acquisition
WYNDHAM WORLDWIDE $87.29 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 120.0 million; Market cap: $10.4 billion; Dividend yield: 1.9%) is one of the world’s largest hospitality companies, with 7,670 franchised hotels worldwide. In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. This wide range of operations gives it more consistent cash flow than most of its competitors, which mainly focus on hotels. Wyndham has just bought ResortQuest Whistler, which manages nearly 600 vacation properties at the popular ski resort, for an undisclosed amount. ResortQuest’s properties are fully furnished and offer amenities like full kitchens, fireplaces and large living areas. This is Wyndham’s first acquisition in Canada....
LOBLAW COMPANIES LTD. $67 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 412.6 million; Market cap: $27.6 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.loblaw.ca) announced that 13,600 unionized employees at 69 of its Ontario supermarkets have voted to accept a six-year labour contract. The deal includes wage increases and new pension protections. The company continues to benefit from the recent closure of Target’s 133 Canadian stores, as well as its 2014 acquisition of Shoppers Drug Mart. Even so, the grocery business remains highly competitive, particularly in Ontario. This new labour deal cuts Loblaw’s risk. Loblaw is a buy.
SAPUTO INC. $30 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 392.9 million; Market cap: $11.8 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.saputo.com) is Canada’s largest producer of dairy products, including milk, butter and cheese. The company also operates dairies in the U.S., Australia and Argentina. In its 2015 fiscal year, which ended March 31, 2015, Saputo’s sales rose 15.4%, to $10.7 billion from $9.2 billion in 2014. That’s mainly due to Australian dairy producer Warrnambool Cheese and Butter Factory; Saputo paid $449.6 million for 87.92% of this business in February 2014. Warrnambool’s contribution helped offset lower cheese prices in fiscal 2015....
CHIPOTLE MEXICAN GRILL, $661.95, symbol CMG on New York, offers higher-quality food and better decor and service than many fast-food chains, and charges slightly higher prices. Under its Food with Integrity initiative, it uses naturally raised meat wherever possible. The company’s all-natural meat comes from animals that are raised humanely, never given antibiotics or hormones and fed a vegetarian diet. In January 2015, the company halted sales of pork items at one-third of its nearly 1,800 U.S. restaurants after learning that a key supplier had failed to meet its pig-housing standards. Under Chipotle’s requirements, pigs must be housed in humane conditions with access to the outdoors, rather than in pens....
Canada is now negotiating the Trans-Pacific Partnership, which would lower trade barriers between 12 countries in the Asia-Pacific region. The TPP could also open Canada’s highly regulated agricultural industry to foreign competitors. That would hurt Saputo and Maple Leaf Foods (see box)—at least initially—though the deal would also help them export their products to more markets. Still, we feel both stocks will make little progress until the TPP is finalized. SAPUTO INC. $30 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 392.9 million; Market cap: $11.8 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.saputo.com) is Canada’s largest producer of dairy products, including milk, butter and cheese. The company also operates dairies in the U.S., Australia and Argentina....
IGM FINANCIAL INC. $40 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 248.5 million; Market cap: $9.9 billion; Price-to-sales ratio: 3.4; Dividend yield: 5.6%; TSINetwork Rating: Above Average; www.igmfinancial.com) had $136.0 billion of assets under management as of June 30, 2015. That’s down 3.9% from $141.4 billion a year earlier. The drop resulted from the recent decline in major stock markets; IGM’s fee income rises and falls with the value of the mutual funds and other securities it manages. Even with the current volatility, IGM’s overall mutual fund sales, net of redemptions, rose by $66.5 million in June. Net gains at the company’s Investors Group (up $74.2 million) and Counsel (up $12.3 million) subsidiaries offset $20.0 million of net redemptions at its Mackenzie division....
Savaria Corp., $6.05, symbol SIS on Toronto (Shares outstanding: 32.6 million; Market cap: $189.8 million; www.savaria.com), makes products for people with limited mobility. The company has two main divisions:
- Accessibility (84% of revenue) makes stairlifts, platform lifts and elevators for homes and businesses.
- Adapted Vehicles (16%) installs ramps and lowered floors in minivans so they can handle wheelchairs. This business serves both private vehicles and taxi fleets.
CAMECO CORP., $17.00, symbol CCO on Toronto, has suspended uranium shipments by truck from its Rabbit Lake and Key Lake mines in northern Saskatchewan. The company made the decision in response to forest fires in the region. Cameco is the world’s largest uranium producer. It has large, high-grade reserves, low-cost operations, significant market share and a number of mines. The company halted shipments after travel restrictions were imposed on some northern roads because of low visibility....
RESTAURANT BRANDS INTERNATIONAL INC. $43 (www. rbi.com) earned $0.30 a share in the three months ended June 30, 2015, up 25.0% from $0.24 a year earlier. These figures exclude costs related to Burger King Worldwide’s December 2014 acquisition of Tim Hortons....
GENUINE PARTS CO. $88 (New York symbol GPC; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 152.3 million; Market cap: $13.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.8%; TSINetwork Rating: Average; www.genpt.com) gets 53% of its sales and 55% of its earnings by selling replacement auto parts: Genuine operates 1,100 outlets under the NAPA banner, and its distribution business serves 4,900 independent stores in North America, Australia and New Zealand.
The company also distributes industrial parts (31% of sales, 29% of earnings), office products (12%, 11%) and electrical equipment (4%, 5%).
As the economy improved after the 2008/09 recession, the company’s sales rose 36.9% from $11.2 billion in 2010 to $15.3 billion in 2014. Overall earnings jumped 49.6%, from $475.5 million to $711.3 million. Per-share profits gained 53.7%, from $3.00 to $4.61, on fewer shares outstanding.
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The company also distributes industrial parts (31% of sales, 29% of earnings), office products (12%, 11%) and electrical equipment (4%, 5%).
As the economy improved after the 2008/09 recession, the company’s sales rose 36.9% from $11.2 billion in 2010 to $15.3 billion in 2014. Overall earnings jumped 49.6%, from $475.5 million to $711.3 million. Per-share profits gained 53.7%, from $3.00 to $4.61, on fewer shares outstanding.
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