price to sales ratio

PENGROWTH ENERGY CORP. $8.41 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 364.5 million; Market cap: $3.1 billion; Price-to sales ratio: 1.9; Dividend yield: 10.0%; TSINetwork Rating: Average; www.pengrowth.com) reported that its daily production rose 2.7% in the three months ended March 31, 2012, to 75,618 barrels of oil equivalent from 73,634 a year ago. Because of depressed natural gas prices, the company is shifting its focus to oil, which accounted for 77% of its production compared with 61% a year earlier. Even with the higher production, weak gas prices and higher royalties cut Pengrowth’s cash flow by 22.6% in the quarter, to $113.6 million from $146.8 million a year earlier. Cash flow per share fell 31.1%, to $0.31 from $0.45, on more shares outstanding. However, the company’s high-quality western Canadian properties and its upcoming all-stock purchase of NAL Energy (Toronto symbol NAE) should let it take better advantage of high oil prices....

AGRIUM INC. $83 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $13.1 billion; Price-to-sales ratio: 0.8; Dividend yield: 0.5%; TSINetwork Rating: Average; www.agrium.com) makes fertilizers from natural gas. It sells its products to farmers and industrial users through its more than 1,200 stores in North America, South America and Australia. The company’s retail outlets help shield it from volatile fertilizer prices. Agrium continues to add more stores. It recently agreed to pay $1.65 billion (all amounts except share price and market cap in U.S. dollars) for 230 outlets in western Canada operated by Viterra Inc. It will also purchase Viterra’s 17 stores in Australia, plus its 34% stake in a fertilizer plant in Alberta. Agrium will buy these businesses from Glencore International plc, which is now in the process of taking over Viterra. Previous acquisitions boosted results ...

Drug makers should see strong gains over the next few years, particularly due to the aging population. However, they still face challenges. For example, they must continually invest large sums to develop new drugs as patents expire on older ones. New drugs can also take years to win regulatory approval. As well, the pharmaceutical business is extremely competitive, and new, more effective products could come along at any time. To cut your risk, we recommend that you focus on leaders like Pfizer. The company recently lost the exclusive rights to its top-selling Lipitor cholesterol drug, but it has plenty of other promising products on the horizon. Its strong balance sheet is also helping it increase its research spending and buy other drug makers. PFIZER INC. $23 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 7.5 billion; Market cap: $172.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.pfizer.com) is the world’s largest pharmaceutical drug maker. Its top-selling brands include Lipitor (for high cholesterol), Lyrica (epilepsy), Celebrex (arthritis pain), Viagra (erectile dysfunction), Xalatan (glaucoma), Norvasc (hypertension) and Zyvox (bacterial infections). The company is also the world’s fifth-largest maker of over-the-counter drugs. Its major brands include Advil (pain relief), Centrum (vitamins) and Robitussin (cough syrup)....

WAL-MART STORES INC. $57 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.4 billion; Market cap: $193.8 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.walmart.com) fell 8% recently after it admitted that it is investigating allegations that executives of its 69%-owned Mexican subsidiary paid bribes to local officials in 2005 to speed up the construction of new stores. U.S. companies are prohibited from bribing foreign officials under the 1977 Foreign Corrupt Practices Act. Wal-Mart is fully cooperating with American and Mexican authorities. This should limit any possible fines it may have to pay. The company has also strengthened its internal accounting controls to make sure all of its overseas businesses comply with the anti-bribery law....

In addition to Pfizer, medical device makers like these three offer another way to profit from aging baby boomers and rising health care spending. However, not all are buys right now. BAXTER INTERNATIONAL INC. $55 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 556.3 million; Market cap: $30.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.4%; TSINetwork Rating: Average; www.baxter.com) makes medical products, such as intravenous pumps and kidney dialysis equipment. It also makes vaccines and drugs. Half of the company’s sales come from single-use products that continually need to be reordered. Baxter earned $569 million in the first quarter of 2012. That’s down 0.2% from $570 million a year earlier. The company spent $575 million on share buybacks during the quarter. Because of fewer shares outstanding, earnings per share rose 3.1%, to $1.01 from $0.98....

INTERNATIONAL BUSINESS MACHINES CORP. $204 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.2 billion; Market cap: $244.8 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.ibm.com) continues to expand its analytics operations, which make software that helps businesses and governments quickly gather and analyze a wide range of data. The company recently paid an undisclosed sum for Toronto-based Varicent Software Inc. Over 180 banks, insurance companies and retailers use Varicent’s products to manage employee salaries and bonuses paid to salespeople. IBM is our #1 buy for 2012.

MICROSOFT CORP. $32 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.4 billion; Market cap: $268.8 billion; Price-to-sales ratio: 3.7; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.microsoft.com) is paying $1.1 billion for 925 patents held by AOL Inc. (New York symbol AOL). It will also license another 300 patents from AOL. Microsoft held cash of $59.5 billion, or $7.09 a share, on March 31, 2012, so it can easily afford this purchase. After the sale closes in the next few weeks, Microsoft will then sell 650 of AOL’s patents to social network operator Facebook Inc. for $550 million. As part of the deal, Microsoft will retain a licence on these patents. AOL’s patents cover Internet communications technologies such as email and instant messaging. Controlling them will help Microsoft defend itself in future patent disputes. The patents will also let the company charge higher licensing fees to smartphone makers....

Intel and Nvidia have thrived as a result of the rapid growth of personal computers in the past two decades. Both companies now aim to duplicate that success with new chips for smartphones and tablet computers. INTEL CORP. $28 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.0 billion; Market cap: $140.0 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.intel.com) is the world’s largest computer chip maker. About 80% of all computers use the company’s chips. In the first quarter of 2012, Intel’s revenue rose 0.5%, to $12.9 billion from $12.8 billion a year earlier. Recent flooding in Thailand caused a hard drive shortage that hurt computer sales. That cut demand for Intel’s chips and caused a 2.0% sales decline at the company’s PC Client Group (which supplies two-thirds of its total revenue). However, software sales jumped 137.9% following last year’s purchase of antivirus software specialist McAfee....

GANNETT CO. INC. $14 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 237.0 million; Market cap: $3.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 5.7%; TSINetwork Rating: Average; www.gannett.com) earned $80.8 million, or $0.34 a share, in the first quarter of 2012. That’s down 18.3% from $98.9 million, or $0.41 a share, a year earlier. Revenue fell 2.6%, to $1.22 billion from $1.25 billion. The company spent $20 million on new growth projects in the quarter, including new applications for mobile devices and an expansion of its sports-related news services. This was the main reason for the lower earnings. As well, advertising revenue at its newspapers and TV stations should rebound during the Summer Olympics and the run-up to the November presidential election. Gannett is a buy.

Limited Brands and Jones Group own some of the clothing industry’s best-known brands. That puts them in a good position to profit as consumer confidence improves. We like both, but we prefer Limited Brands. LIMITED BRANDS INC. $49 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 289.4 million; Market cap: $14.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.limitedbrands.com) owns the Victoria’s Secret lingerie chain and the Bath & Body Works personal-care products stores. It also owns the La Senza lingerie chain in Canada. The company continues to expand its well-known brands into related niche markets. For example, in 2004, Limited launched the Victoria’s Secret Pink clothing line for younger women. This brand’s success has prompted the company to open two stand-alone Pink stores in the U.S. and eight in Canada....