price to sales ratio

TRANSCANADA CORP. $45 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 705.0 million; Market cap: $31.7 billion; Price-to-sales ratio: 3.6; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www.transcanada.com) has won contracts to build and operate two pipelines that will supply natural gas to government-owned power plants in Mexico. These lines will cost $1.4 billion U.S., and should begin operating in 2016. TransCanada has 25-year contracts with Mexico’s federal power company, which cuts the risk of these investments. These deals should help the company win even more business as Mexico continues to convert its power plants from coal to gas. TransCanada is a buy.

PENGROWTH ENERGY CORP. $5.59 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 507.1 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.8; Dividend yield: 8.6%; TSINetwork Rating: Average; www.pengrowth.com) has suffered from low natural gas prices, same as Encana. That’s why in May 2012 it bought NAL Energy Corp., which gets roughly half of its production from higher-priced oil. Thanks to this purchase, Pengrowth’s daily production rose 26.4% in the three months ended September 30, 2012, to a record 94,284 barrels of oil equivalent from 74,568 a year ago. Natural gas accounted for 60% of its production, down from 63% a year earlier. Depressed natural gas prices pushed down Pengrowth’s cash flow by 6.2% in the quarter, to $141.1 million from $150.4 million a year earlier. Cash flow per share fell 39.1%, to $0.28 from $0.46, on more shares outstanding. Even so, the extra production from NAL should let Pengrowth keep paying monthly dividends of $0.04 a share (for an 8.6% annualized yield). Pengrowth is still a buy.

BELL ALIANT INC. $27 (Toronto symbol BA, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 227.8 million; Market cap: $6.2 billion; Price-to-sales ratio: 2.2; Dividend yield: 7.0%; TSINetwork Rating: Average; www.bellaliant.ca) ells telephone and Internet services to 2.5 million customers in Atlantic Canada, as well as rural parts of Ontario and Quebec. It also sells wireless services through an alliance with BCE, which owns 45% of Bell Aliant. The company continues to replace its copper-wire cables with fibre optic lines. This lets it sell more high-speed Internet and digital TV subscriptions, and offset declining sales of its regular phone services, which still supply 60% of its revenue. Bell Aliant expects to spend $550 million to $600 million on network upgrades in 2012, compared to $573 million in 2011. Its fibre optic systems now reach 621,000 homes. The company plans to increase that to 650,000 by the end of 2012....

Demand for more and better food continues to rise in developing countries. That will keep spurring fertilizer sales. We feel the best way to profit from this trend is with well-established fertilizer producers like Potash Corp. and Agrium. Both are attractive in relation to earnings, and both are raising their dividends. POTASH CORP. OF SASKATCHEWAN $40 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 861.6 million; Market cap: $34.5 billion; Price-to-sales ratio: 4.1; Dividend yield: 2.1%; TSINetwork Rating: Average; www.potashcorp.com) is the world’s largest fertilizer producer. It has six potash mines in Saskatchewan and one in New Brunswick. The company has faced delays in securing new supply contracts with buyers in China. That has lowered its potash shipments. As well, the Indian government has cut fertilizer subsidies....

SUNCOR ENERGY INC. $34 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $51.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.suncor.com) will spend $6.65 billion to upgrade its operations in 2012, down 11.3% from its earlier forecast of $7.5 billion. That’s mainly due to lowerthan- expected costs to expand its Firebag oil sands project in Alberta. The new addition should begin operating by the end of 2012—three months ahead of schedule. The recent drop in oil prices has also prompted Suncor to slow the development of three other big oil sands projects. However, lower oil prices are boosting profits at Suncor’s refineries. As a result, cash flow per share rose 2.9% in the three months ended September 30, 2012, to $1.78 from $1.73 a year earlier. Suncor is a buy.

MAPLE LEAF FOODS INC. $11 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 140.0 million; Market cap: $1.5 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.mapleleaf.ca) is acquiring Puratone Corporation, a private company that raises over 500,000 hogs a year at 50 barns in Manitoba. The takeover will give Maple Leaf control of 30% of the hogs used by its processing facility in Brandon, Manitoba.The company will pay $42 million for Puratone when the deal closes in the next few weeks. To put that in context, Maple Leaf earned $30.2 million, or $0.21 a share, in the three months ended September 30, 2012. That’s down 24.5% from $39.9 million, or $0.28 a share, a year earlier....

TIM HORTONS INC. $50 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 154.9 million; Market cap: $7.7 billion; Price-to-sales ratio: 2.5; Dividend yield: 1.7%; TSINetwork Rating: Average; www.timhortons.com) is the first fast-food company in Canada that lets customers pay for their purchases using their smartphones. After installing the necessary software, users can pay for their purchases by swiping their phone in front of a special scanner. This should speed up service and encourage repeat visits. The company has installed these scanners in 2,300 of its 3,300 coffee-and-donut stores in Canada. Tim Hortons plans to bring this technology to an additional 700 outlets by December 2012. Tim Hortons is a buy.

CAE INC. $10 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.7 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.cae.com) is the world’s leading maker of flight simulators for commercial airlines, with 70% of the market. It also makes simulators for military clients. The company began training pilots for its customers in 2001; it now has over 100 flight schools in 30 countries. CAE gets 50% of its revenue from military clients. That cuts its exposure to cyclical commercial airlines, which supply 45% of its revenue.

New markets have big potential

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CAE INC. $10 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.7 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.cae.com) recently sold six flight simulators and related equipment....

DUNDEE CORP. $24 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 54.7 million; Market cap: $1.3 billion; Price-to-sales ratio: 1.8; 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 June 30, 2012, Dundee lost $16.8 million, or $0.34 a share. That’s because it wrote down the value of securities it holds by $34.0 million. A year earlier, it earned $21.0 million, or $0.28 a share, partly due to $1.9 million in investment gains. Revenue jumped 40.7%, to $171.2 million from $121.7 million.

Dundee is still a buy.

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