price to sales ratio
CANADA BREAD CO. LTD. $50 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.canadabread.ca) reported that its sales fell 3.8% in the three months ended September 30, 2012, to $401.5 million from $417.2 million a year earlier. That’s partly because the company recently closed an unprofitable U.K. plant that made frozen products. Sales of fresh baked goods also declined during the quarter.
If you exclude an unusual tax gain and costs related to the plant closure, earnings per share would have risen 11.6% to $0.96 from $0.86. Higher profits on frozen foods and gains from hedging contracts on raw materials offset lower earnings from pasta products.
Canada Bread is still a hold.
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If you exclude an unusual tax gain and costs related to the plant closure, earnings per share would have risen 11.6% to $0.96 from $0.86. Higher profits on frozen foods and gains from hedging contracts on raw materials offset lower earnings from pasta products.
Canada Bread is still a hold.
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BOMBARDIER INC. (Toronto symbols BBD.A $3.43 and BBD.B $3.28; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.4 billion; Price-to-sales ratio: 0.3; Dividend yield: 3.0%; TSINetwork Rating: Average; www.bombardier.com) has received a firm order for 56 of its Global business jets from Switzerland-based VistaJet. This deal is worth $3.1 billion (all amounts except share price and market cap in U.S. dollars). If VistaJet exercises all of its options, the order would rise by 86 planes, for a total value of $7.8 billion. That’s equal to 43% of Bombardier’s 2011 revenue of $18.3 billion. The company will begin delivering these planes in 2014.
The subordinate-voting class B shares are the better choice because of their slightly better liquidity and higher dividend yield.
Bombardier B stock is a buy.
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The subordinate-voting class B shares are the better choice because of their slightly better liquidity and higher dividend yield.
Bombardier B stock is a buy.
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NORDION INC. $6.58 (Toronto symbol NDN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 62.0 million; Market cap: $408.0 million; Price-to-sales ratio: 1.8; No dividends paid since July 2012; TSINetwork Rating: Extra Risk; www.nordion.com) gets 40% of its revenue from selling isotopes for medical research and cancer treatments. Most of its isotopes come from Atomic Energy of Canada Ltd.’s aging Chalk River nuclear reactor near Ottawa, which will close in 2016.
The company recently lost its arbitration case against Atomic Energy over a failed plan to build two new reactors that would have replaced Chalk River. As a result, Nordion may now have to pay all or some of Atomic Energy’s $46 million in legal costs. At July 31, 2012, Nordion held cash of $81.9 million U.S., or $1.32 U.S. a share. Its long-term debt was $40.3 million U.S.
Nordion has also cancelled its deal to buy isotopes from its current supplier in Russia. It now plans to buy them from that country’s Research Institute of Atomic Reactors (RIAR). Nordion feels RIAR will be more reliable. However, it still needs to find more suppliers before Chalk River closes.
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The company recently lost its arbitration case against Atomic Energy over a failed plan to build two new reactors that would have replaced Chalk River. As a result, Nordion may now have to pay all or some of Atomic Energy’s $46 million in legal costs. At July 31, 2012, Nordion held cash of $81.9 million U.S., or $1.32 U.S. a share. Its long-term debt was $40.3 million U.S.
Nordion has also cancelled its deal to buy isotopes from its current supplier in Russia. It now plans to buy them from that country’s Research Institute of Atomic Reactors (RIAR). Nordion feels RIAR will be more reliable. However, it still needs to find more suppliers before Chalk River closes.
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RESEARCH IN MOTION LTD. $12 (Toronto symbol RIM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 516.4 million; Market cap: $6.2 billion; Price-to-sales ratio: 0.4; No dividends paid; TSINetwork Rating: Above Average; www.rim.com) has gained over 96% since it fell to $6.10 on September 24, 2012.
That’s mainly because the company confirmed it will launch smartphones that use its new BlackBerry 10 software on January 30, 2013. These devices will help RIM compete with Apple’s (Nasdaq symbol AAPL) iPhone and phones powered by Google’s (Nasdaq symbol GOOG) Android software. The U.S. government has also approved BlackBerry 10 software for use by its agencies. This will help RIM hang on to its current government clients.
However, slowing demand for RIM’s current phones continues to hurt its earnings. In its fiscal 2013 second quarter, which ended September 1, 2012, RIM lost $0.27 a share (all amounts except share price and market cap in U.S. dollars). A year earlier, it earned $0.63 a share.
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That’s mainly because the company confirmed it will launch smartphones that use its new BlackBerry 10 software on January 30, 2013. These devices will help RIM compete with Apple’s (Nasdaq symbol AAPL) iPhone and phones powered by Google’s (Nasdaq symbol GOOG) Android software. The U.S. government has also approved BlackBerry 10 software for use by its agencies. This will help RIM hang on to its current government clients.
However, slowing demand for RIM’s current phones continues to hurt its earnings. In its fiscal 2013 second quarter, which ended September 1, 2012, RIM lost $0.27 a share (all amounts except share price and market cap in U.S. dollars). A year earlier, it earned $0.63 a share.
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PRECISION DRILLING CORP. $7.48 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 276.3 million; Market cap: $2.1 billion; Price-to-sales ratio: 1.0; No dividends paid since February 2009; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract-drilling services to land-based oil and gas producers, mainly in North America. It had 363 rigs in service as of September 30, 2012.
The company is slowly expanding its international operations: it now has a total of eight rigs in Mexico and Saudi Arabia. Precision’s overseas business now accounts for 5% of its revenue, up from just 1% a year ago.
In the three months ended September 30, 2012, the company’s earnings fell 52.8%, to $39.4 million, or $0.14 a share. A year earlier, it earned $83.5 million, or $0.29 a share.
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The company is slowly expanding its international operations: it now has a total of eight rigs in Mexico and Saudi Arabia. Precision’s overseas business now accounts for 5% of its revenue, up from just 1% a year ago.
In the three months ended September 30, 2012, the company’s earnings fell 52.8%, to $39.4 million, or $0.14 a share. A year earlier, it earned $83.5 million, or $0.29 a share.
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ENBRIDGE INC. $40 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 799.9 million; Market cap: $32.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.enbridge.com) wants to reverse the flow of its oil pipeline in southern Ontario, which would let it pump oil to Montreal. The company also aims to increase the line’s capacity by 25%. Regulators must still approve this plan.
Reversing the flow will make it easier to pump oil from western Canada to refineries in Ontario and Quebec. Shipping more oil to eastern refineries will also improve Enbridge’s long-term prospects if regulators reject its proposed Northern Gateway pipeline, which would pump oil from Alberta to Kitimat, B.C.
Enbridge is a buy.
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Reversing the flow will make it easier to pump oil from western Canada to refineries in Ontario and Quebec. Shipping more oil to eastern refineries will also improve Enbridge’s long-term prospects if regulators reject its proposed Northern Gateway pipeline, which would pump oil from Alberta to Kitimat, B.C.
Enbridge is a buy.
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TELUS CORP. (Toronto symbols T $65 and T.A $65; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 325.8 million; Market cap: $21.2 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www.telus.com) recently received shareholder approval for its plan to convert its 151 million non-voting class A shares into regular common shares (one vote per share) on a one-for-one basis. The B.C. Supreme Court must still approve this move, probably in early 2013.
Telus also reported that non-Canadian investors now own about 15% of its common shares, down from 33% six months ago. It’s likely that U.S.-based hedge fund Mason Capital, which opposes the conversion plan, has cut its 18.7% stake. This drop also makes it easier for Telus to attract more non-Canadian investors without violating Ottawa’s foreign ownership limits on phone companies.
Even though they receive identical dividends and have similar liquidity, the non-voting shares are usually cheaper than the common shares.
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Telus also reported that non-Canadian investors now own about 15% of its common shares, down from 33% six months ago. It’s likely that U.S.-based hedge fund Mason Capital, which opposes the conversion plan, has cut its 18.7% stake. This drop also makes it easier for Telus to attract more non-Canadian investors without violating Ottawa’s foreign ownership limits on phone companies.
Even though they receive identical dividends and have similar liquidity, the non-voting shares are usually cheaper than the common shares.
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DUNDEE CORP. $26 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 54.2 million; Market cap: $1.4 billion; Price-to-sales ratio: 2.2; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) is a holding company with investments in wealth management, real estate, resources and agriculture.
In the quarter ended September 30, 2012, Dundee lost $2.2 million, or $0.19 a share. A year earlier, it earned $91.7 million, or $1.29, mainly due to a $95.6-million gain on the sale of a resources investment. Land sales caused revenue to jump 25.7%, to $173.5 million from $138.0 million.
Dundee is riskier than Great-West, IGM and Home Capital. That’s because sales of individual investments can have a big impact on its earnings. As well, the Goodman family controls 87.4% of the company’s votes through multiple-voting shares.
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In the quarter ended September 30, 2012, Dundee lost $2.2 million, or $0.19 a share. A year earlier, it earned $91.7 million, or $1.29, mainly due to a $95.6-million gain on the sale of a resources investment. Land sales caused revenue to jump 25.7%, to $173.5 million from $138.0 million.
Dundee is riskier than Great-West, IGM and Home Capital. That’s because sales of individual investments can have a big impact on its earnings. As well, the Goodman family controls 87.4% of the company’s votes through multiple-voting shares.
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HOME CAPITAL GROUP INC. $56 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.7 million; Market cap; $1.9 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.9%; TSINetwork Rating: Average; www.homecapital.com) is a mortgage lender that serves borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks.
Even though Home Capital caters to riskier borrowers, it avoids huge credit losses by identifying problem loans early. It then uses this information to restructure a borrower’s repayment terms and adjust its lending policies.
In the three months ended September 30, 2012, Home Capital’s earnings rose 18.3%, to a record $57.3 million, or $1.65 a share. A year earlier, the company earned $48.4 million, or $1.39 a share.
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Even though Home Capital caters to riskier borrowers, it avoids huge credit losses by identifying problem loans early. It then uses this information to restructure a borrower’s repayment terms and adjust its lending policies.
In the three months ended September 30, 2012, Home Capital’s earnings rose 18.3%, to a record $57.3 million, or $1.65 a share. A year earlier, the company earned $48.4 million, or $1.39 a share.
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IGM FINANCIAL INC. $40 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 252.6 million; Market cap: $10.1 billion; Price-to-sales ratio: 3.9; Dividend yield: 5.4%; TSINetwork Rating: Above Average; www.igmfinancial.com) is Canada’s largest independent mutual fund company, with $119.3 billion of assets under management. Power Financial owns 58.4% of IGM.
To help spur its sales and compete with other fund companies, IGM recently cut the management fees on most of the mutual funds it sells through its Investors Group subsidiary. It is also changing the way it pays its salespeople. This will result in savings that will help offset the lower fee income.
In the meantime, the reduced fees pushed down IGM’s earnings by 12.3% in the three months ended September 30, 2012, to $186.9 million. A year earlier, it earned $213.0 million. Earnings per share fell 11.0%, to $0.73 from $0.82, on fewer shares outstanding. Revenue declined 5.9%, to $634.0 million from $673.8 million.
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To help spur its sales and compete with other fund companies, IGM recently cut the management fees on most of the mutual funds it sells through its Investors Group subsidiary. It is also changing the way it pays its salespeople. This will result in savings that will help offset the lower fee income.
In the meantime, the reduced fees pushed down IGM’s earnings by 12.3% in the three months ended September 30, 2012, to $186.9 million. A year earlier, it earned $213.0 million. Earnings per share fell 11.0%, to $0.73 from $0.82, on fewer shares outstanding. Revenue declined 5.9%, to $634.0 million from $673.8 million.
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