price to sales ratio

CENOVUS ENERGY INC. $14 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 833.2 million; Market cap: $11.7 billion; Price-to-sales ratio: 0.9; Dividend yield: 1.4%; TSINetwork Rating: Average; www.cenovus.com) gets 35% of its revenue from its Western Canadian oil sands properties and conventional oil and gas wells. Chief among these assets are its 50%-owned Christina Lake and Foster Creek oil sands projects; ConocoPhilips (New York symbol COP) owns the remaining 50%. Refining supplies the remaining 65% of Cenovus’s revenue. The company ships its oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50%. Low crude prices have prompted Cenovus to cut its capital spending by 26.5%, to about $1.25 billion in 2016 from $1.7 billion in 2015....

ROYAL BANK OF CANADA $66 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.5 billion; Market cap: $99.0 billion; Price-to-sales ratio: 2.9; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.rbc.com) is selling its RBC General Insurance subsidiary to Aviva Canada. This business mainly sells home and auto insurance. As part of the sale, Royal’s customers can also access all of Aviva’s insurance products for the next 15 years. The sale makes sense, as regulators prevent Canadian banks from selling insurance policies through their branches. That limits Royal’s ability to expand this business. However, the bank will continue to sell life and health insurance through separate offices and online....

ENCANA CORP. $4.86 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 849.8 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.7%; TSINetwork Rating: Average; www.encana.com) plans to spend $1.5 billion to $1.7 billion upgrading its properties in 2016, down 25% from 2015 (all amounts except share price and market cap in U.S. dollars). Even with the drop, it expects production at its four main oil projects—Montney (B.C.), Duvernay (Alberta) and Eagle Ford and Permian (both in Texas)—will rise 12% this year. It has also cut its annual dividend rate by 78.6%, to $0.06 a share from $0.28. In addition, Encana has eliminated the 2% price discount it offered to shareholders who chose to reinvest their dividends in new shares. In all, these moves will save $185 million a year. Encana is still a buy for long-term gains.

Integrated oil producers, like the three we analyze below, are the best way for conservative investors to get oil exposure while shielding themselves from slumping crude prices. That’s because cheaper oil makes these companies’ refineries more profitable. We continue to see all three as buys for long-term gains. SUNCOR ENERGY INC. $30 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.4 billion; Market cap: $42.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.9%; TSINetwork Rating: Average; www. suncor.com) is Canada’s largest oil producer. It also operates four refineries and 1,500 Petro-Canada gas stations, which supply 63% of its revenue. The company produced an average of 577,800 barrels of oil equivalent a day in 2015, up 8.0% from 534,900 barrels in 2014. Suncor’s oil sands projects accounted for 80% of its output....

CGI GROUP INC. $57 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 313.4 million; Market cap: $17.9 billion; Price-to-sales ratio: 1.7; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is one of eight firms the U.S. Navy has chosen to help it upgrade its computer systems. CGI hasn’t yet said how much it would receive under its initial one-year contract. However, the Navy has set aside a total of $809.5 million U.S. for this project, which it expects to complete in 2020. The company’s strong reputation should continue to help it win more contracts from military clients. Moreover, CGI’s $21.5-billion backlog of contracts (at December 31, 2015) is equal to 2.1 times its annual revenue....

PENGROWTH ENERGY CORP. $0.91 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 543.0 million; Market cap: $494.1 million; Price-to-sales ratio: 0.8; Dividend suspended in January 2016; TSINetwork Rating: Speculative; www.pengrowth.com) has suspended its $0.01-a-share quarterly dividend in response to the sharp decline in oil prices. It will also reduce its capital spending to between $60 million to $70 million in 2016, from $184 million in 2015. The company has also laid off workers, which should save it $25 million in 2016, and aims to sell $600 million of less important properties. It will probably put these funds toward its $2.1-billion debt, which is now a high 4.3 times its depressed market cap. Pengrowth is a hold....

IGM FINANCIAL INC. $33 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 244.8 million; Market cap: $8.1 billion; Price-to-sales ratio: 2.7; Dividend yield: 5.9%; TSINetwork Rating: Above Average; www.igmfinancial.com) had $131.0 billion worth of assets under management as of January 31, 2016, down 9.9% from $145.5 billion a year earlier. The company’s fee income rises and falls with the value of the mutual funds and other securities it manages, so its revenue and earnings decline when the price of these assets falls. The drop is mainly due to the recent volatility in global stock markets. In January 2016, the S&P/TSX Composite Index fell 1.4%, while the S&P 500 Index declined 5.1%. However, IGM sells most of its funds through its own salesforce. This leaves it less dependent on selling through the brokerage industry than its competitors. This salesforce also lets IGM form close relationships with clients, and keep redemption rates down....

ENCANA CORP. $4.86 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 849.8 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.7%; TSINetwork Rating: Average; www.encana.com) plans to spend $1.5 billion to $1.7 billion upgrading its properties in 2016, down 25% from 2015 (all amounts except share price and market cap in U.S. dollars). Even with the drop, it expects production at its four main oil projects—Montney (B.C.), Duvernay (Alberta) and Eagle Ford and Permian (both in Texas)—will rise 12% this year. It has also cut its annual dividend rate by 78.6%, to $0.06 a share from $0.28. In addition, Encana has eliminated the 2% price discount it offered to shareholders who chose to reinvest their dividends in new shares. In all, these moves will save $185 million a year. Encana is still a buy for long-term gains....

CGI GROUP INC. $57 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 313.4 million; Market cap: $17.9 billion; Price-to-sales ratio: 1.7; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is one of eight firms the U.S. Navy has chosen to help it upgrade its computer systems. CGI hasn’t yet said how much it would receive under its initial one-year contract. However, the Navy has set aside a total of $809.5 million U.S. for this project, which it expects to complete in 2020. The company’s strong reputation should continue to help it win more contracts from military clients. Moreover, CGI’s $21.5-billion backlog of contracts (at December 31, 2015) is equal to 2.1 times its annual revenue....

SNC-LAVALIN GROUP INC. $40 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 149.8 million; Market cap: $6.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.5%; TSINetwork Rating: Average; www.snclavalin.com) has won a contract from the United Arab Emirate’s state-owned aluminum company to supply engineering services to its two smelters. SNC did not say how much the deal is worth, but it should complete the work in July 2018. The company’s $12.7-billion order backlog, as of September 30, 2015, is equal to 1.3 times its annual revenue. However, oil and mining jobs account for a third of that total. Low commodity prices could force these clients to postpone or cancel these projects. SNC-Lavalin is a hold.