price to sales ratio

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $43 and TPX.B $43; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 180.9 million; Market cap: $7.8 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.9%; TSINetwork Rating: Average; www. molsoncoors.com) has completed its $3.4-billion purchase of StarBev LP, which owns nine breweries in Central and Eastern Europe (all amounts except share prices and market cap in U.S. dollars). In the three months ended June 30, 2012, this acquisition contributed $19.7 million to Molson Coors’s pre-tax earnings. That helped push up the company’s overall earnings by 8.0%, to $250.1 million from $231.6 million a year earlier. Earnings per share rose 12.2%, to $1.38 from $1.23, on fewer shares outstanding. Sales rose 7.0%, to $999.4 million from $933.6 million. StarBev contributed $57.3 million to the latest sales figure. The company borrowed $2.9 billion to buy StarBev. As a result, its long-term debt has risen to $4.1 billion from $1.9 billion at the end of 2011. That’s a high 52% of its market cap. However, brewing is a stable business, and StarBev’s cash flows will help Molson Coors pay down this debt....

Canadian Pacific Railway has gained 22% since the start of 2012, while Canadian National Railway is up 9%. Even so, both trade at reasonable multiples to their earnings. Due to their importance to the Canadian economy, all investors should own at least one railway. We prefer CP for new buying. CANADIAN NATIONAL RAILWAY CO. $87 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 434.8 million; Market cap: $37.8 billion; Price-to-sales ratio: 3.8; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.cn.ca) reported that its earnings rose 17.3% in the three months ended June 30, 2012, to $631 million from $538 million a year earlier. Earnings per share rose 22.0%, to $1.44 from $1.18, on fewer shares outstanding. If you exclude one-time items, such as gains on sales of rail lines, earnings per share rose 19.0%, to $1.50 from $1.26. Revenue rose 12.5% to $2.5 billion from $2.3 billion. CN saw higher shipments of metals and minerals, coal, intermodal (containers that can be shipped by rail, ship or truck), petroleum and chemicals, and automotive and forest products. That offset lower shipments of grain and fertilizer....

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.

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. In all, these deals are worth $85 million, or 5% of CAE’s annual revenue of $1.8 billion. The company has now sold 16 simulators in its 2013 fiscal year, which began on April 1, 2012. CAE sold 37 simulators in all of fiscal 2012. CAE is a buy. IGM FINANCIAL INC. $37 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares out- standing: 255.1 million; Market cap: $9.4 billion; Price-to-sales ratio: 3.6; Dividend yield: 5.8%; TSINetwork Rating: Above Average; www.igmfinancial.com) reports that it had $119.7 billion of assets under management, including mutual fund assets, as of September 30, 2012. That’s an increase of 2.5% from $116.7 billion a year earlier....

ANDREW PELLER LTD. $9.85 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.3 million; Market cap: $140.9 million; Price-to-sales ratio: 0.5; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.andrewpeller.com) reported that its sales rose 4.7% in the three months ended June 30, 2012, to $72.7 million from $69.4 million a year earlier. The company launched a number of new wines and is seeing rising demand for its high-margin premium brands. A new 10-year deal to make and distribute wines under the Wayne Gretzky brand also contributed to the higher sales. Peller earned $4.7 million, or $0.34 a share, in the quarter. That’s up 19.2% from $3.9 million, or $0.28 a share. If you exclude gains on hedging contracts that the company uses to lock in foreignexchange rates, earnings would have risen 7.0%. Andrew Peller 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 Canada’s largest foodprocessing company. It mainly makes its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. This business accounts for 60% of Maple Leaf’s revenue. The company also makes fresh and frozen bread, pastries and pasta through its 90.0% stake in Canada Bread Co. Ltd., which supplies 35% of Maple Leaf’s revenue. The remaining 5% comes from the company’s agribusiness division, which raises hogs for its processed-meat operations. This division also recycles animal by-products into other materials,such as soaps and biodiesel fuel.

Restructuring slowed sales growth

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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 Canada’s largest foodprocessing company. It mainly makes its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. This business accounts for 60% of Maple Leaf’s revenue.

The company also makes fresh and frozen bread, pastries and pasta through its 90.0% stake in Canada Bread Co. Ltd., which supplies 35% of Maple Leaf’s revenue. The remaining 5% comes from the company’s agribusiness division, which raises hogs for its processed-meat operations. This division also recycles animal by-products into other materials,such as soaps and biodiesel fuel.

Restructuring slowed sales growth

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ANDREW PELLER LTD. $9.85 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.3 million; Market cap: $140.9 million; Price-to-sales ratio: 0.5; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.andrewpeller.com) reported that its sales rose 4.7% in the three months ended June 30, 2012, to $72.7 million from $69.4 million a year earlier. The company launched a number of new wines and is seeing rising demand for its high-margin premium brands. A new 10-year deal to make and distribute wines under the Wayne Gretzky brand also contributed to the higher sales.

Peller earned $4.7 million, or $0.34 a share, in the quarter. That’s up 19.2% from $3.9 million, or $0.28 a share. If you exclude gains on hedging contracts that the company uses to lock in foreignexchange rates, earnings would have risen 7.0%.

Andrew Peller is a buy.

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SNC-LAVALIN GROUP INC. $38 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.0 million; Market cap: $5.7 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.snclavalin.com) is facing a class-action lawsuit over $56 million U.S. in unusual payments to agents it hired to secure certain construction contracts. The stock fell nearly 20% when the company disclosed these payments in March 2012. The news also prompted SNC’s chief executive officer to quit.

These payments are small next to the $378.8 million (Canadian), or $2.49 a share, that SNC earned in 2011. But even so, the lawsuit is seeking $1 billion in damages. However, lawsuits like this are difficult to prove. Moreover, it would probably take years for the case to come to court.

The matter has had little impact on SNC’s ability to win new contracts. For example, the B.C. government has selected a consortium headed by SNC to design and build an 11-kilometre light-rail rapid transit line near Vancouver.

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IGM FINANCIAL INC. $37 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares out- standing: 255.1 million; Market cap: $9.4 billion; Price-to-sales ratio: 3.6; Dividend yield: 5.8%; TSINetwork Rating: Above Average; www.igmfinancial.com) reports that it had $119.7 billion of assets under management, including mutual fund assets, as of September 30, 2012. That’s an increase of 2.5% from $116.7 billion a year earlier.

IGM’s fee income rises and falls with the value of the mutual funds and other securities it manages, so the company’s revenue and earnings benefit when the value of these assets rises. If markets continue to rise—as we think they will—IGM’s share price should also gain. Moreover, low interest rates will probably continue to spur investors to shift from fixed-income investments to equity-based mutual funds over the next few months.

IGM Financial is a buy.

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