price to sales ratio

These two software makers continue to invest heavily in research, which helps them dominate their niche markets. However, we prefer Symantec to Adobe(see next article) right now. That’s because its security expertise should be in high demand after recent high-profile data thefts. SYMANTEC CORP. $24 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 690.3 million; Market cap: $16.6 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.5%; TSINetwork Rating: Average; www.symantec.com) sells antivirus software and other computer security services. Home Depot (New York symbol HD) recently hired Symantec and another firm to help investigate a major data breach. Online intruders secretly installed software on Home Depot’s systems that let them steal about 56 million credit card numbers and related data, but not personal identification numbers for debit cards....

ADOBE SYSTEMS INC. $69 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 497.4 million; Market cap: $34.3 billion; Price-to-sales ratio: 8.5; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) earned $140.6 million in its fiscal 2014 third quarter, which ended August 29, 2014. That’s down 14.5% from $164.4 million a year earlier. Per-share earnings declined 12.5%, to $0.28 from $0.32, on fewer shares outstanding. Revenue rose 1.0%, to $1.01 billion from $995.1 million. The company continues to shift away from selling software as a one-time purchase and toward a subscription model. It now gets 63% of its revenue from recurring subscriptions. Adobe ended the latest quarter with 2.8 million subscribers to its Creative Cloud package of photo editing and desktop publishing programs, up 21.8% from a year earlier. Adobe Marketing Cloud, a package of software aimed at improving online marketing efforts and website performance, saw its revenue rise 13.8%....

More consumers are shopping online instead of in stores. That trend has forced some book and music stores to close and is putting pressure on electronics chains, like Best Buy, and sellers of office and computer equipment, like Staples. Even so, most consumers still prefer to shop for clothes in stores, where they can try them on before buying. That’s a plus for the three retailers below. Moreover, all three continue to invest heavily in e-commerce and make it easier for shoppers to pick up their online orders in stores. That helps them compete with big Internet sellers like Amazon.com....

FEDEX CORP. $159 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 283.2 million; Market cap: $45.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) continues to benefit from a recent cost-control plan and the rise of online shopping, which has boosted demand for its package-delivery services. In the first quarter of its 2015 fiscal year, which ended August 31, 2014, FedEx’s revenue rose 6.0%, to $11.7 billion from $11.0 billion a year earlier. Earnings gained 23.9%, to $606 million from $489 million. FedEx is an aggressive buyer of its own stock. As a result, its earnings per share jumped 37.3%, to $2.10 from $1.53. The company expects to earn $8.50 to $9.00 a share for all of fiscal 2015, and the stock trades at 18.2 times the midpoint of that range. That’s an attractive multiple, particularly as FedEx is raising its shipping rates in January 2015....

BOEING CO. $129 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 720.6 million; Market cap: $93.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.boeing.com) has won a contract from the U.S. National Aeronautics and Space Administration (NASA) to develop a new vehicle that will carry astronauts to and from the International Space Station. Boeing will build three of its Crew Space Transportation (CST-100) crew capsules at the Kennedy Space Center in Florida. The contract is worth $4.2 billion, which is equal to 5% of the company’s annual revenue of $88.4 billion. NASA, which retired its space shuttle fleet in 2011, plans to resume manned space flights in 2017....

Tennant and MTS (see n) have risen sharply in the past few years and now seem expensive in relation to their earnings. However, we feel Tennant’s environmentally friendly products will sell faster than MTS’s testing systems, at least in the next year or two. TENNANT CO. $68 (New York symbol TNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 18.4 million; Market cap: $1.3 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.2%; TSINetwork Rating: Average; www.tennantco.com) makes industrial floor-cleaning equipment, including scrubbers, sweepers and polishers. It also manufactures cleaning gear for garages, stadiums, parking lots and city streets. In 2008, the company started selling equipment featuring its ec-H20 technology, which uses electricity to turn tap water into a chemical-free cleaning solution. This helps cut the machine’s operating costs....

MTS SYSTEMS CORP. $69 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 15.1 million; Market cap: $1.0 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.7%; TSINetwork Rating: Average; www.mts.com) recently paid $16.7 million for Roehrig Engineering, which has developed an electromagnetic technology that tests shock absorbers and other industrial equipment more accurately than traditional methods. These products look like a nice fit with MTS’s existing automotive testing equipment. In its fiscal 2014 third quarter, which ended June 28, 2014, MTS’s revenue rose 7.7%, to $145.5 million from $135.1 million a year earlier. Overall earnings improved 9.7%, to $12.7 million from $11.5 million a year earlier. Earnings per share gained 13.9%, to $0.82 from $0.72, on fewer shares outstanding. MTS spends 4% of its revenue on research. The stock is up 129% in the past five years and now trades at 21.0 times MTS’s projected fiscal 2014 earnings of $3.28 a share. That’s high p/e ratio for a firm that serves the highly cyclical automotive and aerospace industries....

CISCO SYSTEMS INC. $25 (Nasdaq symbol CSCO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.1 billion; Market cap: $127.5 billion; Price-to-sales ratio: 2.8; Dividend yield 3.0%; TSINetwork Rating: Average; www.cisco.com) is buying Metacloud, a privately held California firm whose software helps companies manage data they store on remote servers. The company didn’t reveal the purchase price. However, earlier this year Cisco earmarked $1 billion for its Intercloud initiative, which aims to deliver cloud computing services through a network of outside companies instead of building its own system. Using partners makes it easier for Cisco to expand to other countries and comply with local laws about data privacy and other online issues. Cisco is a buy....

GENERAL MILLS INC. $50 (New York symbol GIS, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 610.1 million; Market cap: $30.5 billion; Price-to-sales ratio: 1.8; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.generalmills.com) earned $345.2 million in its fiscal 2015 first quarter, which ended August 24, 2014. That’s down 24.8% from $459.3 million a year earlier. Per-share earnings fell 21.4%, to $0.55 from $0.70, on fewer shares outstanding. Without unusual items, such as gains and losses on hedging contracts, earnings per share declined 12.9%, to $0.61 from $0.70. The company launched over 250 new products in the quarter, which increased its operating and advertising costs. Sales fell 2.4%, to $4.3 billion from $4.4 billion, mainly due to weak demand for breakfast cereal in the U.S. The company expects its new products to boost its sales by 5% in fiscal 2015. General Mills also estimates that a new cost-cutting plan, which includes closing plants, will save it $400 million in the current fiscal year. In the longer term, streamlining its other operations should cut its yearly costs by $152 million by 2017....

CONAGRA FOODS INC. $34 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 424.5 million; Market cap: $14.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.conagra foods.com) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter, Orville Redenbacher popcorn and Reddiwip whipped cream. Consumers account for 70% of ConAgra’s sales. Businesses, like restaurants and other food makers, provide the remaining 30%. Sales rose 9.8%, from $12.1 billion in 2010 to $13.3 billion in 2012 (fiscal years end May 31). Ralcorp acquisition boosted results...