Zero tolerance: That appears to be the market mood when it comes to companies missing expectations for third-quarter 2012 results. And we’ve seen more than a few household names get taken to the woodshed this reporting season.

That may well happen to one or more Canadian Edge Portfolio Holdings by the time all the numbers are in. In fact it looks like short-sellers are once again betting against some of our higher-yielding fare, as they have prior to releases in previous cycles.

Thus far such bets have hurt the bears, sometimes badly. The reason: Reported numbers have definitively confirmed the security of dividends.

I expect to see a similar trap sprung on shorts this time around in CE stocks. But if the numbers do come in on the disappointing side, our task then will be to determine if anything has changed at the underlying business. If not we’ll likely hold the position and stomach the red ink. If so, however, we’ll be forced to move on to better alternatives.

That’s the reality that faces us every earnings season. The good news is at least thus far, the surprises for Canadian Edge Holdings reporting numbers have all been welcome ones.

That was the case for Colabor Group Inc (TSX: GCL, OTC: COLFF) earlier this week, as I pointed out in an Oct. 23 Flash Alert. The company has since earned an upgrade to “buy” from one of the five analysts covering it (four rate it “hold”), and the stock has bounced back to the trading range it held up until mid-September, when it became a target for shorts.

Those short the stock this week have been squeezed a bit. Meanwhile, long investors are breathing a sigh of relief on numbers that confirm a strengthening business. Colabor is still a buy up to USD10 for those who don’t already own it.

Shaw Communications Inc (TSX: SJR/B, NYSE: SJR) didn’t face quite so many skeptics in the days leading up to its Thursday release of fiscal fourth-quarter and full-year 2012 earnings (ended Aug. 31, 2012). But the numbers were no less favorably viewed, and the stock has responded positively, punishing short sellers.

The broadband communications-and-entertainment company’s quarterly revenue rose 3 percent, and operating income ticked up 4 percent. Margins remain solid at 49 percent of revenue, despite measures taken to fend off competition.

Finally, free cash flow–Shaw’s most important measure of profitability–bounced back from recent quarters to soar 110 percent. Free cash flow was in fact 7 percent above guidance and is expected to be similarly strong in fiscal 2013.

Free cash flow gains were in large part the payoff from Shaw’s consistently robust investment in its network, which raised broadband speeds and expanded reach of its WiFi service. The company also saw modest sales gains at its cable, satellite and media divisions, reflecting solid marketing efforts.

Investment should continue to drive profitability in fiscal 2013, though management also noted some improvement in pricing trends during this week’s conference call. The company also hinted at potential acquisitions and further promotional efforts, especially in the improving small business market.

As for dividend increases, management wouldn’t be pinned down during the call to forecast an amount. But given the better free cash flow numbers and the company’s apparent success competing with Telus Corp (TSX: T, NYSE: TU) in Western Canada, acceleration in growth to the 5 percent to 7 percent range appears likely.

That’s very likely the biggest reason for Shaw’s solid post-announcement performance. The stock’s a conservative buy up to USD22 for those who don’t yet own it.

TransForce Inc (TSX: TFI, OTC: TFIFF) continues to rank among our biggest winners for 2012. Since early spring, however, the shares have been range-bound, surging as high as USD19.39 in late August before plunging under USD17 earlier this week leading up to its third-quarter earnings release.

Fortunately the numbers were good enough to assuage any fears that TransForce’s fortunes are fading. Quarterly revenue growth was modest at 3 percent. The company’s cash flow, however, soared 17 percent on vastly improved operating efficiency. That, in turn, produced strong free cash flow that the company used to pay off debt and buy back stock.

Full-year results were more impressive still. Revenue surged 22.7 percent excluding the fuel surcharge that’s passed on to the transport company’s customers. Free cash flow rose 37 percent to CAD1.85 per share, providing a full-year dividend coverage ratio of 3.56-to-1 (payout ratio 28.1 percent). That should open the door to another double-digit dividend increase in March 2013.

My big question on TransForce for most of this year has been where to set a buy target as the stock first surged and then ran in place. At this point I’m inclined to keep the target where it is now, mainly because these numbers are due a lot more to improved efficiencies than the health of the market.

CEO Alain Bedard, for example, declared the month of August “a disaster,” as volumes dropped sharply.

Continuing to post strong numbers when the macro picture is iffy is a difficult business and makes significant share-price gains from here tougher to come by.

So while I’m confident as ever in TransForce’s long-run ability to build shareholder wealth–even if the North American economy should slow sharply–I also believe odds favor we’ll see another buying opportunity under my current target of USD17. Sit tight until we see a dip to that level.

Here’s when recommended companies are expected to report their numbers. Note that I don’t send Flash Alerts for non-Portfolio companies, but will recap their numbers as reported in your regular issue of Canadian Edge, which will be published on Nov. 9.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Nov. 1 (confirmed)
• Artis REIT (TSX: AX-U, OTC: ARESF)–Nov. 7 (confirmed)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Nov. 5 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Nov. 9 (estimate)
• Brookfield Real Estate Services Inc (TSX: BRE, OTC: BREUF)–Oct. 30 (confirmed)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPFF)–Nov. 8 (confirmed)
• Canadian Apartment Properties REIT (TSX: CAR, OTC: CDPYF)–Nov. 8 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Nov. 8 (confirmed)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Nov. 6 (confirmed)
• Dundee REIT (TSX: D-U, OTC: DRETF)–Nov. 5 (confirmed)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Nov. 5 (confirmed)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–November 9 (confirmed)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–Nov. 6 (confirmed)
• Just Energy Group Inc (TSX: JE, NYSE: JE)–Nov. 8 (estimate)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Nov. 1 (estimate)
• Northern Property REIT (TSX: NPR, OTC: NPRUF)–Nov. 7 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, NYSE: PBA)–Nov. 6 (confirmed)
• RioCan REIT (TSX: REI, OTC: RIOCF)–Nov. 6 (confirmed)
• Shaw Communications Inc (TSX: SJR/A. NYSE: SJR)–Oct. 26 Flash Alert
• Student Transportation Inc (TSX: STB, NSDQ: STB)–Nov. 9 (estimate)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–Oct. 26 Flash Alert

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN OTC: ACAZF)–Oct. 30 (confirmed)
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–Nov. 14 (confirmed)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–Nov. 2 (estimate)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Nov. 12 (confirmed)
• Colabor Group Inc (TSX: GCL, OTC: COLFF)–Oct. 23 Flash Alert
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–Nov. 9 (estimate)
• Extendicare Inc (TSX: EXE, OTC: EXETF)–Nov. 7 (confirmed)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Nov. 7 (confirmed)
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–Nov. 8 (estimate)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Nov. 8 (confirmed)
• Pengrowth Energy Corp (TSX: PGF, NYSE: PGH)–Oct. 31 (confirmed)
• PetroBakken Energy Ltd (TSX: PBN, OTC: PBKEF)–Nov. 8 (confirmed)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–Nov. 9 (estimate)
• Poseidon Concepts Corp (TSX: PSN, OTC: POOSF)–Nov. 8 (estimate)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–Nov. 1 (confirmed)
• Wajax Corp (TSX: WJX, OTC: WJXFF)–Nov. 2 (estimate)