price to sales ratio

MANITOBA TELECOM SERVICES INC. $32 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 67.0 million; Market cap: $2.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 5.3%; TSINetwork Rating: Average; www.mtsallstream.com) gets around 55% of its revenue from its 1.3 million telephone and wireless customers in Manitoba.

The remaining 45% comes from its Allstream division, which sells integrated telephone, Internet and other communication services to businesses across Canada....

Canada’s top two railways continue to focus on cutting costs and streamlining their operations. That puts them in a better position to handle changing demand for the cyclical products they transport, such as coal, oil and grain.

CANADIAN NATIONAL RAILWAY CO....

TRANSCANADA CORP. $49 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 705.0 million; Market cap: $34.5 billion; Price-to-sales ratio: 4.0; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.transcanada.com) has received approval from Nebraska’s governor for its plan to reroute the proposed Keystone XL pipeline around environmentally sensitive areas of the state.

The company is currently building Keystone XL in sections....

CAE INC. $11 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 259.2 million; Market cap: $2.9 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.8%; TSINetwork Rating: Average; www.cae.com) recently sold seven flight simulators and related equipment....

IMPERIAL OIL LTD. $44 (Toronto symbol IMO; Conservative Growth Portfolio; Resources sector; Shares outstanding: 847.6 million; Market cap: $37.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) now estimates that the first phase of its 71%-owned Kearl oil sands project will cost $12.9 billion....

AGRIUM INC. $114 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 149.4 million; Market cap: $17.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.8%; TSINetwork Rating: Average; www.agrium.com) has soared 60% in the past year....

CGI GROUP INC. $24 (Toronto symbol GIB.A;Aggressive Growth Portfolio, Manufacturing &Industry sector; Shares outstanding: 307.7 million;Market cap: $7.4 billion; Price-to-sales ratio: 1.5; No dividends paid; TSI Network Rating: Extra Risk;www.cgi.com) is Canada’s largest provider of computer outsourcing services. CGI helps its clients automate routine functions, like accounting and buying supplies. That makes them more efficient and lets them focus on their main businesses.

CGI was our #1 stock pick for 2010 and 2011.

Aiming for global growth

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TRANSCONTINENTAL INC. $11 (Toronto symbol TCL.A;Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.2 million; Market cap: $860.2 million; Price-to-sales ratio: 0.4; Dividend yield: 5.3%; TSI Network Rating: Average;www.tctranscontinental.com) has amended the terms of its contract to print the San Francisco Chronicle, which runs to 2024.

The newspaper’s print circulation is falling, so it needs fewer copies. To compensate, the Chronicle will pay Transcontinental$200 million U.S.

To put that in context, Transcontinental earned $149.4 million(Canadian), or $1.85 a share, in its 2012 fiscal year, which ended October 31, 2012. That’s down 3.8% from $155.3 million, or $1.92a share, in fiscal 2011. However, revenue rose 6.2%, to $2.1 billion from $2.0 billion, mainly because it bought new printing plants.That offset lower ad revenue at its newspapers, as well as the completion of a big contract to print census forms in 2011.

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LOBLAW COMPANIES LTD. $41 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 281.5 million; Market cap: $11.5 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; TSI Network Rating: Above Average;www.loblaw.ca) has launched a new line of gluten free baked goods for people who can’t digest wheat.These products include breads, cakes and cookies.The company plans to launch more gluten-free foods over the next few months.

Only about 1% of the population has trouble digesting wheat, so consumer concerns about gluten levels could pass quickly. Even so, these products should help Loblaw attract more customers.

Loblaw is a buy.

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FORTIS INC. $34 (Toronto symbol FTS;Conservative Growth Portfolio, Utilities sector;Shares outstanding: 190.7 million; Market cap: $6.5billion; Price-to-sales ratio: 1.8;D i v i d e n d y i e l d : 3 . 6 % ;TSI Network Rating: Above Average; www.fortis.ca) has raised its quarterly dividend by3.3%, to $0.31 a share from$0.30. The new annual rate of$1.24 yields 3.6%. Fortis has raised its payout every year for the past 40 years.

The company should complete its takeover of CH Energy Group (New York symbol CHG)in the first quarter of 2013. CH is a regulated utility that supplies electricity to 300,000 customers in the Mid-Hudson River Valley in New York State.

Fortis will pay $1.5 billion U.S. for CH Energy, including assuming $500 million U.S. of debt. That’s a high 23% of the company’s market cap. Large acquisitions, even of stable regulated utilities like CH Energy, can come with unpleasant surprises.

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