price to sales ratio
CANADIAN PACIFIC RAILWAY LTD. $232 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 164.2 million; Market cap: $38.1 billion; Price-to-sales ratio: 7.1; Dividend yield: 0.6%; TSINetwork Rating: Above Average; www.cpr.ca) transports freight over a 22,000-kilometre rail network between Montreal and Vancouver, as well as hubs in the U.S. Midwest and Northeast. The U.S. supplies 40% of its revenue. CP’s shares have soared 236.2% since we made it our Stock of the Year for 2012, when it was trading at $69. That’s mainly due to a major restructuring that has improved its efficiency with new locomotives, better tracks and software that optimizes train loads and speeds. Speedier service boosted results...
FedEx’s stock has risen 80% since the start of 2013. That’s mainly because more consumers are shopping online, which has translated into more packages for the company’s delivery services. Companies are also relying on its just-in-time shipping services to cut their inventory costs and increase their efficiency. We feel FedEx has lots more growth ahead. And its recent costcutting plan— combined with falling fuel costs— will spur its earnings for years to come. FEDEX CORP. $165 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 283.8 million; Market cap: $46.8 billion; Price-to-sales ratio: 1.0; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) began offering air-delivery services in 1973, under the Federal Express banner. It’s now one the world’s largest shipping firms....
Both GE and ABB (see box) are selling less important assets to concentrate on their main industrialequipment businesses. That should improve their earnings and cut their risk. GENERAL ELECTRIC CO. $25 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.1 billion; Market cap: $252.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.ge.com) makes machinery for power generation and distribution (such as turbines) and other products, like jet engines, medical equipment, appliances, lighting and locomotives. The company continues to shrink GE Capital, which mainly provides loans to GE’s clients. In 2014, this business supplied 42% of the company’s operating earnings, but it aims to cut that to 25% by 2016....
ABB LTD. ADRs $21 (New York symbol ABB; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 2.3 billion; Market cap: $48.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.abb.com) makes transformers, transmission systems and circuit breakers for electrical utilities. The Switzerland-based firm also produces automation systems and robotics that industrial clients use to improve their productivity. As part of a new plan to focus on its main operations, ABB sold several small businesses for a total of $1.1 billion in 2014. As well, the company is focusing on power projects with strong potential and turning down risky, less profitable orders. At the same time, a restructuring plan, including plant closures and job cuts, saved the company a further $1.1 billion in 2014. Partly due to asset sales, ABB’s revenue fell 4.8% in 2014, to $39.8 billion from $41.8 billion in 2013. However, orders for new equipment rose 6.7%, to $41.5 billion from $38.9 billion....
The three companies below make testing gear that other manufacturers rely on to improve their products. As well, all three have built strong relationships with their clients, which gives them a strong competitive advantage. Still, only one is a buy right now. AGILENT TECHNOLOGIES INC. $41 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 336.0 million; Market cap: $13.8 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.0%; TSINetwork Rating: Average; www.agilent.com) has completed its plan to split into two publicly traded companies. One firm kept the Agilent name and stock symbol and focuses on testing equipment for medical research labs. It gets 70% of its revenue from overseas....
TERADATA CORP. $43 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 147.9 million; Market cap: $6.4 billion; Price-to-sales ratio: 2.3; No dividends paid; TSINetwork Rating: Average; www.teradata .com) makes computers and software that capture and store large amounts of a business’s data. It then analyzes this information and identifies buying habits and other trends. In 2014, Teradata’s earnings fell 1.5%, to $452 million from $459 million in 2013. But per-share earnings rose 3.6%, to $2.86 from $2.76, on fewer shares outstanding. Revenue gained 1.5%, to $2.73 billion from $2.69 billion. Strong competition from bigger firms, like IBM and Oracle, will likely cut Teradata’s 2015 earnings to $2.60 a share. The stock trades at a somewhat high 16.5 times that forecast....
MCKESSON CORP. $226 (New York symbol MCK; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 232.8 million; Market cap: $52.6 billion; Price-to-sales ratio: 0.3; Dividend yield: 0.4%; TSINetwork Rating: Above Average; www. mckesson.com) is the largest wholesale drug distributor in the U.S. and Canada. It also sells surgical tools and health and beauty products. In addition, the company makes computers and software that help clinics and pharmacies manage their drug inventories. The technology solutions division accounts for just 2% of McKesson’s revenue but supplies 12% of its earnings. In February 2014, McKesson acquired 77.6% of Celesio AG, a German firm that distributes prescription drugs in Europe and Brazil. If you include McKesson’s share of Celesio’s cash, it paid $4.5 billion for this stake. Celesio has issued more shares since then, reducing McKesson’s interest to 75.9%....
The four lenders below (including American Express— see box) have passed the Federal Reserve’s latest “stress test,”which measures how financial firms would cope with a jump in unemployment, falling stock prices and other unfavourable conditions. As a result, they have all raised their dividends and announced new share buyback plans. WELLS FARGO & CO. $55 (New York symbol WFC; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 5.2 billion; Market cap: $286.0 billion; Price-to-sales ratio: 3.4; Dividend yield: 2.7%; TSINetwork Rating: Average; www.wellsfargo.com) will raise its quarterly dividend by 7.1%, to $0.375 a share from $0.35. The new annual rate of $1.50 yields 2.7%....
AMERICAN EXPRESS CO. $80 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $80.0 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.5%; TSINetwork Rating: Average; www.americanexpress.com) has raised its quarterly dividend by 11.5%, to $0.29 a share from $0.26. The new annual rate of $1.16 yields 1.5%. Amex also plans to repurchase up to $6.6 billion worth of its stock by June 30, 2016, up 50.0% from $4.4 billion in 2014. The company’s 2015 earnings will probably fall to $5.49 a share from $5.56 in 2014. However, Amex’s current restructuring plan, which includes a 6% cut to its workforce, could push its earnings up to $6.00 a share in 2016. The stock trades at 13.3 times that estimate....
ALCOA INC. $13 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.2 billion; Market cap: $15.6 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.9%; TSINetwork Rating: Average; www.alcoa.com) has agreed to buy RTI International Metals (New York symbol RTI), which makes titanium components for airplanes, armoured vehicles, oil and gas machinery and other industrial products. RTI’s investors will exchange their holdings for Alcoa common shares. If you include RTI’s cash balances and debt, the deal is worth $1.5 billion. Alcoa expects to close it in the next six months. Alcoa is a buy....