADR fell 29.9%, to $3.85 from $5.50. (Each American Depositary Receipt represents two BHP common shares.)...

MICROSOFT CORP. $25 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.9 billion; Market cap: $222.5 billion; Price-to-sales ratio: 3.8; WSSF Rating: Above Average) may have to stop selling Word, its word-processing program and a key part of its top-selling Office software package. A court has ruled that Word violates a patent held by Toronto-based i4i Inc., whose technology makes it easier to find and classify documents stored in databases. The ruling only applies to sales of Word in the U.S. Microsoft is appealing the decision. If it loses, it would have to redesign the program or license the technology from i4i. Either way, this dispute will probably force Microsoft to delay next year’s launch of a new version of Office. The uncertainty could also dampen demand for its upcoming Windows 7 operating system. Microsoft is still a hold.

STATE STREET CORP. $53 (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 494.5 million; Market cap: $26.2 billion; Price-to-sales ratio: 2.8; WSSF Rating: Extra Risk) set aside $625 million in 2007 to settle lawsuits related to the company’s dealings in illiquid securities backed by subprime mortgages. As of June 30, 2009, only $193 million remained in this fund, so State Street will probably have to add to it in light of ongoing lawsuits. Meanwhile, the company earned $483 million, or $1.04 a share, in the second quarter of 2009. This excludes charges related to the consolidation of “conduits” to its balance sheet. These trade securities backed by mortgages, credit-card receivables and other loans. Traditionally, State Street does not own conduit assets, but has agreements to back them up with loans. A year earlier, it earned $570 million, or $1.40 a share. Revenue fell 20.6%, to $2.1 billion from $2.7 billion. State Street gets the bulk of its revenue by holding securities for large institutional investors, such as mutual funds and pension plans, and falling stock-market prices lowered its fees....

SONY CORP. ADRs $27 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1 billion; Market cap: $27 billion; Price-to-sales ratio: 0.4; WSSF Rating: Average) has launched a new version of its Play-Station 3 video-game console. The new version is thinner and uses less power than the previous model, which it is now phasing out. Sony has also cut the price of both versions by $100, to $299. The price cut should help Sony increase its share of the highly competitive video-game market. Sony is probably still losing money on each unit it sells, but the new models use fewer parts. This would shrink these losses. Selling more machines will also make it easier for Sony to demand more royalties from video-game developers. As well, more PlayStation 3 users should lead to higher online sales of games and movies. Sony is a buy.