price to sales ratio

UNITED TECHNOLOGIES CORP. $97 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 887.0 million; Market cap: $86.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.utc.com) has four main businesses: Climate, Controls & Security (30% of revenue, 32% of earnings) makes heating and air conditioning equipment under the Carrier brand, as well as burglar alarms and fire-safety products; Aerospace Systems (25%, 24%) makes enginecontrol systems and other parts for aircraft; Pratt & Whitney (23%, 17%) manufactures aircraft engines; and Otis (22%, 27%) makes elevators. Major takeover paid off The company’s revenue rose 7.1%, from $54.3 billion in 2010 to $58.2 billion in 2011. In 2012, it paid $18.3 billion for North Carolina-based Goodrich Corp., which makes aircraft parts (such as landing gear, wheels and brakes) and maintains and fixes planes. However, it also sold smaller businesses, so its revenue fell 0.8%, to $57.7 billion, in 2012....

The old Thomson Corp. wisely got out of the newspaper business in the early 2000s to focus on its faster-growing information-services operation. In 2008, it added more highquality financial data when it acquired the 160-year-old Reuters news agency for $17 billion U.S. in cash and shares. This deal also cut Thomson’s high reliance on North America. The company’s timing was bad, however, as the 2008/09 financial crisis forced many of its banking and brokerage clients to spend much less on information products. That delayed the gains Thomson expected from the Reuters deal. However, the company is now benefiting from this acquisition, as well as a long-range restructuring plan. That’s pushing up its earnings and freeing up cash for share buybacks and dividends....

CAE INC. $15 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 269.3 million; Market cap: $4.0 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.0%; TSINetwork Rating: Average; www.cae.com) earned $47.7 million in its fiscal 2016 second quarter, which ended September 30, 2015, up 13.6% from $42.0 million a year earlier. Earnings per share rose at a slower pace of 12.5%, to $0.18 from $0.16, on more shares outstanding. Revenue gained 16.5%, to $616.8 million from $529.4 million. About 90% of the company’s revenue comes from foreign customers, so it’s benefiting from the lower Canadian dollar. Sales of flight simulators and pilot-training services to airlines (59% of total revenue) jumped 23.4%. CAE sold 16 simulators during the quarter and expects its full-year total to be near the 41 it sold in fiscal 2015....

Canada’s big five banks (including Bank of Montreal, see page 118) make up the bulk of most investors’ finance-sector holdings. However, we feel it’s prudent to diversify beyond the banks with stocks like the three we analyze below. All three are leaders in their niche markets, which helps them thrive in good times and hold their own when the economy weakens. We see all three as buys, but only aggressive investors should consider Home Capital Group. GREAT-WEST LIFECO INC. $35 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 993.2 million; Market cap: $34.8 billion; Price-to-sales ratio: 1.0; Dividend Yield: 3.7%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest insurance company, after Manulife Financial (Toronto symbol MFC). It also offers mutual funds, retirement planning and wealth management....

IMPERIAL OIL LTD. $42 (Toronto symbol IMO; Conservative Growth and Income Portfolios, Shares outstanding: 848.0 million; Market cap: $35.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.3%; TSINetwork Rating: Average; www.imperialoil.ca) produced 386,000 barrels of oil equivalent a day in the three months ended September 30, 2015, up 25.7% from 307,000 a year earlier. That’s because Imperial recently completed the second phase of its 71%-owned Kearl oil sands project in northern Alberta. However, lower oil prices cut its revenue by 25.9%, to $7.2 billion from $9.7 billion. Cash flow per share fell 32.9%, to $1.10 from $1.64. Even so, Imperial plans to keep expanding Kearl and Cold Lake, its other main oil sands project. These operations, which should last decades, will prosper when oil prices rebound....

BCE INC. $57 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 849.4 million; Market cap: $48.4 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.6%; TSINetwork Rating: Above Average; www.bce.ca) continues to benefit from strong demand for its wireless and high-speed Fibe Internet and TV services. In the quarter ended September 30, 2015, BCE’s earnings rose 21.9%, to $790 million from $648 million a year earlier. Per-share profits gained just 12.0%, to $0.93 from $0.83, on more shares outstanding. Revenue rose 2.9%, to $5.3 billion from $5.2 billion. The company added 77,655 new wireless subscribers under long-term contracts, net of cancellations, beating the consensus forecast of 77,400. Most of these customers use smartphones, which generate higher monthly fees than regular cellphones....

CENOVUS ENERGY INC. $20 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 833.3 million; Market cap: $16.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.2%; TSINetwork Rating: Average; www.cenovus.com) has cut jobs in response to sharply lower oil and natural gas prices. It has also lowered its 2015 capital spending by 40%, to between $1.8 billion and $1.9 billion. These moves, along with more efficient drilling, will save it $400 million in 2015, up from its earlier forecast of $280 million. Cenovus now plans more job cuts, which should save it a further $100 million a year starting in 2016. Meanwhile, Cenovus’s oil production rose 5.7% in the three months ended September 30, 2015, to 210,422 barrels a day from 199,089 a year earlier. That’s due to the start up of new phases at its 50%-owned Foster Creek and Christina Lake oil sands projects in northern Alberta; U.S.-based ConocoPhillips (New York symbol COP) owns the other 50%....

The new Liberal government in Ottawa plans to spend more on roads, bridges and public transit over the next three years. SNC-Lavalin, below, is already working on big public works projects, including a transit line in Toronto and a bridge in Montreal, so it should gain from this new spending. The Liberals are also in favour of certain new pipelines, which should help ShawCor (see next article). SNC-LAVALIN GROUP INC. $42 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 149.8 million; Market cap: $6.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.4%; TSINetwork Rating: Average; www.snclavalin.com) is narrowing its focus to engineering projects in the oil and gas, mining and water-treatment industries....

SHAWCOR LTD. $28 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.5 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.1%; TSINetwork Rating: Average; www.shawcor.com) makes sealants and coatings that keep oil and gas pipelines from rusting. It also manufactures industrial products, such as electrical wire and protective sheaths. In the three months ended September 30, 2015, ShawCor’s revenue rose 3.4%, to $485.4 million from $469.6 million a year earlier. Favourable exchange rates added $42.5 million to its revenue in the latest quarter. Earnings gained 21.3%, to $38.1 million from $31.4 million. Per-share profits rose 15.7%, to $0.59 from $0.51, on fewer shares outstanding. As of September 30, 2015, ShawCor’s backlog was $556 million. Its strong reputation should keep helping it win contracts; it has a total of $600 million worth of bids underway on new jobs....

MANITOBA TELECOM SERVICES INC. $29 (Toronto symbol MBT; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 78.9 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 4.5%; TSINetwork Rating: Average; www.mtsallstream.com) has expanded its recent restructuring plan, under which it is cutting 25% of its Allstream subsidiary’s workforce and lowering this business’s capital spending by 20% to 30%. Allstream sells phone and Internet services to companies across Canada. Manitoba Telecom now aims to improve the performance of its MTS division, which has 1.3 million phone, wireless and TV customers in Manitoba. The company will cut jobs and capital spending at MTS and use some of the savings to improve its customer service and billing processes. Restructuring MTS should cut Manitoba Telecom’s annual costs by up to $25 million. To put that in context, it earned $26.7 million, or $0.34 a share, in the third quarter of 2015....