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Warner Music Group Corp. is well-positioned for higher-margin catalog revenues, added streaming adoption, and new AI monetization opportunities.
Top pick Linamar Corp. is trading cheaply despite delivering higher sales and profits.
Gen Digital Inc. is trading quite cheaply for a firm that just grew revenue nearly 26% while providing plenty of cash flow for innovation, dividends and buybacks.
AT&T Inc. offers a 4.2% yield at an attractive valuation as it’s tapped to generate over $18 billion in free cash flow while continuing to build ultrafast wireless and fibre-optic networks.
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SNAP-ON INC. $146 (New York symbol SNA; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 58.1 million; Market cap: $8.5 billion; Price-to-sales ratio: 2.3; Dividend yield: 1.7%; TSINetwork Rating: Average; www.snapon.com) makes tools for auto mechanics and sells them through a fleet of franchised vans that visit garages. It also makes specialized tools for industrial customers. In 2015, Snap-On’s revenue gained 2.3%, to $3.4 billion from $3.3 billion in 2014. Excluding exchange rates and acquisitions, sales gained 7.1%. Earnings per share rose 13.4%, to $8.10 from $7.14. The company continues to benefit as carmakers add new features to their vehicles such as automatic parking and braking systems. That has forced repair shops to invest in new tools and upgrade their diagnostic equipment. Most of these clients borrow the funds they need to buy new tools and equipment, which has increased earnings at Snap-On’s financing division....
IDEXX LABORATORIES INC. $72(Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 89.6 million; Market cap: $6.5 billion; Priceto- sales ratio: 4.0; No dividends paid; TSINetwork Rating: Average; www.idexx.com) makes equipment that veterinarians use to detect diseases in pets. It also makes systems that detect contaminants in livestock and water. Idexx continues to see strong demand for its Catalyst One system, which analyzes an animal’s blood in 15 minutes. That makes veterinarians less reliant on outside labs, and cuts their costs. Idexx earned $2.11 a share in 2015, up 5.5% from $2.00 in 2014 (all per-share amounts adjusted for 2-for-1 split in June 2015). Sales rose 7.8%, to $1.6 billion from $1.5 billion....
On July 1, 2015, Baxter International handed out 80.5% the shares in its Baxalta subsidiary to its investors on a one-for-one basis. Baxalta makes vaccines and drugs in three main areas: hematology (blood diseases), immunology (immune system) and oncology (cancer). Baxter now focuses on medical devices, such as intravenous pumps and kidney-dialysis equipment, and operating room drugs such as anesthesia. BAXTER INTERNATIONAL INC. $39 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 547.0 million; Market cap: $21.3 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.2%; TSINetwork Rating: Average; www.baxter.com) earned $755 million, or $1.38 a share, in 2015 before unusual items. That’s up 7.5% from $702 million, or $1.28, in 2014. Revenue fell 7.0%, to $10.0 billion from $10.7 billion. However, without the negative impact of currency exchange rates, revenue gained 3%....
PFIZER INC. $30(New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 6.2 billion; Market cap: $186.0 billion; Price-to-sales ratio: 3.8; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.pfizer.com) acquired rival drug maker Wyeth in October 2009. Wyeth has now agreed to pay the U.S. Medicaid system $784.6 million to settle a dispute over how it calculated rebates for its Protonix acid reflux drug between 2001 and 2006. Pfizer will have to restate its earnings for 2015 to reflect this charge. However, its earnings before unusual items of $2.20 a share remains unchanged....