price to sales ratio

It pays to be wary of companies that use acquisitions to expand instead of internal growth. This strategy can work well at times, but one bad takeover can wipe out gains from a dozen good ones. Stanley Black & Decker is a good example of a company that grows by acquisition without taking on excessive risk. That’s because it has a long history of successfully merging new businesses and boosting their profits. That cuts the risk of a large writedown. Even though the stock has doubled since Stanley bought Black & Decker in 2010, we feel it still has plenty of gains ahead....

NEWELL RUBBERMAID INC. $45 (New York symbol NWL; Aggressive Growth and Income Portfolios, Consumer sector; Shares outstanding: 267.1 million; Market cap: $12.0 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.7%; TSINetwork Rating: Average; www.newellrubbermaid.com) is buying Jarden Corp. (New York symbol JAH), which makes a wide variety of consumer products, including Sunbeam kitchen appliances, Mr. Coffee coffee makers, Ball jars, Crock-Pot cookers and Rawlings baseball mitts. Jarden shareholders will receive $21.00 a share in cash plus 0.862 of a Newell common share. The offer is worth a total of $13.2 billion. Shares of Jarden are trading at 3.7% below the offer’s value, which indicates investors do not expect a higher bid. Newell expects to complete the deal in the second quarter of 2016....

The outlook for oil and other commodities remains weak, but we still feel that most investors should devote 10% to 15% of their portfolios to resource stocks. But only buy these or any stocks if you are prepared to hold them for at least the next several years. To further cut your risk, you should focus on companies with high-quality reserves, like the three we analyze below. All three are also reducing their costs, which puts them in a better position to profit when prices recover. However, not all of them are buys right now. CHEVRON CORP. $93 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $176.7 billion; Price-to-sales ratio: 1.3; Dividend yield: 4.6%; TSINetwork Rating: Average; www.chevron.com) produced an average of 2.54 million barrels of oil a day (including natural gas) in the three months ended September 30, 2015. That’s down 1.1% from 2.57 million barrels a day a year earlier....

NCR CORP. $27 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 169.9 million; Market cap: $4.6 billion; Price-to-sales ratio: 0.7; No dividends paid; TSINetwork Rating: Average; www.ncr.com) makes automated teller machines, cash registers, self-serve checkouts and kiosks for theatres and arenas. Private equity firm Blackstone Group (New York symbol BX) recently purchased $820 million worth of preferred shares that can be converted to common shares at $30.00 each. If Blackstone converted all of these holdings, it would own 17% of NCR. Blackstone’s expertise should help NCR expand its software and services businesses, which are more profitable than making ATMs and other equipment. Meanwhile, the company will use the cash to buy back $1.0 billion worth of its common shares through a Dutch auction process. Based on the initial response to the offer, NCR will repurchase 37.4 million shares at $26.75 each. That will cut the number of shares outstanding by 22%....

MONDELEZ INTERNATIONAL INC. $45 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $72.0 billion; Price-to-sales ratio: 2.3; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.mondelezinternational.com) makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone), gum and candy (Trident, Chiclets) and Halls cough drops. In July 2015, Mondelez merged its packaged coffee business with European coffee maker D.E. Master Blenders. Under the deal, Mondelez contributed its coffee brands, including Jacobs, Gevalia and Tassimo, to a new firm called Jacobs Douwe Egberts. In return, it received $4.2 billion in cash and 43.5% of the new company. If you exclude unusual items, such as a $6.9-billion gain on this sale, Mondelez earned $678 million in the three months ended September 30, 2015, down 20.1% from $849 million a year earlier. Earnings per share fell 16.0%, to $0.42 from $0.50, on fewer shares outstanding. The sale of the coffee business cut Mondelez’s sales by 17.8%, to $6.8 billion from $8.3 billion. However, if you adjust for the sale and foreign exchange rates, sales improved 3.7%....

These telecom firms’ recent acquisitions cut their reliance on traditional telephones and let them profit from growing markets, like Latin America, and highdemand services, such as mobile video. AT&T INC. $34 (New York symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 6.2 billion; Market cap: $210.8 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.5%; TSINetwork Rating: Average; www.att.com) is the largest wireless provider in the U.S., with 126.4 million subscribers. It also sells phone, TV and high-speed Internet access to 64.1 million users. The company recently completed its $48.5-billion purchase (70% stock and 30% cash) of DirecTV, which has 19.6 million satellite TV customers in the U.S. and 12.5 million in Latin America....

MOTOROLA SOLUTIONS INC. $70 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 176.7 million; Market cap: $12.4 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.3%; TSINetwork Rating: Average; www.motorolasolutions.com) is buying Airwave, which provides two-way radio and other communications services to over 300 emergency and public service agencies in the U.K. The company will pay $1.2 billion for Airwave when it completes the purchase in the first quarter of 2016. The deal will immediately add to Motorola’s earnings and cut its reliance on North America, which currently supplies 65% of its sales. However, big purchases like this add risk. Motorola Solutions is a hold....

WAL-MART STORES INC. $60 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $192.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.walmart.com) has launched Walmart Pay, an app that lets customers pay for their purchases at Wal-Mart stores with their Apple or Android-powered mobile devices. Users can download the app and link it to their credit cards, debit cards or gift cards. They can then scan their device at the checkout, and the system will email a receipt. The company plans to install the service in all of its U.S. stores by the end of 2016. The app will also let Wal-Mart track users’ shopping habits, which it can then use to create unique discounts and other promotions. Moreover, introducing its own mobile payment system means Wal-Mart doesn’t have to share any processing fees with rival services like Apple Pay....

BROADRIDGE FINANCIAL SOLUTIONS INC. $54 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 118.6 million; Market cap: $6.4 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.2%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 90% of all proxy votes in the U.S. and Canada. Broadridge was a subsidiary of Automatic Data Processing until April 2007, when ADP spun it off as a separate firm. Acquisitions drive profits higher...

WAL-MART STORES INC. $60 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $192.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.walmart- .com) has launched Walmart Pay, an app that lets customers pay for their purchases at Wal-Mart stores with their Apple or Androidpowered mobile devices. Users can download the app and link it to their credit cards, debit cards or gift cards. They can then scan their device at the checkout, and the system will email a receipt. The company plans to install the service in all of its U.S. stores by the end of 2016. The app will also let Wal-Mart track users’ shopping habits, which it can then use to create unique discounts and other promotions. Moreover, introducing its own mobile payment system means Wal-Mart doesn’t have to share any processing fees with rival services like Apple Pay....