acquisition
CVS Health Corp., $93.79, symbol CVS on New York (Shares outstanding: 1.1 billion; Market cap: $103.7 billion; www.cvshealth.com), has two main businesses:
- The Pharmacy Services division (66% of revenue) helps employers, insurers, unions and government agencies manage their drug-coverage plans. It also distributes prescription drugs to patients through the mail, as well as to 68,000 U.S. pharmacies.
- The Retail Pharmacy division (34%) operates over 7,900 drugstores in 44 U.S. states, Puerto Rico and Brazil. Many of these outlets also feature walk-in clinics.
: The shares of IBM are down, but its proven ability to adapt to new conditions makes it a value stock with strong growth potential
AGT FOOD & INGREDIENTS INC., $31.53, symbol AGT on Toronto, buys and processes a range of pulses, which include peas, beans, lentils and chickpeas, as well as other specialty crops. The Saskatchewan-based company owns processing plants in Canada, the U.S., Turkey, Australia, China and South Africa.
Before one-time items, AGT earned $0.51 a share in the three months ended September 30, 2015, up 10.9% from $0.46 a year earlier. Revenue gained 26.1%, to $362.8 million from $287.7 million. The increases came from recent acquisitions and higher processing activity.
AGT continues to benefit from its plan to focus on more-profitable products, such as ingredients and packaged foods, as opposed to simply cleaning, splitting and bagging bulk crops. Food makers use these ingredients in products such as baked goods, soups and beverages, as well as pet food and animal feed.
The stock trades at a low 13.2 times the $2.38 a share AGT will probably earn in 2016. It yields 1.9%.
OUR RECOMMENDATION: AGT Food & Ingredients is a buy.
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Before one-time items, AGT earned $0.51 a share in the three months ended September 30, 2015, up 10.9% from $0.46 a year earlier. Revenue gained 26.1%, to $362.8 million from $287.7 million. The increases came from recent acquisitions and higher processing activity.
AGT continues to benefit from its plan to focus on more-profitable products, such as ingredients and packaged foods, as opposed to simply cleaning, splitting and bagging bulk crops. Food makers use these ingredients in products such as baked goods, soups and beverages, as well as pet food and animal feed.
The stock trades at a low 13.2 times the $2.38 a share AGT will probably earn in 2016. It yields 1.9%.
OUR RECOMMENDATION: AGT Food & Ingredients is a buy.
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The old Thomson Corp. wisely got out of the newspaper business in the early 2000s to focus on its faster-growing information-services operation. In 2008, it added more highquality financial data when it acquired the 160-year-old Reuters news agency for $17 billion U.S. in cash and shares. This deal also cut Thomson’s high reliance on North America. The company’s timing was bad, however, as the 2008/09 financial crisis forced many of its banking and brokerage clients to spend much less on information products. That delayed the gains Thomson expected from the Reuters deal. However, the company is now benefiting from this acquisition, as well as a long-range restructuring plan. That’s pushing up its earnings and freeing up cash for share buybacks and dividends....
With smart, low-risk acquisition strategies, blue chip insurance firms Great-West Lifeco and Sun Life Financial are positioned for growth.
INTEL CORP. $34 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 4.7 billion; Market cap: $159.8 billion; Price-to-sales ratio: 2.9; Dividend yield: 3.1%; TSINetwork Rating: Above Average; www.intel.com) is the world’s leading chip maker. Its products power 80% of all personal computers.
In the three months ended September 26, 2015, Intel’s earnings fell 6.3%, to $3.1 billion from $3.3 billion a year earlier. The company repurchased $1.0 billion of its shares during the quarter, so per-share profits declined just 3.0%, to $0.64 from $0.66. Overall revenue slipped 0.6%, to $14.47 billion from $14.55 billion.
Revenue from chips for computers and mobile devices (59% of the total) fell 7.5%, partly because Intel is offering fewer subsidies to mobile-device makers.
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In the three months ended September 26, 2015, Intel’s earnings fell 6.3%, to $3.1 billion from $3.3 billion a year earlier. The company repurchased $1.0 billion of its shares during the quarter, so per-share profits declined just 3.0%, to $0.64 from $0.66. Overall revenue slipped 0.6%, to $14.47 billion from $14.55 billion.
Revenue from chips for computers and mobile devices (59% of the total) fell 7.5%, partly because Intel is offering fewer subsidies to mobile-device makers.
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CONAGRA FOODS INC. $42 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 432.9 million; Market cap: $18.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www.conagrafoods.com) makes packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter, Orville Redenbacher popcorn and Reddi-wip whipped cream.
Consumers supply 70% of ConAgra’s sales. Businesses, including restaurants and other food makers, provide the remaining 30%. ConAgra’s sales jumped 44.2%, from $12.3 billion in 2011 to $17.7 billion in 2014 (fiscal years end May 31). That’s mainly due to its $4.75-billion acquisition of Ralcorp Holdings, the largest privatelabel food maker in the U.S., in January 2013.
However, the purchase didn’t work out as ConAgra hoped, so the company agreed to sell most of the Ralcorp business to TreeHouse Foods (New York symbol THS) for $2.7 billion in November 2015. Excluding Ralcorp, ConAgra’s overall sales fell to $15.8 billion in fiscal 2015.
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Consumers supply 70% of ConAgra’s sales. Businesses, including restaurants and other food makers, provide the remaining 30%. ConAgra’s sales jumped 44.2%, from $12.3 billion in 2011 to $17.7 billion in 2014 (fiscal years end May 31). That’s mainly due to its $4.75-billion acquisition of Ralcorp Holdings, the largest privatelabel food maker in the U.S., in January 2013.
However, the purchase didn’t work out as ConAgra hoped, so the company agreed to sell most of the Ralcorp business to TreeHouse Foods (New York symbol THS) for $2.7 billion in November 2015. Excluding Ralcorp, ConAgra’s overall sales fell to $15.8 billion in fiscal 2015.
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With an improving U.S. economy, cost-cutting and smart growth, we view Wells Fargo as a lower-risk value stock for conservative investors.
RUSSEL METALS INC., $19.26, symbol RUS on Toronto, is one of North America’s largest metal distributors, serving 39,000 clients at 53 locations in Canada and 12 in the U.S. In the three months ended September 30, 2015, Russel’s revenue fell 25.5%, to $773.4 million from $1.04 billion a year earlier. The company’s sales mainly declined because revenue fell 40% at its energy products division, which supplies pipes for oil and gas drillers. Earnings dropped sharply, to $12.8 million, or $0.21 a share, from $33.0 million, or $0.54. The latest figure included a $2-million charge related to a more than 7% cut to the company’s workforce. Russel’s earnings fell faster than its revenue because steel prices moved down in the latest quarter. That hurts the company’s profit margins and causes it to suffer losses on its inventory....
GREAT-WEST LIFECO $34.21 (Toronto symbol GWO; Shares outstanding: 997.4 million; Market cap: $34.1 billion; TSINetwork Rating: Above Average; Yield: 3.8%; www.greatwestlifeco.com) is one of Canada’s largest insurance firms. It also offers mutual funds and wealth management. Power Financial owns 67.1% of Great-West. In the three months ended June 30, 2015, Great-West’s earnings per share rose 6.5%, to $0.66 from $0.63 a year earlier. In recent years, Great-West has bought firms in Ireland and the U.S. that have added new business lines and boosted its profits. Growth by acquisition can be risky, but the company’s large size lets it take advantage of opportunities with strong chances of success....