SONY CORP. ADRs $21 - New York symbol SNE

SONY CORP. ADRs $21 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.0 billion; Market cap: $21.0 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.3%; TSINetwork Rating: Average; www.sony.com) has rejected a plan from Dan Loeb, an activist investor who owns 7% of the company’s shares. Loeb wants Sony to sell 15% to 20% of its entertainment division, which makes movies, TV shows and music recordings and accounts for 16% of Sony’s revenue.

The company feels that owning media content gives it an edge over other electronics makers.

Meanwhile, Sony’s revenue fell 9.8% in its fiscal 2014 first quarter, which ended June 30, 2013, to $17.3 billion from $19.2 billion a year earlier. That’s partly because the company sold its chemical operations in September 2012. Weak camera demand also hurt its revenue.

Sony earned $35 million, or $0.03 per ADR (each American Depositary Receipt represents one common share). However, that includes a $106-million gain on the sale of music publishing rights. Still, it’s a big improvement over the $312 million, or $0.31 per ADR, that Sony lost a year earlier.

The stock is up 88% since the start of 2013. However, at 47.7 times the company’s projected fiscal 2014 earnings of $0.44 per ADR, it’s vulnerable to a sudden setback if Sony’s earnings growth stalls.

Sony is a hold.

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Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

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Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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