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 second quarter of its 2014 fiscal year, which ended September 30, 2013, Peller’s sales rose 5.7%, to $77.2 million from $73.1 million a year earlier. However, strong price competition in Western Canada and higher costs for wine and juice purchased from international suppliers cut Peller’s earnings by 17.3%, to $3.5 million from $4.3 million. Per-share earnings fell 19.4%, to $0.25 from $0.31.

However, if you disregard unusual items, such as losses on hedging contracts that Peller uses to lock in foreign exchange rates, earnings would have risen 11.2%.

Andrew Peller is a buy.

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