NEWMONT MINING CORP. $47 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 422.5 million; Market cap: $19.9 billion; WSSF Rating: Average) is one of the world’s largest gold mining companies, with major operations in the United States, Canada, Peru, Australia, Indonesia and Ghana. It also produces other metals, including copper, silver and zinc. Gold prices got as high as $725 an ounce in May 2006, but moved down to about $570 a month later. Gold will probably average $650 this year. Newmont prefers to sell its gold at the spot price instead of through hedging contracts. While that increases its price risk, the company offsets this by expanding or cutting production....

ALCOA INC. $35 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 867.7 million; Market cap; $30.4 billion; WSSF Rating: Above average) jumped nearly 10% on media reports that two major mining multinational companies, BHP Billiton and Rio Tinto Plc, may launch separate takeover bids for the company. If a bid goes ahead, the buyer would probably keep Alcoa’s aluminum mining and smelting operations, and sell the less profitable manufacturing businesses. Alcoa has no controlling stockholder, so a takeover is always a possibility. The long-term outlook for aluminum is strong, and Alcoa’s high quality assets would undoubtedly attract several offers. However, a bid from either company would run into anti-trust problems. Even if an offer fails to materialize, it has drawn attention to Alcoa’s improving prospects. Alcoa is a buy.

The Resources and Commodities sector of the economy has gone through a once-in-a-generation price boom in the past few years. Investors generally expect booming demand from India and China to keep prices high. However, this sector has always been highly volatile and subject to sudden downdrafts. We feel the best way to cut your resource risk is to stick with high-quality companies such as these three. They all have a broad range of income streams, which helps them stay profitable, even if prices fall. Hidden or little appreciated assets should fuel their growth for decades. They also have the flexibility to adjust production in the face of lower prices, which conserves cash for dividends and stock repurchases. CHEVRON CORP. $70 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.2 billion; Market cap: $154.0 billion; WSSF Rating: Above average) is the second-largest integrated oil company in the United States, after ExxonMobil Corp....

In the past decade, we’ve regularly advised buying PepsiCo and selling The Coca-Cola Co., which is the opposite of the consensus. Mind you, we have a high regard for Coca-Cola as a business. But there’s a risk in placing too much emphasis on a single product and/or a single brand name, as the company does with Coke. Then too, you need to pay attention to demographics and other key trends. We felt conventional soft drinks were sure to become harder to sell to baby boomers as they grew older and became more health conscious. In contrast, we liked PepsiCo’s mix of soft drinks and snack foods. We liked it even better when it bought the Tropicana fruit juice business. We were even more impressed when it acquired (through the Quaker Oats takeover) the Gatorade brand, a sugar-based soft drink with health food rather than junk food connotations. Its Naked Juice and vitamin-laced bottled water could also work out nicely. To top things off, Coke was earning far too many buy recommendations from the implied approval of its most prominent investor, Warren Buffett. Even Mr. Buffett doesn’t get it right every time....

The recent U.S./North Korea nuclear agreement enhances an already attractive stock market outlook for this year and next. North Korea’s nuclear activities can’t do the stock market any good, but the agreement will shelve these activities for a year or two. That may be all the Bush administration hopes to accomplish — to leave North Korea for the next president to worry about. Of course, according to our four-year rule, which we have frequently written about here, the first couple of years of a newly elected or re-elected U.S. president tend to be less-than-ideal for investing anyway....

North American stock markets could be sluggish or weak for a month or two as investors dwell on the possibility of a downturn in China’s economy, and the effect it would have on world economic growth. We think China’s economy is in reasonably good shape, but its stock market is showing clear signs of excessive speculation. It could go through additional one-day plunges that rattle investors and put downward pressure on North American stocks.

Now is a bad time for investing in Chinese or any emerging markets stocks. But if you have built an investment portfolio along the lines we recommend – well-established stocks, spread out across most if not all of the five main economic sectors – you should stick with it, rather than letting yourself be panicked into selling.

FEDERATED DEPARTMENT STORES INC. $44.25, New York symbol FD, earned $870 million or $1.66 a share from continuing operations in its fourth fiscal quarter ended February 3, 2007, up 35.1% from $644 million or $1.16 a share a year earlier. These figures exclude costs related to the integration of May Company stores and other unusual items. Sales fell 4.2%, to $9.2 billion from $9.6 billion due to the closure of about 80 stores. Same-store sales grew 6.1%.

The company plans to spend $4 billion on share buybacks in the next few months, which would cut the number of shares outstanding by 18%. If stockholders approve, it plans to change its name to “Macy’s Group Inc.” in June.

Federated Department Stores is a buy.

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RESTORATION HARDWARE INC. $7.22 (Nasdaq symbol RSTO; SI Rating: Extra risk) (415-924-1005; www.restorationhardware.com; Shares outstanding: 38.7 million; Market cap: $279.6 million) is a specialty retailer of high quality home furnishings, linens, bath fixtures and bathware, plus functional and decorative hardware, gifts and related merchandise that reflect classic or period designs. The company operates 103 stores and eight outlet stores in 30 states, the District of Columbia and Canada. In addition to its retail stores, Restoration Hardware sells directly to consumers, both through catalogs and the Internet. It also manufactures furniture. Restoration Hardware uses its catalog as its primary marketing vehicle. It mails catalogs to people with demographic profiles similar to those of its retail customers and who also possess previous mail order purchase histories. Approximately 60% of the catalogs are circulated to past customers, and the remaining catalogs are mailed to new prospects....

SUNOPTA INC. $12.86 (Toronto symbol SOY; SI Rating: Speculative) (905-455-2528; www.sunopta.com; Shares outstanding: 57.6 million; Market cap: $806.7 million) hopes to benefit from the focus on the commercial deployment of cellulosic ethanol announced in President Bush’s State of the Union Address. The new Renewable Fuels Standard will mandate production of 35 billion gallons of biofuel by 2017, a five-fold increase. In addition, the new Farm Bill will include $2 billion for funding of cellulosic ethanol plants. SunOpta’s BioProcess division engineers and sells proprietary steam explosion technology systems that use high heat and pressure to convert biomass such as sugar cane pulp, wood chips and straw into useful components such as ethanol. These waste products are much cheaper and more plentiful than the corn or fresh sugar cane typically used to produce ethanol. The availability of corn as an ethanol feedstock is expected to limit production of ethanol to a maximum 15 billion gallons per year. This makes technology such as Sun-Opta’s, which uses readily available waste products, all the more important....

TRUE ENERGY TRUST $5.73 (Toronto symbol TUI.UN; SI Rating: Speculative) (403-264-8875; www.tketrust.com; Units outstanding: 70.3 million; Market cap: $402.7 million) produces oil and gas in West Central Alberta and West Central Saskatchewan. About 60% of its production is natural gas. True Energy has announced plans to convert from an income trust back into an exploration and development company. The company now pays a distribution of $0.12 per month. That will fall to a dividend of $0.02 a month. True Energy had cash flow of $0.50 a share in the three months ended September 30, 2006. So it now trades at a low 2.9 times cash flow. Total oil and gas production was up 52.3% in the quarter. True Energy has a large inventory of 600 drilling prospects and a significant undeveloped land base. The new structure and lower payout will give it the cash flow to exploit those assets....

RDM CORPORATION $5.07 (Toronto symbol RC; SI Rating: Speculative) (519-746- 8483; www.rdmcorp.com; Shares outstanding: 21.1 million; Market cap: $106.9 million) reports 134.5% higher revenues in the three months ended December 31, 2006, to a record $11.7 million from $5 million. Earnings per share were $0.06 a share in the quarter, compared to nil per share a year earlier. The improved results came partly from the success of its Image & Transaction Management System. This system lets bank customers scan all types of cheques, and then route them to any location, such as their bank for immediate processing. Transaction volumes for the system averaged 995,000 items per week during the latest quarter, compared to 550,000 items per week a year earlier, and 859,000 items in the previous quarter....