Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions.

This past week, an Inner Circle member wondered about one of Canada’s most successful growth stocks. The shares for this athletic wear firm have done very well for this investor, but he asks Pat if he should be cautious about the high share price.

Q: Pat: I’ve done well with my lululemon shares, but they are getting really high. What is your recommendation from here on out? Thank you.

A: lululemon athletica Inc., ( symbol LLL on Toronto; www.lululemon.com) is a Vancouver-based designer and seller of yoga-inspired athletic wear and accessories.

lululemon first sold shares to the public at $9 each, and began trading on Toronto in July 2007. (Note: All per-share figures adjusted for a 2-for-1 stock split in July 2011.)

Dennis “Chip” Wilson founded lululemon in 1998, after noticing that more women were taking up yoga and other physical activities. Wilson had 20 years of experience making surfing and snowboard clothing. He believed that the all-cotton fabrics then used for yoga were inappropriate.

When Wilson opened the first lululemon store in the Kitsilano Beach area of Vancouver in 2000, he positioned its staff not just as salespeople, but as “lifestyle educators.” Wilson invited yoga, Pilates, fitness and dance instructors to join lululemon’s “R&D team,” and give feedback on its apparel, in return for a 15% discount. He also recruited some of them to appear on lululemon’s posters, website and postcards.

Pat McKeough's ValuVesting System generated a whopping 383.9% return since 1995 (164.1% above the 219.8% gain of the S&P/TSX) in one of the most volatile markets in history. That means if you had invested $100,000 in 1995, you would have $483,900 today! Click here to learn more about how you can profit from Pat McKeough's The Successful Investor newsletter.

Growth stocks: lululemon sees revenue rise 40% and earnings up 51%

lululemon has also developed its own stretch fabrics, such as Luon, its signature fabric, and Silverescent, which uses silver yarn that has anti-bacterial qualities (which lululemon calls “anti-stink”). As well, all of lululemon’s athletic wear has premium features, such as flat seams, which reduce chafing.

The company has 174 stores: 47 in Canada, 108 in the U.S., 18 in Australia and one in New Zealand. lululemon plans to open around 30 more stores within the next year. The company is particularly interested in smaller cities in the U.S., as well as international markets such as Western Europe and China.

lululemon recently repurchased the remaining four stores operated by franchisees. It now owns all of its stores.

Most of the company’s stores operate under the lululemon athletica banner. However, five of its outlets sell dance-related apparel for girls under the ivivva athletica banner. The company also sells ivivva merchandise online through www.ivivva.com.

In the fiscal year ended January 29, 2012, lululemon’s revenue rose 40.6% to $1.0 billion from $711.7 million in fiscal 2011. Same-store sales rose 20%. Earnings jumped 51.1% to $184.1 million from $121.8 million. Earnings per share rose 49.4%, to $1.27 from $0.85, on more shares outstanding.

The company holds cash of $409.4 million, or $2.85 a share. It has no long-term debt.

lululemon’s shares continue to hit record highs. They are now up 63% from the start of this year. The company will probably earn $1.64 a share this year. The shares trade at a high 46.8 times that forecast.

In the most recent Inner Circle Q&A, Pat looks at whether lululemon’s popular and high-quality brand can maintain its growth in a fickle and competitive market. He also examines how the company’s decision to raise the prices of its products might affect its long-term growth. He concludes with his clear buy-hold-sell advice on the stock.

Inner Circle members see Pat’s analysis and recommendations on the stocks that other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this unique investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.

(Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.)

COMMENTS PLEASE:

When an aggressive stock you own shoots up in price, how do you generally react? Sell quick to nail down the gain? Or consider buying more? Do you have a standard plan that you follow, such as selling half of your holding when a stock doubles, so you get back your initial outlay? Or do you try to react rationally to circumstances as they occur? Let us know what you think in the comments section below. Click here.

Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions.

Last week, an Inner Circle member, pleased with his investment in one U.S. stock, wanted to know if it would continue to pay off. This company uses personal sales representatives to sell its skin care and nutritional products and gets most of its sales in foreign markets like China.

Q: Hi Pat: What are your thoughts regarding Nu Skin Enterprises? I bought it last year and have done very nicely with it. Best regards.

A: Nu Skin Enterprises, (symbol NUS on New York; www.nuskin.com), supplies personal care and nutritional products under the Nu Skin and Pharmanex brands. Nu Skin mainly sells through a network of independent sales representatives, and operates in over 50 countries.

In the three months ended December 31, 2011, the company’s revenue rose 23.4%, to $495.3 million from $401.2 million a year earlier.

Nu Skin gets about 84% of its sales from outside the Americas. Its Chinese division has been especially strong: this business’s revenue rose by more than 66% in the latest quarter, as it attracted a number of new sales representatives.

Growth stocks: NuSkin had earnings jump 32%

The company has launched a number of successful new products, including its ageLOC offerings and nutritional items under the R2 name.

Earnings jumped 32.7%, to $49.5 million, or $0.80 a share, from $37.3 million, or $0.60 a share. The higher sales pushed up earnings. The company is also doing a good job of cutting its costs and improving its manufacturing processes.

Nu Skin’s shares have almost doubled over the last year, and now trade at 19.8 times this year’s forecast earnings of $2.89 a share. The company recently raised its quarterly dividend by 25%, to $0.20 from $0.16. The stock now yields 1.4%.

In the latest Inner Circle Q&A, Pat looks at NuSkin’s outlook and whether it can keep its earnings high enough to justify its elevated price-to-earnings ratio. He concludes with his clear buy-hold-sell advice on the stock.

Inner Circle members see Pat’s analysis and recommendations on the stocks that other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this unique investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.

(Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.)

Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions.

This week, an Inner Circle member wanted Pat’s opinion on the one of the world’s largest drug stocks. The leading maker of generic drugs, this company is expanding into brand-name and non-prescription drugs. Still, it faces increasing competition in all of these industry segments.

Q: Hi Pat: What are your thoughts on Teva Pharmaceuticals?

A: Teva Pharmaceutical Industries Ltd. ADRs, (symbol TEVA on Nasdaq; www.tevapharm.com), is the world’s largest generic drug maker.

In 2011, Israel-based Teva got 56% of its sales by making and selling more than 500 generic drugs.

The company also develops and markets some of its own name-brand drugs, including Copaxone, the second-highest-selling multiple-sclerosis treatment, and Azilect, a Parkinson’s drug. Branded drugs supplied 35% of Teva’s 2011 sales. The remaining 9% of its sales mainly came from over-the-counter drugs.

The company has grown steadily by acquisition. Most recently, it paid $6.5 billion for U.S.-based Cephalon Inc., which makes several branded drugs, including Actiq (which relieves pain caused by cancer), Trisenox (for treating leukemia), Nuvigil (sleep disorders) and Gabitril (seizures).

Drug stocks: Teva in over-the-counter drug venture with Procter & Gamble

Teva is also expanding its non-prescription drug business. It recently formed a joint venture with Procter & Gamble Co. (New York symbol PG) that will make and sell over-the-counter drugs outside North America. Procter will own 51% of this new business, called PGT Consumer Healthcare, and Teva will own the other 49%.

Thanks to the company’s recent acquisitions, its overall sales rose 13.6% in 2011, to $18.3 billion from $16.1 billion in 2010. Excluding one-time items, such as costs to integrate its purchases, earnings rose 7.4%, to $4.4 billion from $4.1 billion.

Earnings per ADR rose 9.5%, to $4.97 from $4.54, on fewer ADRs outstanding. (Each American Depositary Receipt represents one Teva common share.) The company spent $1.1 billion, or 6.0% of its sales, on research.

Drug stocks: Teva has 177 generic drug applications waiting for approval

Teva has 177 generic drug applications awaiting FDA approval. The company also has a number of late-stage drugs under development, including treatments for women’s health, respiratory conditions and wound care.

The company will probably earn $5.62 per ADR in 2012. The stock trades at 7.8 times that estimate. The company recently raised its dividend by 25.0%. The shares now yield 2.4%.

In his assessment of Teva Pharmaceuticals in the most recent Inner Circle Q&A, Pat notes that demographic trends favour generic drugs as the population ages and governments and medical insurance providers come under pressure to cut costs by using more generics. But he also considers the risk that enhanced competition may lower profit margins for all generic drug makers. And he assesses Teva’s chances of success in the competitive brand-name and non-prescription drug market. He concludes with his clear buy-hold-sell advice on the stock.

Inner Circle members see Pat’s analysis and recommendations on the stocks that other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this unique investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.

(Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.)

Yesterday, we discussed U.S. drug store chain Walgreen, a name familiar to many Canadian investors. Today we examine a U.S. drug distributor that has a strong and growing Canadian presence, but is not as well known. We first included this stock in the Aggressive Growth portfolio of Wall Street Stock Forecaster in June, 2002.

McKesson Corp. (New York symbol MCK; www.mckesson.com) is the largest wholesale drug distributor in the U.S. and Canada. It also owns 49% of Mexico’s largest drug distributor.

McKesson’s customers include 40,000 pharmacies, as well as doctor’s offices, hospitals and clinics. The company also supplies surgical tools and health and beauty products.

McKesson’s revenue rose 20.6%, from $93.0 billion in 2007 to $112.1 billion in 2011 (fiscal years end March 31). Earnings jumped 49.4%, from $881 million in 2007 to $1.3 billion in 2011. Because of fewer shares outstanding, earnings per share shot up 73.0%, from $2.89 in 2007 to $5.00 in 2011.

A big part of the company’s growth comes from its technology solutions division, which makes computers and software that help pharmacies and clinics manage their drug inventories. This division accounts for just 3% of McKesson’s revenue, but supplies close to 25% of its earnings.

Growth stocks: McKesson makes Canadian acquisition, has room for more

Acquisitions have also fuelled McKesson’s earnings. In December 2010, it bought US Oncology, a privately held firm that sells drugs and provides research and administrative services to over 500 cancer care facilities in the U.S.

In January 2012, McKesson agreed to pay $920 million (Canadian) for Drug Trading Company Limited, which buys drugs on behalf of 850 independently owned pharmacies in Canada. McKesson already distributes products to these customers; that familiarity cuts the risk of this purchase. The deal should close in mid-2012.

The company’s capital expenditures are low, and it spends less than 1% of its revenue on research. That gives McKesson plenty of flexibility to keep making acquisitions. It also holds cash of $4.2 billion, or $17.03 a share, and its long-term debt is just $3.6 billion, or 17% of its market cap.

In addition to acquisitions, McKesson is using its cash to buy back shares. It recently added $650 million to its share repurchase authorization. It can now buy back up to $1.5 billion of its stock. There is no time limit to these purchases. The company is also likely to raise its dividend again this year. The current annual rate of $0.80 a share yields 0.9%.

McKesson will probably earn $6.05 a share in fiscal 2012. The stock trades at a reasonable 14.6 times that estimate.

In the latest edition of Wall Street Stock Forecaster, we look at whether McKesson can continue to increase its earnings in the face of stiff competition to renew its contract as sole supplier of drugs to the U.S. Department of Veterans Affairs. We conclude with our clear buy-hold-sell advice on the stock.

You can get Wall Street Stock Forecaster, with our advice on leading U.S. stocks written especially for Canadian investors, along with “My #1 U.S. Stock Pick for 2012” as well as FREE access to our weekly Email/Telephone Hotlines when you subscribe now. And as a new subscriber you can save $50.00 on an introductory subscription. Click here to get started right away.

Companies take different paths to growth. Over the years, this Canadian company has steadily acquired a series of small firms with specialized expertise and integrated them into a large organization that can undertake a wide range of projects. And this year, it has joined the ranks of Canadian dividend stocks.

STANTEC INC. (Toronto symbol STN; www.stantec.com) sells a range of consulting, project delivery, design/build and technology services. The company’s clients operate in a wide variety of markets, including industry, environment, transportation and construction. Stantec has over 11,000 employees at 170 locations throughout North America. It also has four international offices.

In the three months ended December 31, 2011, the company’s revenue rose 12.6%, to $432.0 million from $383.7 million a year earlier. Acquisitions were part of the reason for the gains.

Pat McKeough's ValuVesting System generated a whopping 383.9% return since 1995 (164.1% above the 219.8% gain of the S&P/TSX) in one of the most volatile markets in history. That means if you had invested $100,000 in 1995, you would have $483,900 today! Click here to learn more about how you can profit from Pat McKeough's The Successful Investor newsletter.

Canadian dividend stocks: Stantec added five more companies in 2011

Stantec is also working on a number of new projects. Before one-time items, earnings rose 4.3%, to $24.3 million, or $0.53 a share, from $23.3 million, or $0.51 a share.

The company continues to grow by acquisition. In 2011, it bought five companies. Together, these firms added 725 staff to Stantec’s workforce.

Stantec has begun paying dividends for the first time with a quarterly payment of $0.15 a share in April 2012. Based on the current price, the shares will yield 1.9%.

In the latest edition of Stock Pickers Digest, we examine whether Stantec can successfully counter the risks inherent in its acquisitions policy with its integrated sales policies and cost cutting measures. We conclude with our clear buy-hold-sell advice.

If you’re looking for stocks with the potential for gains of 50% or more in 6 months or less, you should subscribe to Stock Pickers Digest.

The latest issue of Stock Pickers Digest gives you our full analysis, including clear buy/sell/hold advice, on 20 stocks that may be suitable for the part of your portfolio you devote to aggressive investing. What’s more, as a new subscriber you can save $50.00 off regular annual subscription rate. Click here to learn how.

Understanding all this, there are still very good reasons to turn to aggressive stocks. And there are ways to earn big returns without exposing yourself to excessive risk. Here are 4 principles that we use to select our growth stock picks for Stock Pickers Digest, our newsletter for the aggressive portion of investors’ portfolios.

1. Limit aggressive holdings to 30% of your overall portfolio. Because aggressive stocks expose you to a greater risk of loss, we recommend limiting your aggressive holdings to no more than about 30% of your overall portfolio.
   
   That’s not an invariable number. Ultimately, the percentage of your portfolio that you should hold in either conservative or aggressive investments depends on your personal circumstances and risk tolerance. An investor with a longer time horizon or without the need for current income from a portfolio can invest more money in aggressive growth stock picks. But we think 30% is a good rule of thumb.
2. Focus on investment quality when looking for aggressive stocks with the potential for higher returns. When we look for aggressive investments, we zero in on companies that have established a business and have at least some history of building revenue and cash flow. We also look for companies that stand to benefit as the economy continues to improve, and have proven management and long-term growth plans.
   
   That’s very different from so so-called concept stocks, many of which are start-ups or companies that look to profit from next week’s or next year’s investor fad. These companies can generate big returns in a good year. In the long run, though, they are likely to cost you money.

Pat McKeough's ValuVesting System generated a whopping 383.9% return since 1995 (164.1% above the 219.8% gain of the S&P/TSX) in one of the most volatile markets in history. That means if you had invested $100,000 in 1995, you would have $483,900 today! Click here to learn more about how you can profit from Pat McKeough's The Successful Investor newsletter.

3. Hold a diverse aggressive portfolio: As with your more conservative holdings, we recommend that you cut your risk by spreading your aggressive holdings across the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities). Your emphasis may diverge. In the search for greater gains, you may choose to invest more heavily in Manufacturing and Resources, the two riskiest sectors. If so, take care to spread your money out across the many industries within each of these sectors. That way, you protect yourself from an unforeseeable industry downturn.
4. Downplay stocks in the broker/media limelight: That limelight fosters bloated investor expectations. Stocks that are talked up like this may seem like ideal candidates for big gains, with lots of investors getting on board. But when stocks fail to live up to those expectations, brutal downturns follow.
   
   Applying that aspect of our conservative philosophy to an aggressive portfolio leads us to stay out of most new issues. That’s because most new issues come to market when it’s a good time for the company or insiders to sell. That’s rarely a good time for you to buy.

If you’re looking for aggressive stocks with the potential for returns of 50% or more in 6 months or less, you should subscribe to Stock Pickers Digest. The latest issue gives you our full analysis, including clear buy/sell/hold advice, on 20 stocks that may be suitable for the part of your portfolio you devote to aggressive investing. And as a new subscriber, you can save $50.00 off the regular annual subscription rate. Click here to learn how.

Still, the long-term outlook for these three carmakers remains bright. Toyota and Honda are recovering from natural disasters in Japan and Thailand, while Ford is enjoying the benefits of a major restructuring. Not all three are buys right now, but we feel they have stronger prospects than General Motors.

TOYOTA MOTOR CO. ADRs $84 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $142.8 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.toyota.com) is Japan’s largest automobile maker and the world’s second-biggest after General Motors. Toyota also makes industrial equipment, such as forklifts and prefabricated housing. Like most carmakers, it offers vehicle loans through its financing division.

The company is starting to recover from the disruptions caused by the March 2011 earthquake and tsunami in Japan and the recent flooding in Thailand. Toyota sold 2.0 million vehicles in its fiscal 2012 third quarter, which ended December 31, 2011, up 9.3% from 1.8 million a year earlier.

As a result, its revenue rose 12.3%, to $63.2 billion from $56.3 billion. However, higher income taxes and unfavourable exchange rates cut its earnings by 6.8%, to $1.05 billion, or $0.61 per ADR, from $1.1 billion, or $0.65 per ADR. (Each American Depositary Receipt represents two Toyota common shares.)

Toyota continues to shift production away from Japan. As part of this move, it plans to spend $400 million to produce more Highlander sport utility vehicles at its plant in Indiana. This will cut the company’s exposure to the high Japanese yen, which makes cars exported from Japan more expensive.

The high yen will probably limit Toyota’s earnings to $2.37 per ADR in fiscal 2012. The stock trades at a high 35.4 times that figure. However, it trades at a more reasonable 15.8 times the company’s forecast fiscal 2013 earnings of $5.31 per ADR.

Toyota is a hold.

HONDA MOTOR CO. LTD. ADRs $37 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $66.6 billion; Price-to-sales ratio: 0.7; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.honda.com) is Japan’s second-largest carmaker, and the world’s largest motorcycle manufacturer.

Like Toyota, Honda has suffered setbacks due to the natural disasters in Japan and Thailand. In Honda’s fiscal 2012 third quarter, which ended December 31, 2011, its sales fell 3.5%, to $25.0 billion from $25.9 billion a year earlier. Honda sold 830,000 cars and trucks in the quarter, down 2.9% from 855,000 a year earlier. However, motorcycle sales rose 6.3%, to 3.1 million from 2.9 million.

Earnings fell 38.4%, to $613 million, or $0.34 per ADR, from $995 million, or $0.55 per ADR (each American Depositary Receipt represents one Honda common share).

The lost production will cut Honda’s earnings to $1.67 per ADR in fiscal 2012. The stock trades at 22.2 times that estimate.

However, the company expects its plants in Thailand to return to full production in April 2012. That should push up its fiscal 2013 production to 4.0 million vehicles from a projected 3.15 million in fiscal 2012.

As well, Honda’s fiscal 2013 earnings should rebound to $3.47 per ADR. The stock trades at a more reasonable 10.7 times that figure.

Honda is a buy.

FORD MOTOR CO. $12 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.8 billion; Market cap: $45.6 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.7%; TSINetwork Rating: Extra Risk; www.ford.com) is the second-biggest carmaker in the U.S., and the world’s fifth-largest.

The company continues to benefit from its restructuring plan, which it implemented in 2005 to deal with its falling sales and market share. In the years since, Ford has sold its Jaguar and Land Rover luxury car divisions, closed factories and laid off workers.

In 2011, the company sold 5.7 million vehicles, up 7.2% from 5.3 million in 2010. Sales rose 11.3% in North America, 7.5% in Asia, 3.5% in South America and 1.8% in Europe. Ford now accounts for 16.5% of all car sales in the U.S., up from 16.4% in 2010. It also has 8.3% of the European market, down from 8.4% in 2010.

Revenue rose 12.7% in 2011, to $136.3 billion from $120.9 billion in 2010. Earnings jumped 208.1%, to $20.2 billion, or $4.94 a share. However, that’s mainly due to an $11.5-billion tax benefit. The company earned $6.6 billion, or $1.66 a share, in 2010.

Ford plans to invest some of its rising profits in the 15 new models that it plans to introduce over the next few years. That will help it increase its market share in fast-growing countries like China, India and Thailand. As well, a new joint venture with Sollers, Russia’s second-largest carmaker, should increase Ford’s sales in that country.

The company will probably earn $1.48 a share in 2012. The stock trades at 8.1 times that forecast. Ford also recently resumed paying dividends. The annual rate of $0.20 a share yields 1.7%.

Ford is a buy.

These moves will cost Briggs between $50 million and $55 million. To put that in context, it earned $63.2 million, or $0.48 a share, in the fiscal year ended June 30, 2011. However, the closures should cut Briggs’ yearly costs by $18 million to $20 million.

Briggs & Stratton is a hold.

IDEXX LABORATORIES INC. $89 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 55.1 million; Market cap: $4.9 billion; Price-to-sales ratio: 4.0; No dividends paid; TSINetwork Rating: Average; www.idexx.com) earned $2.78 a share in 2011, up 17.3% from $2.37 in 2010. Revenue rose 10.4%, to $1.2 billion from $1.1 billion.

Sales of the company’s Pro-Cyte Dx hematology analyzer, which processes animal blood tests in just two minutes, continue to rise. This device cuts veterinarians’ reliance on external labs and lowers their costs. Demand is also increasing in overseas markets. For example, Idexx recently received approval to market this device in Japan.

Idexx feels that its revenue will rise by 7% to 8% in 2012. However, the stock trades at 29.0 times the company’s likely 2012 earnings of $3.07 a share. That high p/e ratio makes the stock vulnerable to a sudden drop if Idexx fails to meet its revenue or earnings growth targets.

Idexx is a hold.

GENERAL MILLS INC. $39 (New York symbol GIS, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 644.7 million; Market cap: $25.1 billion; Price-to-sales ratio: 1.6; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.generalmills.com) reports that sales of its cereals, soups and baking products are falling in the U.S. That’s making it hard for the company to pass along rising ingredient costs. Increasing competition is also forcing it to spend more on advertising.

As a result, General Mills now feels that it will earn $2.54 a share in its 2012 fiscal year, which ends May 31, 2012. That’s down from its earlier forecast of $2.60 a share. Even so, the stock trades at a reasonable at 15.4 times the new estimate. Moreover, the company continues to expand internationally, which cuts its risk.

General Mills is a buy.

In the three months ended December 31, 2011, Wyndham’s revenue rose 6.7%, to $1.0 billion from $937.0 million. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped push up Wyndham’s occupancy rate by 3.8%.

Before one-time items, earnings rose 2.2%, to $0.47 a share from $0.46. Wyndham continues to buy back its shares. In the latest quarter, it repurchased 6.7 million shares for $225 million. In all of 2011, it bought back 28.7 million shares for $902 million. The company has also raised its quarterly dividend by 53.3%, to $0.23 from $0.15. It now yields 2.1%.

Wyndham’s shares rose to an all-time high after it released its latest quarterly results. Still, the stock trades at just 14.7 times the $2.92 a share that the company will likely earn in 2012.

Wyndham Worldwide is still a buy.

AMAZON.COM $184.47 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 454.8 million; Market cap: $83.9 billion; No dividends paid) is a major online retailer. Books, music and videos make up about 40% of its sales. Other products, including electronics, computer games and toys, make up the other 60%. Amazon Marketplace lets other companies sell their products through Amazon’s websites.

In the three months ended December 31, 2011, Amazon’s earnings fell 57.5%, to $177 million, or $0.39 a share. A year earlier, it earned $416 million, or $0.93 a share. The decline came despite a 34.6% jump in sales, to $17.4 billion from $12.9 billion.

During the quarter, the company spent $862 million on “technology and content,” up 66.1% from $519 million a year earlier. That was the main reason for the lower earnings. This additional spending included investments in new models of its Kindle electronic book reader, including the Kindle Fire tablet computer.

Amazon faces a number of challenges that could keep its profit margins low. For example, it will have to keep spending heavily on technology to hold onto its customers and attract new ones. At the same time, it must deal with intense competition in the e-book market from rivals like Barnes & Noble and Google. And right now, the tablet market is dominated by Apple.

Amazon.com is still a hold.

The company will open 155 to 165 new restaurants in 2012. That will push up its sales. However, rising food costs will keep putting pressure on its profit margins. It’s uncertain if Chipotle can further raise its prices to offset those increases.

Chipotle trades at nearly 46 times its forecast earnings for this year. That’s a high ratio that leaves the stock vulnerable if it runs into any short-term problems. Still, it’s a well-established chain with a growing following, especially among health-conscious, environmentally aware baby boomers.

Chipotle is still a hold.