MASTERS ENERGY, $1.65, Toronto symbol MSY on Toronto, jumped over 40% this week after it received a friendly $41.4-million takeover offer from ZARGON ENERGY TRUST, $13.54, symbol ZAR.UN on Toronto. To fund the purchase, Zargon plans to pay out a maximum of $5.7 million in cash. It will also issue up to 1.49 million trust units. Zargon is offering Masters shareholders a cash option and a units-plus-cash option. Under the cash option, Zargon will pay $1.83 for each Masters common share tendered until it reaches its maximum cash payout. Any remainder will be paid in Zargon units. Under the second option, each Masters common share may be exchanged for 0.12 of a Zargon unit. This option will also be pro-rated according to Zargon’s unit and cash maximums....

WELLS FARGO & CO., $8.61, New York symbol WFC, has cut its quarterly dividend by 85.3%, to $0.05 a share from $0.34. The new annual rate of $0.20 yields 2.3%. The lower dividend will save the bank $5 billion a year. To put that in context, it earned $2.7 billion, or $0.70 a share, in 2008. (Its 2008 earnings included $9.9 billion of pre-tax writedowns and other charges related to its purchase of financial services company Wachovia on December 31.) The savings should help Wells Fargo cope with higher loan defaults during the recession. Wells Fargo is making good progress integrating Wachovia into its own operations. Wells Fargo’s management still feels the merger will cut the combined company’s annual expenses by $5 billion. Wells Fargo has already written down most of Wachovia’s troubled loans and securities, so any further charges should be manageable. The company has also received $25 billion under the U.S. government’s Troubled Asset Relief Program....

3M COMPANY $47 (New York symbol MMM) has temporarily stopped buying back its shares in order to conserve cash. However, 3M raised its quarterly dividend by 2%, to $0.51 a share from $0.50. The new annual rate of $2.04 yields 4.3%. 3M has increased its dividend each year for the past 51 years. Buy. T. ROWE PRICE GROUP INC. $24 (NASDAQ symbol TROW) reported a 15.4% drop in earnings per share for 2008, to $2.03 from $2.40 in 2007. Falling stock markets were the main reason behind the decline. T. Rowe Price’s fees vary with the value of the mutual funds it manages, so the lower value of these assets hurts its revenue and earnings. Investors are also moving their money out of stock funds and into lower-fee bond and money market funds. Still, the economic slowdown should encourage investors to spend less and save more for retirement, probably by buying mutual funds or opening up new savings accounts. The company also raised its quarterly dividend by 4.2%. The new annual rate of $1.00 now yields 4.2%. Buy. WINDSTREAM CORP. $7.58 (New York symbol WIN) continues to pay quarterly dividends of $0.25 a share, for an annual yield of 13.2%. Dividends accounted for 58% of Windstream’s free cash flow (or its operating cash flow, minus its capital expenditures) in 2008, so it should be able to maintain the current rate in 2009. Buy.

BHP BILLITON LTD. ADRs $37 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.8 billion; Market cap: $103.6 billion; Price-to-sales ratio: 1.7; WSSF Rating: Average) is the world’s largest mining company. It has major operations in Australia, Chile, South Africa and the U.K. The company took its current form through the 2001 merger of Australia’s BHP Ltd. and U.K.-based Billiton plc. BHP has nine main segments: iron ore, which generates 20% of BHP’s revenues, metallurgical coal, used for making steel (17%), petroleum (15%), thermal coal, used for power generation (15%), base metals (11%), aluminum (9%), manganese (7%), stainless steel (4%) and diamonds and titanium (2%).

Acquisitions help fuel strong growth

Thanks to acquisitions and higher mineral prices, BHP’s revenue jumped by 159.9%, from $22.9 billion in 2004 to $59.5 billion in 2008 (its fiscal year ends June 30)....

HARTE-HANKS INC. $5.29 (New York symbol HHS; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 63.3 million; Market cap: $334.9 million; Price-to-sales ratio: 0.3; WSSF Rating: Average) provides direct mail and other marketing services. It also publishes free “shopper” newspapers in Florida and California. These papers rely solely on advertising for revenue. Due to weaker advertising and marketing spending, particularly by banks and retailers, Harte-Hanks’s 2008 revenue fell 6.9%, to $1.1 billion from $1.2 billion in the previous year. Its earnings dropped 32.3%, to $62.7 million from $92.6 million. Earnings per share fell 22.2%, to $0.98 from $1.26, because of a 13% drop in the number of shares outstanding. Harte-Hanks is aggressively cutting its costs, including closing printing plants and call centres. These moves should lower its expenses by $28.6 million in 2009. Harte-Hanks is a buy.

MCDONALD’S CORP. $54 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.1 billion; Market cap: $59.4 billion; Price-to-sales ratio: 2.6; WSSF Rating: Above Average) plans to open 500 new restaurants in China over the next three years. It opened 146 restaurants in 2008, and now operates about 1,015 restaurants in China out of about 32,000 worldwide. Expanding in China makes sense for McDonald’s, despite the country’s slowing economy. Demand for low-cost fast food is still strong, and construction and labour costs are falling. McDonald’s is a buy. J.C. PENNEY CO., INC. $16 (New York symbol JCP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 222.2 million; Market cap: $3.6 billion; Price-to-sales ratio: 0.2; WSSF Rating: Average) earned $2.57 a share in its fiscal year ended January 31, 2009, down 47.9% from $4.93 in the prior year. Sales fell 6.9%, to $18.5 billion from $19.9 billion. Same-store sales fell 8.5%. The drop was largely the result of lower consumer demand for jewelery and home furnishings, although sales of women’s clothing and cosmetics held steady....

HEWLETT-PACKARD CO. $30 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.4 billion; Market cap: $72 billion; Price-to-sales ratio: 0.6; WSSF Rating: Above Average) is half way toward its goal of cutting its costs by $1 billion in its current fiscal year. In its first fiscal quarter, which ended January 31, 2009, its earnings were unchanged at $2.3 billion from a year earlier. Earnings per share rose 8.1%, to $0.93 from $0.86 on fewer shares outstanding. These figures exclude one-time items, including integration costs related to Hewlett’s $13.9-billion purchase of Electronic Data Systems in August 2008. Revenue rose 1.2%, to $28.8 billion from $28.5 billion. Slowing demand for new computers will likely cut Hewlett’s full-year revenue by 2% to 5%. However, its earnings should rise to $3.82 a share, and the stock trades at just 7.9 times that forecast. Hewlett-Packard is a buy.

Buckeye and Cedar Fair operate in industries that are difficult to enter, which limits competition. This competitive advantage should continue to let both of them pay above-average distribution yields, despite the difficult economy. BUCKEYE PARTNERS L.P. $37 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 48.4 million; Market cap: $1.8 billion; Price-to-sales ratio: 0.9; WSSF Rating: Average) operates over 8,700 kilometres of pipelines that pump gasoline, jet fuel and other petroleum products. In 2008, Buckeye’s earnings rose 17.9%, to $183.2 million from $155.4 million in 2007, largely as a result of acquisitions, including a natural gas storage facility in northern California. It issued new units to help pay for these purchases. Consequently, earnings per unit grew just 3.3%, to $3.13 from $3.03. Revenue rose 265.2%, to $1.9 billion from $519.3 billion....

CONAGRA FOODS INC. $16 (New York symbol CAG, Income Portfolio, Consumer sector; Shares outstanding: 447.1 million; Market cap: $7.2 billion; Price-to-sales ratio: 0.5; WSSF Rating: Above Average) reports that a recent salmonella outbreak has lowered sales of its Peter Pan peanut butter. However, the source of the contamination, Peanut Corp. of America, is not one of its suppliers. In 2007, salmonella contamination at its own plant forced ConAgra to recall Peter Pan products. The company has launched a new advertising campaign to reassure consumers that its peanut butter is safe, and the related discount coupons should help improve Peter Pan’s sales. ConAgra also feels that new products, such as value-priced frozen meals, will help it reach its earnings target of $1.50 a share for the year ending May 31, 2009. The stock trades at 10.7 times that figure. ConAgra is a buy.

The bleak outlook for the U.S. housing industry continues to weigh on Sherwin-Williams and La-Z-Boy. Their cost-control plans and industry-leading brands should help them cope, but both will probably make little progress in the next few months. SHERWIN-WILLIAMS CO. $46 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 116.9 million; Market cap: $5.4 billion; Price-to-sales ratio: 0.7; WSSF Rating: Above Average) is North America’s largest paint producer. It also operates over 3,300 retail paint stores, which supply 60% of its sales. In 2008, Sherwin’s sales fell 0.3%, to $7.98 billion from $8.01 billion in the prior year. Price increases helped offset lower retail sales volumes. However, sales at its international division grew 7.8% in 2008, partly due to acquisitions of smaller paint producers in Europe and Asia. Overseas markets now account for 20% of Sherwin’s sales....