price to sales ratio

GOOGLE INC. (Nasdaq symbols GOOG $588 (class C: nonvoting) and GOOGL $598 (class A: one vote per share); Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 676.4 million; Market cap: $397.7 billion; Price-to-sales ratio: 6.1; No dividends paid; TSINetwork Rating: Above Average; www.google.com) operates the world’s leading Internet search service. The company has about 70% of this market, mainly because its innovative technology helps users quickly find the information they’re seeking. The U.S. supplies 45% of Google’s revenue.

The company gets about 95% of its revenue by selling advertising on its websites. It mainly does this with its AdWords program.

Using AdWords, advertisers bid on certain search words or phrases. The company then charges advertisers when users click on their ads.

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Enbridge has jumped 175% in the past five years, largely because low interest rates have prompted income-seeking investors to buy high-yielding utility stocks. The company is also aggressively adding pipelines to profit from rising oil sands production and new fields like the Bakken shale oil region. The stock now trades at over 25 times earnings. That’s a high multiple for a regulated pipeline operator, but it’s still reasonable in light of Enbridge’s improving growth prospects. ENBRIDGE INC. $56 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 846.4 million; Market cap: $47.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.enbridge.com) gets 90% of its revenue from pipelines that pump oil and natural gas from Western Canada to customers in Eastern Canada and the U.S. The remaining 10% mainly comes from distributing gas to 2.1 million consumers in Ontario, Quebec, New Brunswick and New York State....

TIM HORTONS INC. $88 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 132.8 million; Market cap: $11.7 billion; Price-to-sales ratio: 3.5; Dividend yield: 1.5%; TSINetwork Rating: Average; www.timhortons.com) has accepted a friendly takeover offer from Miami-based Burger King Worldwide (New York symbol BKW). Under the deal, Tim Hortons shareholders can opt to receive $88.50 a share in cash or 3.0879 Burger King shares (currently worth $106.05). Burger King will limit the overall cash payout, so most investors will likely receive $65.50 in cash plus 0.8025 of a share, for a total value of $93.06. Investors who hold shares outside RRSPs and other registered accounts will be liable for capital gains taxes....

Expanding by acquisition always adds risk. That’s because new businesses can come with hidden problems that delay or offset the extra revenue and savings they bring. Particularly severe problems could force the buyer to write down the value of the acquired assets. Buying companies in foreign markets adds even more risk, because it exposes the buyer to unpredictable currency moves and political uncertainty. However, when done right, foreign acquisitions can pay off for years to come, as the five companies below demonstrate....

BANK OF MONTREAL $84 (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 646.4 million; Market cap: $54.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.bmo.com) earned $1.15 billion in the three months ended July 31, 2014, up 3.6% from $1.11 billion a year ago. Per-share earnings rose 4.2%, to $1.73 from $1.66, on fewer shares outstanding. Earnings from Canadian retail banking (43% of the total) rose 8.0%, as low interest rates spurred demand for mortgages and business loans. The U.S. retail banking division (14%) reported a 6.2% gain in profits, mainly due to improving business loan demand. The bank’s trading division (25%) saw its earnings rise 13.8% on higher volumes and more stock-underwriting deals. However, wealth management earnings (18%) fell 5.4%, due to a one-time charge at its insurance business....

CENOVUS ENERGY INC. $34 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 757.0 million; Market cap: $25.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.1%; TSINetwork Rating: Average; www.cenovus.com) owns 50% of the Foster Creek and Christina Lake oil sands projects in Alberta; ConocoPhillips (New York symbol COP) owns the other 50%. The partners are now developing a third property called Narrows Lake. The project’s first phase should start up in 2017 and will add 22,500 barrels to Cenovus’s daily oil production, which averaged 201,688 barrels in the latest quarter. Cenovus is also developing two other 100%-owned oil sands projects: Telephone Lake and Grand Rapids. In all, these properties could produce up to 100,000 barrels a day....

BOMBARDIER INC. (Toronto symbols BBD.A $3.72 and BBD.B $3.67; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.2 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.7%; TSINetwork Rating: Average; www.bombardier.com)had to ground its new CSeries passenger jet in May 2014 due to an engine malfunction. The engine’s manufacturer fixed the fault, and Bombardier has resumed test flights. The company has firm orders for 203 CSeries planes, plus options for an additional 310. If buyers exercise all of these options, the entire order of 513 aircraft would be worth roughly $34 billion U.S. That’s equal to 1.9 times Bombardier’s 2013 revenue....

Finning and Precision Drilling (see the next article in this issue) serve the cyclical resource sector, which adds risk. However, both are market leaders, so their customers are unlikely to switch to a competitor. As well, complex new technologies like hydraulic fracturing, or fracking, and steam-assisted gravity drainage should spur demand for their specialized gear and services....

PRECISION DRILLING CORP. $13 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 292.7 million; Market cap: $3.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.8%; TSINetwork Rating: Extra Risk; www.precisiondrilling.comtarget="_blank”) provides contract drilling services to land-based oil and gas producers, mainly in North America. It operates 333 rigs. Higher oil and gas prices have spurred demand for Precision’s drilling services. As a result, revenue rose 25.4% in the second quarter of 2014, to $475.2 million from $378.9 million a year ago. However, the company lost $7.2 million, or $0.02 a share. Precision recently changed the way it calculates depreciation on its rigs, and the new method cut its earnings by $14 million, or $0.05 a share. A year earlier, it earned $473,000, or nil per share....

TELUS CORP. $40 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 615.5 million; Market cap: $24.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.telus.com) continues to expand its health care division, which helps doctors, pharmacies and hospitals convert patient records and other information to electronic formats. The company recently paid an undisclosed sum for ZRx Prescriber, an app that lets doctors write prescriptions through their tablet computers and smartphones. The app can also access a patient’s drug insurance information, which speeds up claims and cuts down on errors. Over 520 clinics in Ontario and Quebec use ZRx Prescriber to process 400,000 prescriptions a month. Telus is a buy....