merger
KRAFT HEINZ CO. $75 (www.kraftheinzcompany.com) earned $0.44 a share in the third quarter of 2015, down 4.3% from $0.46 a year earlier. Sales fell 9.0%, to $6.4 billion from $7.0 billion. If you exclude exchange rates and businesses it sold since the July 2015 merger of Kraft Foods Group and H.J....
PFIZER INC. $33 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 6.2 billion; Market cap: $204.6 billion; Price-to-sales ratio: 4.1; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.pfizer.com) has agreed to merge with Irish drug maker Allergan plc (New York symbol AGN).
Allergan makes a variety of drugs, including treatments for Alzheimer’s disease, depression, dry eye, enlarged prostate, overactive bladder, cystic fibrosis and bacterial infections. It also makes the anti-wrinkle drug Botox.
Under the deal, Allergan shareholders will receive 11.3 Pfizer shares for each share they hold. That will give them a 44% stake in the combined company, which will be the world’s biggest pharmaceutical maker.
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Allergan makes a variety of drugs, including treatments for Alzheimer’s disease, depression, dry eye, enlarged prostate, overactive bladder, cystic fibrosis and bacterial infections. It also makes the anti-wrinkle drug Botox.
Under the deal, Allergan shareholders will receive 11.3 Pfizer shares for each share they hold. That will give them a 44% stake in the combined company, which will be the world’s biggest pharmaceutical maker.
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One of our top U.S. dividend stocks, Procter & Gamble knows which products to keep and which to sell off for greater long-term profits.
ALAMOS GOLD $3.97 (Toronto symbol AGI; TSINetwork Rating: Speculative)(604-681-2802; www.alamosgold.com; Shares outstanding: 255.5 million; Market cap: $996.5 million; No dividends paid) is the company formed by the July 2015 merger of Alamos Gold and Stock Pickers Digest recommendation AuRico Gold.
The combined firm owns the Mulatos mine in Mexico and the Young-Davidson project in northern Ontario, which holds as much as 5.6 million ounces of gold. Young-Davidson started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open-pit to underground mining, which has sharply increased its costs.
The company’s gold production rose 3.1% in the three months ended September 30, 2015, to 87,663 ounces from 85,037 a year earlier. However, lower gold prices offset the higher production, causing the company’s cash flow per share to fall to $0.02 from $0.16 (all figures except share price and market cap in U.S. dollars).
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The combined firm owns the Mulatos mine in Mexico and the Young-Davidson project in northern Ontario, which holds as much as 5.6 million ounces of gold. Young-Davidson started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open-pit to underground mining, which has sharply increased its costs.
The company’s gold production rose 3.1% in the three months ended September 30, 2015, to 87,663 ounces from 85,037 a year earlier. However, lower gold prices offset the higher production, causing the company’s cash flow per share to fall to $0.02 from $0.16 (all figures except share price and market cap in U.S. dollars).
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APPLE INC., $119.50, Nasdaq symbol AAPL, reported better-than-expected results this week, thanks to strong demand for new models of its iPhone and Mac computers.
In its fiscal 2015 fourth quarter, which ended September 26, 2015, the company sold 48.0 million iPhones, up 22.3% from 39.3 million a year earlier, mainly due to strong demand in China. Even so, that missed the consensus forecast of 48.7 million.
Overall earnings jumped 31.4% to $11.1 billion from $8.5 billion. Per-share profits gained 38.0%, to $1.96 from $1.42, on fewer shares outstanding, beating the consensus estimate of $1.88.
Sales rose 22.3%, to $51.5 billion from $42.1 billion, also exceeding the consensus forecast of $51.1 billion.
In addition to strong demand for the iPhone (63% of total sales), sales of Mac computers (13%) gained 3.9%, while sales of software, music and movies (10%) rose 10.4%. The company bundles its new Apple Watch with other products, like iPods and Beats headphones. Sales in this category (6%) jumped 60.7%.
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In its fiscal 2015 fourth quarter, which ended September 26, 2015, the company sold 48.0 million iPhones, up 22.3% from 39.3 million a year earlier, mainly due to strong demand in China. Even so, that missed the consensus forecast of 48.7 million.
Overall earnings jumped 31.4% to $11.1 billion from $8.5 billion. Per-share profits gained 38.0%, to $1.96 from $1.42, on fewer shares outstanding, beating the consensus estimate of $1.88.
Sales rose 22.3%, to $51.5 billion from $42.1 billion, also exceeding the consensus forecast of $51.1 billion.
In addition to strong demand for the iPhone (63% of total sales), sales of Mac computers (13%) gained 3.9%, while sales of software, music and movies (10%) rose 10.4%. The company bundles its new Apple Watch with other products, like iPods and Beats headphones. Sales in this category (6%) jumped 60.7%.
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WYNDHAM WORLDWIDE CORP., $81.35, symbol WYN on New York, is one of the world’s largest hospitality companies, with 7,700 franchised hotels worldwide. It also manages vacation resorts, rental properties, luxury clubs and time-shares. The company has 110,000 vacation-rental properties in 100 countries.
In the three months ended September 30, 2015, Wyndham’s revenue rose 3.3%, to $1.56 billion from $1.51 billion a year earlier.
The company continues to buy back its stock, including 2.1 million shares for $170 million in the latest quarter. That’s partly why its per-share earnings rose 6.6% before one-time items, to $1.78 from $1.67, beating the consensus estimate of $1.70.
Wyndham’s shares moved up on both the improved results and reports that at least three big Chinese companies are competing to win Beijing’s approval to bid for Starwood Hotels & Resorts Worldwide (symbol HOT on New York). Starwood controls brands like Westin, Sheraton, W Hotels and St. Regis and has more than 1,200 properties worldwide. The company now has a market cap of $13.6 billion.
Earlier this year, China’s Anbang Insurance Group paid nearly $2 billion for the Waldorf-Astoria Hotel on New York’s Park Avenue, a record price for a U.S. hotel. As well, Sunshine Insurance Group, another Chinese insurer, paid $230 million—or more than $2 million a room—for New York’s Baccarat Hotel. That was an all-time high on a per-room basis.
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In the three months ended September 30, 2015, Wyndham’s revenue rose 3.3%, to $1.56 billion from $1.51 billion a year earlier.
The company continues to buy back its stock, including 2.1 million shares for $170 million in the latest quarter. That’s partly why its per-share earnings rose 6.6% before one-time items, to $1.78 from $1.67, beating the consensus estimate of $1.70.
Wyndham’s shares moved up on both the improved results and reports that at least three big Chinese companies are competing to win Beijing’s approval to bid for Starwood Hotels & Resorts Worldwide (symbol HOT on New York). Starwood controls brands like Westin, Sheraton, W Hotels and St. Regis and has more than 1,200 properties worldwide. The company now has a market cap of $13.6 billion.
Earlier this year, China’s Anbang Insurance Group paid nearly $2 billion for the Waldorf-Astoria Hotel on New York’s Park Avenue, a record price for a U.S. hotel. As well, Sunshine Insurance Group, another Chinese insurer, paid $230 million—or more than $2 million a room—for New York’s Baccarat Hotel. That was an all-time high on a per-room basis.
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BOMBARDIER INC., Toronto symbols BBD.A $1.50 and BBD.B $1.42, announced this week that it will form a new joint venture with the government of Quebec.
Under the deal, the government pay $1.0 billion for 49.5% of a partnership that will own the CSeries passenger jet business (all amounts except share prices in U.S. dollars). Bombardier will own the remaining 50.5%.
The company is also giving Quebec warrants to buy up to 200 million class B subordinate voting shares at the U.S. dollar equivalent of $2.21 (Canadian) each. The warrants expire in five years. If Quebec exercises all of them, the extra shares would equal 8.18% of the total class A and B shares currently outstanding.
Bombardier has also promised to keep its headquarters and CSeries plants in Quebec for the next 20 years.
The cash from this sale will help Bombardier finish certifying the CSeries; flight tests are now 97% complete. Quebec’s backing should also help attract more buyers. The company has firm orders for 243 CSeries planes but hasn’t received any new orders in the past year.
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Under the deal, the government pay $1.0 billion for 49.5% of a partnership that will own the CSeries passenger jet business (all amounts except share prices in U.S. dollars). Bombardier will own the remaining 50.5%.
The company is also giving Quebec warrants to buy up to 200 million class B subordinate voting shares at the U.S. dollar equivalent of $2.21 (Canadian) each. The warrants expire in five years. If Quebec exercises all of them, the extra shares would equal 8.18% of the total class A and B shares currently outstanding.
Bombardier has also promised to keep its headquarters and CSeries plants in Quebec for the next 20 years.
The cash from this sale will help Bombardier finish certifying the CSeries; flight tests are now 97% complete. Quebec’s backing should also help attract more buyers. The company has firm orders for 243 CSeries planes but hasn’t received any new orders in the past year.
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PROCTER & GAMBLE CO. $77 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.7 billion; Market cap: $207.9 billion; Price-to-sales ratio: 2.8; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.pg.com) makes products in five main categories: fabric and home care items, such as Tide laundry detergent (29% of sales, 24% of earnings); baby goods, including Pampers diapers (27%, 26%); beauty products, like Olay cosmetics (24%, 23%); grooming items, including Gillette razors (10%, 16%); and health care products, such as Crest toothpaste (10%, 11%). Wal-Mart supplies 14% of the company’s sales. Latest sale set to deliver big gains In the past few years, Procter has sold many of its less profitable brands, including its recent deal to transfer 43 beauty product lines, including Wella, Clairol, Max Factor and CoverGirl, to Coty Inc. (New York symbol COTY)....
YUM! BRANDS INC., $72.89, New York symbol YUM, plans to spin off its operations in China as a separate firm. The company will hand out shares in Yum China to its own investors, who will not be liable for capital gains taxes until they sell. The company aims to complete the spinoff by the end of 2016. Yum China will operate 6,900 fast-food outlets under the KFC, Pizza Hut and Taco Bell banners. In the three months ended September 5, 2015, this division supplied 57% of Yum’s overall sales....
With eight operating gold mines and a potential spinoff, Yamana Gold continues to hold a place among our top Canadian mining stocks.