price to sales ratio
TECK RESOURCES LTD. $27 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 576.3 million; Market cap: $15.6 billion; Price-to-sales ratio: 1.6; Dividend yield: 3.3%; TSINetwork Rating: Average; www.teck.com) will contribute $2.9 billion to the Fort Hills oil sands project (see Suncor at left).
Teck mainly produces coal, copper and zinc, so Fort Hills will help diversify its operations. Its mining expertise will also help keep Fort Hills’ operating costs down.
The company will probably sell some of its less important assets to free up cash for Fort Hills. For example, it has reportedly agreed to sell its 3% stake in Australian iron ore mining company Fortescue Metals Group for about $479 million.
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Teck mainly produces coal, copper and zinc, so Fort Hills will help diversify its operations. Its mining expertise will also help keep Fort Hills’ operating costs down.
The company will probably sell some of its less important assets to free up cash for Fort Hills. For example, it has reportedly agreed to sell its 3% stake in Australian iron ore mining company Fortescue Metals Group for about $479 million.
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CENOVUS ENERGY INC. $30 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.7 million; Market cap: $22.7 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.2%; TSINetwork Rating: Average; www.cenovus.com) gets 60% of its production from its three heavy oil projects in Alberta and one in Saskatchewan. Conventional oil and natural gas wells supply the remaining 40%. In all, Cenovus’s proved reserves should last at least 23 years.
U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects in Alberta. These operations produce heavy bitumen, which Cenovus ships to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these refineries.
In the three months ended September 30, 2013, Cenovus produced 264,100 barrels of oil equivalent a day (67% oil and 33% gas), down 1.3% from 267,500 barrels a year earlier.
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U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects in Alberta. These operations produce heavy bitumen, which Cenovus ships to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these refineries.
In the three months ended September 30, 2013, Cenovus produced 264,100 barrels of oil equivalent a day (67% oil and 33% gas), down 1.3% from 267,500 barrels a year earlier.
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IMPERIAL OIL LTD. $45 (Toronto symbol IMO; Conservative Growth Portfolio; Resources sector; Shares outstanding: 847.6 million; Market cap: $38.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.2%; TSINetwork Rating: Average; www.imperialoil.ca) produces oil and natural gas, mainly from its oil sands projects in Alberta. It also owns three refineries and operates 1,800 Esso gas stations.
Imperial began operating its new Kearl oil sands project in April 2013. It owns 71% of Kearl. ExxonMobil (New York symbol XOM) holds the other 29%. Exxon also owns 69.9% of Imperial.
In the three months ended September 30, 2013, Imperial produced an average of 288,000 barrels of oil equivalent a day (88% oil and 12% natural gas). That’s up 1.1% from 285,000 barrels a year earlier.
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Imperial began operating its new Kearl oil sands project in April 2013. It owns 71% of Kearl. ExxonMobil (New York symbol XOM) holds the other 29%. Exxon also owns 69.9% of Imperial.
In the three months ended September 30, 2013, Imperial produced an average of 288,000 barrels of oil equivalent a day (88% oil and 12% natural gas). That’s up 1.1% from 285,000 barrels a year earlier.
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SUNCOR ENERGY INC. $36 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $54.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.2%; TSINetwork Rating: Average; www. suncor.com) gets 70% of its production from its Alberta oil sands projects. The rest comes from conventional oil and natural gas properties. Suncor also operates four refineries and 1,500 Petro- Canada gas stations.
The company recently sold most of its Western Canadian conventional natural gas properties for $1 billion.
The cash will help Suncor develop its Fort Hills oil sands project in Alberta. Suncor owns 40.8% of Fort Hills and will operate it. France’s Total S.A. owns 39.2%, and Teck (see box this page) holds the remaining 20.0%. Fort Hills’ reserves should last 50 years.
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The company recently sold most of its Western Canadian conventional natural gas properties for $1 billion.
The cash will help Suncor develop its Fort Hills oil sands project in Alberta. Suncor owns 40.8% of Fort Hills and will operate it. France’s Total S.A. owns 39.2%, and Teck (see box this page) holds the remaining 20.0%. Fort Hills’ reserves should last 50 years.
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ENCANA CORP. $18 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 740.1 million; Market cap: $13.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.6%; TSINetwork Rating: Average; www.encana.com) is cutting its reliance on natural gas, as rising shale gas production has cut prices from $11.50 U.S. per thousand cubic feet in 2008 to just $3.60 U.S. today.
Encana now plans to narrow its focus from around 30 properties to five: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico) and Tuscaloosa Marine Shale (Louisiana).
These five fields also produce significant amounts of oil and natural gas liquids (NGLs), such as butane and propane, and should last decades. Encana expects oil and NGLs to supply 75% of its cash flow by 2017, up from about 35% today.
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Encana now plans to narrow its focus from around 30 properties to five: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico) and Tuscaloosa Marine Shale (Louisiana).
These five fields also produce significant amounts of oil and natural gas liquids (NGLs), such as butane and propane, and should last decades. Encana expects oil and NGLs to supply 75% of its cash flow by 2017, up from about 35% today.
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RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 303.2 million; Market cap: $7.6 billion; Price-to-sales ratio: 6.5; Dividend yield: 5.6%; TSINetwork Rating: Average; www.riocan.com) started up in 1993 and is now Canada’s largest REIT. It currently owns all or part of 295 retail properties, including 15 under development. These holdings account for 85% of its rental revenue. The remaining 15% comes from 51 malls in the U.S.
RioCan continues to expand beyond suburban big-box-style shopping centres. Mostly through joint ventures with other property developers, it has added mixed-use retail, office and residential buildings, mainly in densely populated urban areas.
RioCan’s revenue declined 0.8%, from $764 million in 2008 to $758 million in 2009. Some of the trust’s tenants went bankrupt during the recession, but it mostly offset that by adding new properties. RioCan’s revenue recovered to $882 million in 2010 and rose to $1.1 billion in 2012, as it took advantage of lower property values and interest rates to expand its portfolio.
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RioCan continues to expand beyond suburban big-box-style shopping centres. Mostly through joint ventures with other property developers, it has added mixed-use retail, office and residential buildings, mainly in densely populated urban areas.
RioCan’s revenue declined 0.8%, from $764 million in 2008 to $758 million in 2009. Some of the trust’s tenants went bankrupt during the recession, but it mostly offset that by adding new properties. RioCan’s revenue recovered to $882 million in 2010 and rose to $1.1 billion in 2012, as it took advantage of lower property values and interest rates to expand its portfolio.
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A key part of our three-part investment approach is to downplay stocks in the broker/media limelight (the other two parts are to invest mainly in well-established companies and spread your money across the five main economic sectors). Tupperware is a good example of an out-of-the-limelight stock. Even though it started up in 1946 and is one of the world’s largest direct sellers of consumer products, few brokers cover it. The company’s independent dealers are an underappreciated asset, because they are cheaper than selling through stores and make it easier to enter new markets. Tupperware can also use its dealers to sell other products in the future. That cuts its need to expand through acquisitions....
WAL-MART STORES INC. $81 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.3 billion; Market cap: $267.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.walmart.com) earned $3.9 billion in its fiscal 2014 third quarter, which ended October 31, 2013. That’s up 1.6% from $3.8 billion a year earlier. Per-share earnings gained 6.5%, to $1.14 from $1.07, on fewer shares outstanding. Overall sales rose 1.7%, to $115.7 billion from $113.8 billion. Sales at the company’s U.S. stores, which supply 59% of the total, increased 2.4%. However, same-store sales fell 0.3%, as shoppers lowered their spending due to high unemployment and uncertainty over future health insurance premiums in the wake of the Affordable Care Act (or Obamacare). However, sales at the international stores (29% of the total) gained 4.1%, excluding exchange rates. New locations in fast-growing markets like China and Africa should continue to offset slower sales in the U.S. Moreover, Wal-Mart could unlock some of its value by spinning off its Sam’s Club warehouse outlets (12%). This chain’s sales rose 1.1% in the latest quarter....
Traditional retailers, such as the four we analyze below, face increasing competition from big box stores and online sellers. However, these four firms own some of the best-known brands in the industry. Their popular labels will continue to help them attract shoppers and increase sales through their own websites. Even so, not all of these stocks are buys right now. MACY’S INC. $54 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 376.2 million; Market cap: $20.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.9%; TSINetwork Rating: Average; www.macysinc.com) operates 840 Macy’s and Bloomingdale’s department stores in 45 states....
PETSMART INC. $74 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 103.9 million; Market cap: $7.7 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.0%; TSINetwork Rating: Above Average; www.petm.com) operates 1,314 pet stores in the U.S. and Canada. It also has 196 in-store PetsHotels, which look after animals while their owners are away. In the third quarter of its 2014 fiscal year, which ended November 3, 2013, PetSmart’s earnings rose 12.0%, to $92.2 million from $82.3 million a year earlier. The company bought back $30 million of its shares during the quarter. Due to fewer shares outstanding, earnings per share rose 17.3%, to $0.88 from $0.75. Sales rose 4.0%, to $1.7 billion from $1.6 billion. Same-store sales gained 2.7%, while sales of pet services, such as grooming and training, rose 5.2%. Services accounted for 10.9% of PetSmart’s total sales....