dividends paid
MITEL NETWORKS $10.83 (Toronto symbol MNW; TSINetwork Rating: Extra Risk) (613-592-2122; www.mitel.ca; Shares outstanding: 99.4 million; Market cap: $1.1 billion; No dividends paid) has reported its second quarter of results that include Aastra Technologies, a Stock Pickers Digest recommendation Mitel acquired in a friendly takeover on January 31, 2014. Aastra shareholders received cash and Mitel shares.
During the quarter, Mitel’s revenue rose 96.9%, to $288.7 million from $146.6 million a year ago (all figures except share price in U.S. dollars). Most of the increase came from Aastra.
Without one-time items, earnings jumped 124.2%, to $22.2 million from $9.9 million. However, earnings per share rose just 16.7%, to $0.21 from $0.18, as the company issued new shares to pay for Aastra Technologies.
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During the quarter, Mitel’s revenue rose 96.9%, to $288.7 million from $146.6 million a year ago (all figures except share price in U.S. dollars). Most of the increase came from Aastra.
Without one-time items, earnings jumped 124.2%, to $22.2 million from $9.9 million. However, earnings per share rose just 16.7%, to $0.21 from $0.18, as the company issued new shares to pay for Aastra Technologies.
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From time to time, companies set up their subsidiaries as stand-alone companies and hand out shares in these new businesses as a special dividend. Studies have shown that these new firms, called spinoffs, and their former parents tend to outperform groups of comparable stocks for several years. Here are seven of our recommendations that have either been spun off or are about to set up some of their operations as a separate firm. All of these stocks have done well. That’s not surprising, since the spinoffs have come from well-managed parent companies with long histories of rising profits. MONDELEZ INTERNATIONAL INC. $37 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.7 billion; Market cap: $62.9 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.mondelezinternational.com) took its current form on October 1, 2012, when the old Kraft Foods Inc. broke itself into two publicly traded companies: Mondelez International and Kraft Foods Group....
STATE STREET CORP. $72 (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 425.0 million; Market cap: $30.6 billion; Price-to-sales ratio: 3.2; Dividend yield: 1.7%; TSINetwork Rating: Average; www. statestreet.com) sells accounting and administrative services to large institutional investors, such as mutual funds and pension plans. The company’s fee income rises and falls with the value of the securities it manages. Thanks to improving stock markets and new contracts, earnings rose 5.6% in the quarter ended June 30, 2014, to $603 million from $571 million a year earlier. State Street spent $410 million on share buybacks in the latest quarter. As a result, earnings per share gained 12.1%, to $1.39 from $1.24. Revenue rose 3.7%, to $2.7 billion from $2.6 billion....
AMAZON.COM $358.14 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 460.2 million; Market cap: $166.1 billion; No dividends paid) has enticed Babik Parviz, a key director at Google’s secretive Google X labs, to join the company. Parviz pioneered the development of Google Glass, a wearable computer that displays information on a small display attached to a pair of glasses. More recently, Parviz led the Google team working on contact lenses with embedded electronics. Amazon recently introduced its long-awaited Amazon Fire smartphone, which features a screen that can display seemingly 3-D images without the need for special glasses. This new technology—called Dynamic Perspective—uses retina-tracking technology embedded in four front-facing infrared cameras to make some images appear to be 3-D, similar to a hologram....
CGI GROUP INC. $38 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 309.6 million; Market cap: $11.8 billion; Price-to-sales ratio: 1.1; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) has won a contract to help modernize the Michigan state government’s computer systems.
The revenue from this deal—$89.4 million U.S.—is small next to the company’s annual revenue of $10 billion. Still, deals like this enhance CGI’s reputation in the wake of the well-publicized problems it had launching the Obamacare website.
CGI Group is a buy.
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The revenue from this deal—$89.4 million U.S.—is small next to the company’s annual revenue of $10 billion. Still, deals like this enhance CGI’s reputation in the wake of the well-publicized problems it had launching the Obamacare website.
CGI Group is a buy.
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DUNDEE CORP. $17 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 53.5 million; Market cap: $909.5 million; Price-to-sales ratio: 4.5; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) owns businesses in the wealth management, real estate, natural resource and agriculture industries.
Dundee is more risky than most of the stocks we recommend. Many brokers avoid it due to its complex holding company structure, so it has little following among institutional investors. Irregular earnings from real estate and resource operations also add to its risk, and the lack of a dividend hurts its appeal.
However, like most holding companies, Dundee typically trades at a discount to the market value of the assets it held. Occasionally, it would unlock some of this value, as it did in 2011 when it sold its Dynamic mutual fund operations. In 2013, it spun off its commercial real estate subsidiary —DREAM Unlimited (Toronto symbol DRM)—as a separate company.
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DUNDEE CORP. $17 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 53.5 million; Market cap: $909.5 million; Price-to-sales ratio: 4.5; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) owns businesses in the wealth management, real estate, natural resource and agriculture industries. Dundee is more risky than most of the stocks we recommend. Many brokers avoid it due to its complex holding company structure, so it has little following among institutional investors. Irregular earnings from real estate and resource operations also add to its risk, and the lack of a dividend hurts its appeal. However, like most holding companies, Dundee typically trades at a discount to the market value of the assets it held. Occasionally, it would unlock some of this value, as it did in 2011 when it sold its Dynamic mutual fund operations. In 2013, it spun off its commercial real estate subsidiary —DREAM Unlimited (Toronto symbol DRM)—as a separate company....
CGI GROUP INC. $38 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 309.6 million; Market cap: $11.8 billion; Price-to-sales ratio: 1.1; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) has won a contract to help modernize the Michigan state government’s computer systems. The revenue from this deal—$89.4 million U.S.—is small next to the company’s annual revenue of $10 billion. Still, deals like this enhance CGI’s reputation in the wake of the well-publicized problems it had launching the Obamacare website. CGI Group is a buy.
EBAY INC. $53 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.2 billion; Market cap: $63.6 billion; Price-to-sales ratio: 4.0; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) has signed a deal with Russia Post that will speed up delivery of foreign goods Russian buyers purchase on eBay’s websites.
As well, eBay will soon launch a website in Russia that will let domestic merchants sell more of their goods online.
Expanding in Russia adds risk, particularly as the U.S. and Europe plan to impose new economic sanctions against the country in response to its annexation of Crimea. However, Russia only accounts for a small fraction of eBay’s revenue and earnings.
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As well, eBay will soon launch a website in Russia that will let domestic merchants sell more of their goods online.
Expanding in Russia adds risk, particularly as the U.S. and Europe plan to impose new economic sanctions against the country in response to its annexation of Crimea. However, Russia only accounts for a small fraction of eBay’s revenue and earnings.
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TERADATA CORP. $43 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 157.7 million; Market cap: $6.8 billion; Price-to-sales ratio: 2.6; No dividends paid; TSINetwork Rating: Average; www.teradata.com) was a wholly owned subsidiary of NCR Corp. until it was spun off on October 1, 2007. Teradata is up 65% since then.
The company’s technology captures and stores large amounts of a business’s data, including its sales and inventory. Teradata then analyzes this information and identifies buying habits and trends, which helps its clients improve their decision-making.
In the three months ended March 31, 2014, the company’s earnings rose 19.2%, to $87 million from $73 million a year earlier. Teradata spent $86 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share gained 25.6%, to $0.54 from $0.43. Revenue rose 7.0%, to $628 million from $587 million.
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The company’s technology captures and stores large amounts of a business’s data, including its sales and inventory. Teradata then analyzes this information and identifies buying habits and trends, which helps its clients improve their decision-making.
In the three months ended March 31, 2014, the company’s earnings rose 19.2%, to $87 million from $73 million a year earlier. Teradata spent $86 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share gained 25.6%, to $0.54 from $0.43. Revenue rose 7.0%, to $628 million from $587 million.
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