ANDREW PELLER LTD. $14 - Toronto symbol ADW.A

ANDREW PELLER LTD. $14 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.3 million; Market cap: $200.2 million; Price-to-sales ratio: 0.7; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.andrewpeller.com) is Canada’s second-largest producer of wines, after Vincor International. The company has wineries in Nova Scotia, Ontario and British Columbia.

In the first quarter of its 2014 fiscal year, which ended June 30, 2013, Peller’s sales were flat at $72.7 million. The company continues to see strong demand for premium wines and brands it sells under licence, such as Wayne Gretzky wines. However, sales of home wine kits declined.

Earnings rose 10.6%, to $5.1 million from $4.6 million. Per-share earnings gained 12.1%, to $0.37 from $0.33. The company benefited from hedging contracts that it uses to lock in foreign exchange rates; that was the main reason for the higher earnings. Without these hedges, Peller’s earnings would have gained 0.2%.

Peller should earn $1.20 a share in 2014, and the stock trades at just 11.7 times that forecast. The $0.40 dividend yields 2.9%.

Andrew Peller is a buy.

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