price to sales ratio

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.

As part of this plan, GE recently agreed to sell GE Capital’s consumer-lending operations in Australia and New Zealand for $6.3 billion. The proceeds will help cover the cost of the company’s recent alliance with France’s Alstom SA, a leading maker of parts for power plants and transmission gear.

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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.

The company has four divisions:

FedEx Express (59% of 2014 revenue, 34% of earnings) offers air-delivery services to over 220 countries. This business has 650 aircraft and 55,000 ground vehicles.

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Wal-Mart opened its first store in Rogers, Arkansas, in 1962. It has since grown to become the world’s biggest retailer, with 11,453 locations in the U.S. and 26 other countries. The company was one of the first to use computerized cash registers. That not only sped up checkout lines but gave Wal-Mart valuable data it could use to identify popular products in its various markets. As a result, it was able to keep top-selling items in stock and cut down on clearance sales. At the same time, Wal-Mart’s continued growth let it negotiate better prices from suppliers. The retail business continues to change, particularly as consumers buy more goods online. As well, many younger shoppers in cities prefer local stores instead of driving to suburban malls....

RESTAURANT BRANDS INTERNATIONAL INC. $43 (New York symbol QSR; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 467.1 million; Market cap: $20.1 billion; Price-to-sales ratio: 14.2; Dividend yield: 0.8%.; TSINetwork Rating: Average; www.rbi.com) took its current form on December 12, 2014, as a result of Burger King Worldwide’s (old symbol BKW) takeover of Tim Hortons Inc. (old symbol THI). Restaurant Brands now has 14,372 Burger King restaurants and 4,671 Tim Hortons outlets in over 100 countries. In the three months ended December 31, 2014, the company lost $514.2 million, or $2.52 a share, compared to a profit of $66.8 million, or $0.19, a year earlier. Without merger-related costs and other unusual items, gross earnings before depreciation, interest and taxes gained 23.1%....

All three of the companies we analyze below provide vital services to banks, credit card issuers and other financial services firms. They’re also benefiting as the improving economy spurs loan demand, prompting their clients to buy more of their products. What’s more, they all dominate their niche businesses, which makes it harder for new competitors to steal their customers. Thanks to these factors, all three are trading near their all-time highs. But only two are buys right now....

VISA INC. $273 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 616.0 million; Market cap: $168.2 billion; Price-to-sales ratio: 13.2; Dividend yield: 0.7%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest electronic payments network, through which it processes credit, debit, prepaid and commercial transactions. In its fiscal 2015 first quarter, which ended December 31, 2014, Visa’s earnings rose 11.5%, to $1.6 billion from $1.4 billion a year earlier. Per-share earnings gained 15.0%, to $2.53 from $2.20, on fewer shares outstanding. Revenue rose 7.2%, to $3.4 billion from $3.2 billion. The company gets half of its revenue from outside the U.S. Without the negative impact of currency exchange rates, revenue gained 9%. Visa processed 17.6 billion transactions in the quarter, up 10.1% from a year earlier....

T. ROWE PRICE GROUP INC. $84 (Nasdaq symbol TROW; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 260.7 million; Market cap: $21.9 billion; Price-to-sales ratio: 5.5; Dividend yield: 2.5%; TSINetwork Rating: Average; www.troweprice .com) sells mutual funds and wealth management services. In 2014, the company earned $1.23 billion, or $4.55 a share. That’s up 17.4% from $1.05 billion, or $3.90 a share, in 2013. Revenue gained 14.3%, to $4.0 billion from $3.5 billion. On December 31, 2014, the company had a record $746.8 billion of assets under management, up 7.9% from $692.4 billion at the end of 2013. About 93% of that increase came from higher stock prices. The company’s fee income varies with the value of the assets it manages, so it gains from rising stock markets. Higher mutual fund sales (net of redemptions) supplied the remaining 7%....

These two alcoholic-beverage makers have been increasing their international sales. That has added currency risk, but their top brands will keep fuelling their growth. Still, only one is a buy right now. DIAGEO PLC ADRs $118 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 627.8 million; Market cap: $74.1 billion; Price-to-sales ratio: 4.7; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.diageo.com) is the world’s largest premium alcoholic beverage company. Its major brands include Guinness stout, Smirnoff vodka, Johnnie Walker whisky and Captain Morgan rum. The company recently agreed to acquire the 50% of Don Julio tequila that it doesn’t already own from Casa Cuervo in exchange for its Bushmills Irish whisky business. Diageo will also get $408 million when it completes the deal later this year....

L BRANDS INC. $92 (New York symbol LB; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 292.7 million; Market cap: $26.9 billion; Price-to-sales ratio: 2.4; Dividend yield: 2.2%; TSINetwork Rating: Average; www.lb.com) reported that its same-store sales rose 6% in its 2015 fourth quarter, which ended January 31, 2015, thanks to gains at Victoria’s Secret (up 10%) and Bath & Body Works (up 6%). The retailer has also increased its dividend by 47.1%. The new annual rate of $2.00 a share yields 2.2%. It is also paying a special dividend of $2.00 a share. However, the stock trades at a high 25.9 times L Brands’likely fiscal 2016 earnings of $3.55 a share. L Brands is a hold....

Low interest rates have spurred strong investor interest in these two high-yielding master limited partnerships (MLPs). Both have strong businesses that give them lots of cash flow for distributions. However, we feel Cedar Fair (see box) is the better choice, because Buckeye’s aggressive growth-by-acquisition strategy adds risk. Still, there are a few things Canadian investors should keep in mind: for one, you must pay a 35% U.S. withholding tax on income from MLPs, though you can usually claim a non-refundable Canadian tax credit to offset that. As well, MLPs are not suitable for RRSPs or RRIFs....