Based on its price-earnings and price-to-book-value multiples, Progressive looks undervalued. The shares could jump by at least 25% over the next year.

Google shares face few near-term obstacles, given the company's hold on search advertising. Longer-term, they're a tougher bet on successful diversification.

Google shares face few near-term obstacles, given the company's hold on search advertising. Longer-term, they're a tougher bet on successful diversification.

"The next 12 months still look good," Rohit Sehgal, a money manager at Toronto's Goodman & Co. Investment Counsel, says of the Canadian banks, which he thinks should be helped by cost-cutting, a more favorable yield curve and a likely decline in nonperforming loans. Based on normalized earnings projections, RBC estimates that TD and Scotiabank shares could rise more than 18% over the next year. Wall Street analysts see the pair climbing by a more modest 14% and 8%, respectively, and Royal Bank advancing by 10%. Add dividends, and the potential total returns look juicier.

"The next 12 months still look good," Rohit Sehgal, a money manager at Toronto's Goodman & Co. Investment Counsel, says of the Canadian banks, which he thinks should be helped by cost-cutting, a more favorable yield curve and a likely decline in nonperforming loans. Based on normalized earnings projections, RBC estimates that TD and Scotiabank shares could rise more than 18% over the next year. Wall Street analysts see the pair climbing by a more modest 14% and 8%, respectively, and Royal Bank advancing by 10%. Add dividends, and the potential total returns look juicier.

In some ways, anyone who invests in one of the five biggest Canadian banks -- all of which trade in both New York and Toronto -- pays a premium; in other ways, the stocks are bargains. Royal Bank of Canada, Toronto-Dominion and Bank of Nova Scotia are the group's most attractive members because they boast the most potential to boost profits through foreign growth. Each sells at more than two times book value, while some of their U.S. peers fetch less than book. But they all boast substantial dividends, rack up higher returns on assets and sell at lower multiples of current and expected earnings than their south-of-the-border rivals. The largest Canadian banks trade at an average of about 12 times estimated 2010 profits, compared with 13.7 times for JPMorgan Chase (JPM), 19.9 for Bank of America (BAC) and 72 for Citigroup (C).

Any boost to computer sales from the noisy release of Windows 7 also should boost licensing income for Dolby, making it a safer play on a consumer recovery. There is no burden of expectation, with analysts forecasting a 4% decline in 2010 profits. And even if earnings stagnate, Miller Tabak analyst David Joyce thinks the price/earnings multiple could expand "with greater confidence that consumers and businesses are starting to purchase electronics again." The shares are now trading at 21 times expected 2010 earnings.

Jim Kennedy, president of Marathon Capital Management, thinks SRS is "on the verge of a breakout in terms of sustained profitability." Fees it can collect will vary with the exclusivity and prices of gadgets, but he reckons 20 cents to 35 cents for each device is reasonable. "Since this is chip-level technology, the margins can be impressive as the unit count goes up." That ramp-up is why shares near 6.50 are a whopping 72 times 2009 profits but a less-forbidding 22 times projected 2010 earnings. The stock is well-owned by insiders, and the small market cap (of just $100 million) will exacerbate price swings. On the other hand, SRS has no debt and 40% of its market value is in cold hard cash. You'd think Dolby might have ponied up the premium to snap up SRS before it grows big enough to steal some thunder, but continued independence is a sign SRS feels comfortable in its own spotlight.