price to sales ratio
TRANSCANADA CORP. $51 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 708.9 million; Market cap: $36.2 billion; Price-to-sales ratio: 3.5; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.transcanada.com) still hopes its Keystone XL pipeline will be approved, even though Alberta’s new NDP government has withdrawn the province’s support for the project. Keystone XL would pump crude from Alberta’s oil sands to the U.S. Gulf Coast. Meanwhile, the company has improved its efficiency and adopted new technologies, both of which are helping it pump more oil through its existing Keystone pipeline between Alberta and refineries in Illinois. TransCanada recently freed up 10,000 to 15,000 barrels on this 590,000-barrel-a-day line. Long-term contracts account for 90% of Keystone’s current capacity, so the extra space will help TransCanada meet demand for urgent shipments. TransCanada is a buy....
BOMBARDIER INC. (Toronto symbols BBD.A $1.99 and BBD.B $1.90; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $3.3 billion; Price-to-sales ratio: 0.2; Dividend suspended in February 2015; TSINetwork Rating: Extra Risk; www.bombardier.com) is down 52% since the start of 2015, mainly due to rising costs and delays to develop its new CSeries passenger jet. In addition, lower oil prices have diminished the main appeal of this plane—that it’s 20% more fuel-efficient than comparable models. What’s more, Bombardier’s new management team is reviewing its Global business jet program, which could postpone the planned launch of new models in 2016 and 2017. Bombardier recently raised $3.1 billion U.S. by selling new shares and notes. It also plans to sell shares in its transportation division, which makes passenger railcars. These moves should give it enough resources to finish the CSeries. Bombardier expects to begin delivering this new aircraft in 2016....
Canada is now negotiating the Trans-Pacific Partnership, which would lower trade barriers between 12 countries in the Asia-Pacific region. The TPP could also open Canada’s highly regulated agricultural industry to foreign competitors. That would hurt Saputo and Maple Leaf Foods (see box)—at least initially—though the deal would also help them export their products to more markets. Still, we feel both stocks will make little progress until the TPP is finalized. SAPUTO INC. $30 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 392.9 million; Market cap: $11.8 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.saputo.com) is Canada’s largest producer of dairy products, including milk, butter and cheese. The company also operates dairies in the U.S., Australia and Argentina....
MAPLE LEAF FOODS INC. $24 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 143.1 million; Market cap: $3.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.3%; TSINetwork Rating: Average; www.mapleleaf.ca) is Canada’s largest food-processing company. It mainly sells its products, including fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. The company will soon complete a seven-year restructuring that mainly involves closing older plants and shifting their operations to newer facilities. However, it will take several months for the new plants to reach full capacity and increase Maple Leaf’s earnings. Even so, the company expects to increase its gross profit margin to 10% in 2015 from just 0.5% in 2014. The stock has gained 23% since the start of the year and now trades at a somewhat high 31.6 times the $0.76 a share Maple Leaf will likely earn in 2015. The $0.32 dividend yields 1.3%....
More people are shopping online, forcing retailers to close stores and print fewer advertising flyers. This trend is weighing on mall operators, like RioCan, and printing firms, such as Transcontinental (see box). Both companies are diversifying beyond retail in response. That cuts their risk and supports their current payout rates. RIOCAN REAL ESTATE INVESTMENT TRUST $28 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 317.9 million; Market cap: $8.9 billion; Price-to-sales ratio: 6.9; Dividend yield: 5.0%; TSINetwork Rating: Average; www.riocan.com) owns all or part of 290 shopping centres in Canada, including 15 under development. These holdings account for 84% of the trust’s rental revenue. The remaining 16% comes from 48 malls in the U.S. Former tenant Target Canada recently abandoned 26 stores in RioCan’s malls, representing 1.9% of the trust’s annual rental revenue....
TRANSCONTINENTAL INC. $15 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.1 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 4.5%; TSINetwork Rating: Average; www.tctranscontinental.com) saw its earnings rise 13.7% in the quarter ended April 30, 2015, to $39.1 million, or $0.50 a share, from $34.4 million, or $0.44, a year ago. The gain largely came from two recent acquisitions: in May 2014, the company bought U.S.-based Capri Packaging, a maker of plastic bags and pouches for cheese and other dairy products, for $146.5 million. And in June 2014, it paid Sun Media $78.8 million for 74 weekly newspapers in Quebec. Revenue rose 2.7%, to $490.5 million from $477.5 million. Contributions from acquisitions offset lower revenue from printing flyers, particularly after Target closed its 133 Canadian stores....
IGM FINANCIAL INC. $40 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 248.5 million; Market cap: $9.9 billion; Price-to-sales ratio: 3.4; Dividend yield: 5.6%; TSINetwork Rating: Above Average; www.igmfinancial.com) had $136.0 billion of assets under management as of June 30, 2015. That’s down 3.9% from $141.4 billion a year earlier. The drop resulted from the recent decline in major stock markets; IGM’s fee income rises and falls with the value of the mutual funds and other securities it manages. Even with the current volatility, IGM’s overall mutual fund sales, net of redemptions, rose by $66.5 million in June. Net gains at the company’s Investors Group (up $74.2 million) and Counsel (up $12.3 million) subsidiaries offset $20.0 million of net redemptions at its Mackenzie division....
TECK RESOURCES LTD. $12 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 576.2 million; Market cap: $6.9 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.5%; TSINetwork Rating: Average; www.teck.com) has postponed its plan to develop its 100%-owned Frontier oil sands project in Alberta due to weak crude prices. The company had planned to start construction in 2019 and complete it in 2021. However, it now feels commercial production will begin in 2026. If Teck decides to build Frontier, it will cost $20.6 billion. Meanwhile, the company continues to work on its 20.0%-owned Fort Hills oil sands project; Suncor Energy (Toronto symbol SU) owns 40.8% of Fort Hills, while France’s Total SA holds the remaining 39.2%. Teck’s share of Fort Hills’ development costs is $2.94 billion. This project should begin operating in late 2017, and its reserves should last 50 years....
EMERA INC. $42 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 144.8 million; Market cap: $6.1 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.8%; TSINetwork Rating: Average; www.emera.com) owns 100% of Nova Scotia Power, that province’s main electricity supplier. This business supplies 45% of Emera’s revenue and a third of its earnings. In the past few years, the company has steadily expanded into other regions, mainly through acquisitions. It now owns or invests in several power plants and natural gas pipelines in the U.S. and the Caribbean. Thanks to these new operations, Emera’s revenue rose 85.0%, from $1.6 billion in 2010 to $3.0 billion in 2014. Erratic earnings history...
GENUINE PARTS CO. $88 (New York symbol GPC; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 152.3 million; Market cap: $13.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.8%; TSINetwork Rating: Average; www.genpt.com) gets 53% of its sales and 55% of its earnings by selling replacement auto parts: Genuine operates 1,100 outlets under the NAPA banner, and its distribution business serves 4,900 independent stores in North America, Australia and New Zealand.
The company also distributes industrial parts (31% of sales, 29% of earnings), office products (12%, 11%) and electrical equipment (4%, 5%).
As the economy improved after the 2008/09 recession, the company’s sales rose 36.9% from $11.2 billion in 2010 to $15.3 billion in 2014. Overall earnings jumped 49.6%, from $475.5 million to $711.3 million. Per-share profits gained 53.7%, from $3.00 to $4.61, on fewer shares outstanding.
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The company also distributes industrial parts (31% of sales, 29% of earnings), office products (12%, 11%) and electrical equipment (4%, 5%).
As the economy improved after the 2008/09 recession, the company’s sales rose 36.9% from $11.2 billion in 2010 to $15.3 billion in 2014. Overall earnings jumped 49.6%, from $475.5 million to $711.3 million. Per-share profits gained 53.7%, from $3.00 to $4.61, on fewer shares outstanding.
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