price to sales ratio

RESEARCH IN MOTION INC. $7.56 (Toronto symbol RIM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.2 million; Market cap: $4.0 billion; Price-to-sales ratio: 0.2; No dividends paid; TSINetwork Rating: Above Average; www.rim.com) has launched a version of its PlayBook tablet computer that can run on Long-Term Evolution (LTE) wireless networks, which are up to five times faster than current networks. Until now, the PlayBook used slower Wi-Fi technology to access the Internet. These upgrades will help the PlayBook compete with other LTE-capable tablets. However, RIM’s earnings will remain under pressure until it launches smartphones that use its new BlackBerry 10 operating system. The company expects to start selling these phones in early 2013. RIM is a hold, but only for aggressive investors....

BOMBARDIER INC. (Toronto symbols BBD.A $3.90 and BBD.B $3.76; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.4 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.6%; TSINetwork Rating: Average; www.bombardier.com) has received a firm order for 20 of its Q400 turboprop planes from WestJet Airlines Ltd. (Toronto symbol WJA); WestJet is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing. WestJet will use these planes for its new regional airline, which will serve smaller Canadian cities. Bombardier will begin delivering these planes in 2013. The order is worth $683 million (all amounts except share price and market cap in U.S. dollars). If WestJet exercises all of its options to buy an additional 25 planes, the entire order would be worth $1.6 billion. That’s equal to 9% of Bombardier’s 2011 revenue of $18.3 billion....

POTASH CORP. OF SASKATCHEWAN $42 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 859.1 million; Market cap: $36.1 billion; Price-to-sales ratio: 4.2; Dividend yield: 1.3%; TSINetwork Rating: Average; www.potashcorp.com) is the world’s largest fertilizer producer. Its six potash mines in Saskatchewan and one in New Brunswick account for 20% of global potash capacity. Four of its mines have reserves of between 75 and 108 years. It also makes fertilizers from nitrogen and phosphate. Results reflect erratic fertilizer prices The company’s sales and earnings vary with volatile fertilizer prices. That’s why its sales jumped from $5.2 billion in 2007 to $9.4 billion in 2008, but dropped to $4.0 billion in 2009 (all amounts except share price and market cap in U.S. dollars). Sales recovered to $6.5 billion in 2010, and rose to $8.7 billion in 2011....

Many of AT&T’s customers are switching from traditional phones (or land lines) to its more profitable wireless services. The company is also attracting more new subscribers thanks to its recent wireless-network upgrades. At the same time, recent improvements to its fibre optic networks are spurring sales of its Internet and TV services. Competition for new wireless customers is driving down prices. But even so, AT&T’s long-term outlook remains bright. That’s partly because new smartphones are pushing up demand for advanced and highly profitable wireless services, such as video calling. These new services should continue to generate the cash flow AT&T needs to keep upgrading its networks, buying back shares and raising its dividend....

EBAY INC. $43 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $55.9 billion; Price-to-sales ratio: 4.3; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) gets half of its revenue from its auction websites, which now have 104.8 million users. The company gets a further 40% from processing online payments through its PayPal service. This business has huge potential, particularly as it expands to retail stores and handling payments from smartphones. The remaining 10% comes from GSI Commerce Inc., which helps businesses process orders from their websites. eBay paid $2.4 billion for GSI in June 2011....

These three fast-food companies typically trade at higher multiples to their earnings than other Consumersector stocks. While a high p/e ratio can be a sign that a stock is overvalued, in the case of these three, it’s more of an indicator that investors recognize the earnings potential of their well-known brands. Their widely recognized names also give them an advantage as they continue to expand in developing countries. MCDONALD’S CORP. $88 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.0 billion; Market cap: $88.0 billion; Price-to-sales ratio: 3.3; Dividend yield: 3.2%; TSINetwork Rating: Above Average) is the world’s largest fast-food company by sales. Its 33,735 restaurants in 119 countries serve a wide variety of foods, but they are best known for their hamburgers and french fries....

PROCTER & GAMBLE CO. $64 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.7 billion; Market cap: $172.8 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.pg.com) rose 5% after activist investment firm Pershing Square Capital Management announced that it now owns around 1% of Procter’s shares. Pershing Square has a long history of making undervalued companies more profitable. It often does this by encouraging management to sell real estate or underperforming divisions. Rising fuel and raw-material costs have hurt Procter’s profit margins. In response, the company recently announced a major restructuring plan, including cutting jobs and spending less on advertising. Pershing Square’s involvement should continue to spur the stock....

J.P. MORGAN CHASE & CO. $35 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.8 billion; Market cap: $133.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.4%; TSINetwork Rating: Average; www.jpmorganchase.com) now says it lost $4.4 billion in the second quarter on hedging contracts that it uses to cut the risk on corporate bonds. Its original estimate was a $2-billion loss. Even with the bigger loss, Morgan earned $5.0 billion in the three months ended June 30, 2012, down 8.7% from $5.4 billion a year earlier. Earnings per share fell 4.7%, to $1.21 from $1.27, on fewer shares outstanding. Morgan continues to benefit as more borrowers repay their loans on time: it set aside $214 million to cover bad loans in the quarter, down 88.2% from $1.8 billion a year ago. J.P. Morgan Chase is still a hold.

IDEXX LABORATORIES INC. $88 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 56.9 million; Market cap: $5.0 billion; Price-to-sales ratio: 3.9; No dividends paid; TSINetwork Rating: Average; www.idexx.com) gets 80% of its revenue by making equipment that veterinarians use to detect diseases in pets. The company also makes systems that detect contaminants in livestock and water (20% of revenue). It sells its products in over 100 countries. In the three months ended June 30, 2012, Idexx earned $51.3 million. That’s up 5.5% from $48.7 million a year earlier. The company spent $27.4 million on share repurchases in the latest quarter. Due to fewer shares outstanding, earnings per share rose 9.6%, to $0.91 from $0.83. Revenue rose 5.6%, to $335.6 million from $317.9 million....

Toyota and Honda continue to recover from the March 2011 earthquake and tsunami, which cut their production in Japan. Both companies are also wellpositioned to keep benefiting from rising demand for affordable, fuel-efficient cars, particularly in developing countries. We still like both stocks, but we see Honda as more attractive right now. TOYOTA MOTOR CO. ADRs $73 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $124.1 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.toyota.com) recently passed General Motors as the world’s largest carmaker based on sales. Toyota sold 7.35 million vehicles in its 2012 fiscal year, which ended March 31, 2012. That’s up 0.6% from 7.31 million vehicles in 2011. The higher sales pushed up its revenue by 3.5%, to $236.4 billion from $228.4 billion. Earnings rose 19.6%, to $3.5 billion from $3.0 billion. Because of more shares outstanding, earnings per ADR rose at a slower pace of 12.2%, to $2.12 from $1.89. (Each American Depositary Receipt represents two Toyota common shares.)...