merger

XEROX CORP. $11 (New York symbol XRX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.4 billion; Market cap: $15.4 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.5%; TSINetwork Rating: Average; www.xerox.com) makes copiers, laser printers and other publishing equipment. In February 2010, Xerox paid $6.5 billion for Affiliated Computer Services Inc. (ACS), which sells computer-outsourcing services. Xerox now gets over 60% of its revenue from long-term service contracts and recurring payments for supplies. That cuts its risk. Thanks to ACS, Xerox’s earnings rose 111.4% in 2010, to $1.3 billion from $613 million in 2009. Earnings per share rose 34.3%, to $0.94 from $0.70, on more shares outstanding. These figures exclude unusual items, such as merger costs. If you assume Xerox bought ACS at the start of 2009, its revenue would have risen 2.6% in 2010, to $21.6 billion from $21.1 billion....

PEPSICO INC. $63 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $100.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.pepsico.com) saw its sales jump 33.8% in 2010, to $57.8 billion from $43.2 billion in 2009. That’s mainly because of its 2010 purchases of its two main soft-drink bottling firms, Pepsi Bottling Group Inc. and PepsiAmericas Inc., for $7.8 billion in cash and shares. Without merger-related costs, PepsiCo’s 2010 earnings rose 14.2%, to $6.7 billion from $5.8 billion in 2009. Earnings per share rose 11.3%, to $4.13 from $3.71, on more shares outstanding. Combining plants and administrative functions should save the company $550 million a year by the end of 2012. That’s up from its original target of $400 million. These savings should help PepsiCo offset higher prices for corn and other ingredients at its snack-food operations....

Kraft Foods Inc., symbol KFT on New York, is the world’s second-largest food company, after Switzerland-based Nestle. Kraft has 11 brands that generate over $1 billion each in yearly sales. Aside from Kraft (cheeses, pasta and salad dressings), the large cap stock’s brands include Philadelphia (cream cheese), Maxwell House (coffee), Nabisco (biscuits), Oreo (cookies), Trident (gum) and Oscar Meyer (meats). In April 2010, Kraft paid $18.5 billion in cash and stock for U.K.-based Cadbury plc, a leading maker of confectioneries, including chocolate, candy and gum. Cadbury’s well-known brands include Dentyne and Clorets (gum), Dairy Milk (chocolate bars) and Halls (cough drops)....

C.R. Bard Inc. (symbol BCR on New York) makes medical devices in four main areas: urology products, such as vascular products, including stents and catheters (28% of 2010 sales); oncology products that detect and treat various types of cancer (27%); drainage and incontinence devices (26%); and surgical tools and other products (19%). Bard is one of the stock market picks we analyze in our Wall Street Stock Forecaster newsletter. In 2010, Bard’s sales rose 7.3%, to $2.7 billion from $2.5 billion in 2009. Earnings rose 10.7%, to $509.2 million from $460.1 million a year earlier. Earnings per share climbed 15.7% to $5.32 from $4.60, on fewer shares outstanding. If you exclude unusual items, such as merger costs, earnings per share would have risen 10.0%, to $5.60 from $5.09....

Stanley Black & Decker Inc., New York symbol SWK, makes power and hand tools and security devices. It took its current form on March 12, 2010. That’s when Stanley Works bought the Black & Decker Corp. for about $4.5 billion in stock. Stanley shareholders own 50.5% of the combined company, and Black & Decker investors own the remaining 49.5%. In 2010, the U.S. stock’s earnings per share rose 35.5%, to $4.12 from $3.04. This excludes one-time merger costs. Sales improved in both the U.S. and internationally, especially in Latin America. Sales in Canada and Australia declined slightly. Adding Black & Decker’s pre-merger sales in early 2010 to sales of the merged company in 2010 results in $9.3 billion total sales for 2010. Stanley Black & Decker expects that figure to rise by 5% to 6% in 2011....

Volta Resources, $2.14, symbol VTR on Toronto (Shares outstanding: 132.7 million; Market cap: $283.9 million; www.voltaresources.com), is mainly focused on exploring its Kiaka gold project, located in Burkina Faso, and moving towards a development decision. Volta was formed from the 2008 merger of Birim Goldfields Inc. and Goldcrest Resources Ltd. Volta now is now undertaking a drilling program in the central part of the Kiaka project. This program consists of more than 250 holes, for a total depth of about 50,000 metres. The program is designed to further define and expand the deposit, which Volta believes could hold as much as 1.9 million ounces of gold. So far, the drilling continues to reveal strong gold mineralization, and indicates that the boundaries of the deposit still have room for significant extension. The company holds cash of $40 million, or $0.30 a share, so it has the funds to continue its exploration and development work....

KRAFT FOODS INC. $31 (New York symbol KFT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.7 billion; Market cap: $52.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.kraft.com) is the world’s second-largest food company, after Switzerland-based Nestle. Kraft has 11 brands that each generate over $1 billion in yearly sales. These include Kraft (cheeses, pasta and salad dressings), Philadelphia (cream cheese), Maxwell House (coffee), Nabisco (biscuits), Oreo (cookies) and Oscar Meyer (meats). In April 2010, Kraft paid $18.5 billion in cash and stock for U.K.-based Cadbury plc, a leading maker of chocolate, candy and gum. These products are more profitable than Kraft’s foods, so adding Cadbury should increase Kraft’s long-term earnings....

QuadraFNX Mining, $16.26, symbol QUX on Toronto (Shares outstanding: 188.9 million; Market cap: $3.1 billion, www.quadrafnx.com), completed its merger with FNX Mining earlier this year. The combined company now operates five mines in Canada, Chile and the U.S. In 2011, Quadra FNX expects these mines to produce about 300 million pounds of copper and more than 150,000 ounces of gold, platinum and palladium. Quadra FNX also owns the Sierra Gorda copper/molybdenum development project in Chile, and the Malmbjerg molybdenum development project in Greenland....

FRONTIER COMMUNICATIONS CORP. $9.33 (New York symbol FTR; Income Portfolio, Utilities sector; Shares outstanding: 993.9 million; Market cap: $9.3 billion; Price-to-sales ratio: 1.5; Dividend yield: 8.0%; TSINetwork Rating: Average; www.frontier.com) sells traditional telephone and high-speed Internet services to 5.6 million customers in 27 states. In July 2010, Frontier acquired Verizon’s traditional phone operations in 14 states in an all-stock deal. As a result, Verizon investors now own 68% of Frontier. The stock is up 34% since the merger. It now trades at 19.2 times Frontier’s forecast 2010 earnings of $0.49 a share. That’s a high p/e ratio for a telephone company with no wireless operations. However, the $0.75 dividend seems safe, and yields 8.0%....

ALGONQUIN POWER & UTILITIES CORP. $4.88 (Toronto symbol AQN; Shares outstanding: 95.1 million; Market cap: $464.1 million; TSINetwork Rating: Extra Risk; Dividend yield: 4.9%; www.algonquinpower.com) holds interests in 47 hydroelectric plants in Canada and the northeastern U.S., as well as 14 thermal-energy facilities. Wholly owned Liberty Water Co. owns 19 U.S. water-distribution and waste-water plants. The company also has a partnership with Emera Inc. (Toronto symbol EMA), which is a recommendation of The Successful Investor, our affiliated publication. Under this partnership, called Liberty Energy Utilities, Algonquin and Emera plan to buy the assets of California-based electricity generator NV Energy, which serves 47,000 customers in the Lake Tahoe region. When regulators approve the deal, likely in early 2011, Emera will also pay $30.9 million for a 9.9% stake in Algonquin. Algonquin is building its 26.4-megawatt Red Lily wind farm in Saskatchewan. The company expects the $67.7-million project to start generating power in early 2011. Algonquin has already signed an agreement with SaskPower, the province’s main electricity supplier, to buy Red Lily’s power for 25 years....