price to sales ratio
SHAWCOR LTD. $30 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.6 million; Market cap: $2.1 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.1%; TSINetwork Rating: Average; www.shawcor.com) gets 88% of its revenue by making sealants and coatings that keep oil and gas pipelines from rusting. It gets the remaining 12% by making electrical wire and protective sheaths.
ShawCor has won over $800 million of new contracts since October 2011. That includes a $400-million U.S. deal to coat an undersea natural gas pipeline in western Australia.
These new orders pushed up the company’s revenue by 11.9% in 2011, to $1.2 billion from $1.0 billion in 2010. ShawCor gets two-thirds of its revenue from outside Canada, and the high Canadian dollar cut the contribution of its overseas operations by $22.4 million.
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ShawCor has won over $800 million of new contracts since October 2011. That includes a $400-million U.S. deal to coat an undersea natural gas pipeline in western Australia.
These new orders pushed up the company’s revenue by 11.9% in 2011, to $1.2 billion from $1.0 billion in 2010. ShawCor gets two-thirds of its revenue from outside Canada, and the high Canadian dollar cut the contribution of its overseas operations by $22.4 million.
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PRECISION DRILLING CORP. $8.91 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 276.1 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.3; 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 337 rigs in service at the end of 2011.
The company continues to gain as oil producers step up their drilling activity to take advantage of rising oil prices. In 2011, Precision’s revenue rose 36.5%, to $1.95 billion from $1.4 billion in 2010. Earnings soared 344.4%, to $193.5 million, or $0.67 a share, from $43.5 million, or $0.15 a share.
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provides contract drilling services to land-based oil and gas producers, mainly in North America. It had 337 rigs in service at the end of 2011.
The company continues to gain as oil producers step up their drilling activity to take advantage of rising oil prices. In 2011, Precision’s revenue rose 36.5%, to $1.95 billion from $1.4 billion in 2010. Earnings soared 344.4%, to $193.5 million, or $0.67 a share, from $43.5 million, or $0.15 a share.
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CAE INC. $10 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 257.9 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.6%; TSINetwork Rating: Average; www.cae.com) makes flight simulators and runs pilot training schools.
In its 2012 third quarter, which ended December 31, 2011, CAE’s revenue rose 10.3%, to $453.1 million from $410.8 million a year earlier.
Demand for the company’s pilot training services continues to rise as airlines upgrade their fleets. That pushed up revenue by 13% at CAE’s civil division (which supplies 45% of the company’s overall revenue).
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In its 2012 third quarter, which ended December 31, 2011, CAE’s revenue rose 10.3%, to $453.1 million from $410.8 million a year earlier.
Demand for the company’s pilot training services continues to rise as airlines upgrade their fleets. That pushed up revenue by 13% at CAE’s civil division (which supplies 45% of the company’s overall revenue).
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TRANSCANADA CORP. $43 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 704.1 million; Market cap: $30.3 billion; Price-to-sales ratio: 3.3; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.transcanada.com) gets 9% of its revenue from its minority stake in the Bruce nuclear power complex in central Ontario.
The company and its partners are nearly finished upgrading two of the plant’s eight reactors, which have been out of service since 1995. They plan to restart both by September 30, 2012. The plant will then supply 25% of Ontario’s power. Right now, Bruce’s six operating reactors account for 19% of the province’s power.
TransCanada is a buy.
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The company and its partners are nearly finished upgrading two of the plant’s eight reactors, which have been out of service since 1995. They plan to restart both by September 30, 2012. The plant will then supply 25% of Ontario’s power. Right now, Bruce’s six operating reactors account for 19% of the province’s power.
TransCanada is a buy.
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DUNDEE CORP. $24 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 55.0 million; Market cap: $1.3 billion; Price-to-sales ratio: 6.6; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) is a holding company with subsidiaries in wealth management, real estate, resources and agriculture.
Dundee is riskier than the big five banks. That’s because sales of individual investments can have a big impact on its earnings. For example, in 2011, it recorded an $870.8-million gain on the sale of subsidiary DundeeWealth. Without that gain, Dundee’s earnings fell 13.1%, to $173.2 million from $199.3 million in 2010. Earnings per share rose 5.9%, to $2.17 from $2.05, on fewer shares outstanding. Revenue fell 15.7%, to $574.0 million from $680.8 million.
Dundee is still a buy.
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Dundee is riskier than the big five banks. That’s because sales of individual investments can have a big impact on its earnings. For example, in 2011, it recorded an $870.8-million gain on the sale of subsidiary DundeeWealth. Without that gain, Dundee’s earnings fell 13.1%, to $173.2 million from $199.3 million in 2010. Earnings per share rose 5.9%, to $2.17 from $2.05, on fewer shares outstanding. Revenue fell 15.7%, to $574.0 million from $680.8 million.
Dundee is still a buy.
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CANADIAN IMPERIAL BANK OF COMMERCE $75 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 402.7 million; Market cap: $30.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.cibc.com) is Canada’s fifth-largest bank, with total assets of $391.4 billion.
CIBC plans to sell FirstLine, which provides mortgages through third-party brokers, and instead build up its in-house mortgage business.
The bank should earn higher profits from its mortgages as a result. It will also be able to promote credit cards and other products to its mortgage clients. CIBC aims to complete the sale over the next few months.
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CIBC plans to sell FirstLine, which provides mortgages through third-party brokers, and instead build up its in-house mortgage business.
The bank should earn higher profits from its mortgages as a result. It will also be able to promote credit cards and other products to its mortgage clients. CIBC aims to complete the sale over the next few months.
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BANK OF MONTREAL $58 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 640.4 million; Market cap: $37.1 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with assets of $538.3 billion.
Bank of Montreal continues to profit from last year’s purchase of U.S. banking firm Marshall & Ilsley Corp. for $4.0 billion in stock. That more than doubled the number of branches Bank of Montreal operates in the U.S. It also added 2 million customers. The bank now gets 20% of its revenue and earnings from its U.S. retail banking operations.
Meanwhile, the bank’s earnings rose 19.3% in the quarter ended January 31, 2012, to $953 million from $799 million a year ago. Earnings per share rose 7.6%, to $1.42 from $1.32, on more shares outstanding. These figures exclude unusual items, such as costs to integrate the new U.S. operations.
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Bank of Montreal continues to profit from last year’s purchase of U.S. banking firm Marshall & Ilsley Corp. for $4.0 billion in stock. That more than doubled the number of branches Bank of Montreal operates in the U.S. It also added 2 million customers. The bank now gets 20% of its revenue and earnings from its U.S. retail banking operations.
Meanwhile, the bank’s earnings rose 19.3% in the quarter ended January 31, 2012, to $953 million from $799 million a year ago. Earnings per share rose 7.6%, to $1.42 from $1.32, on more shares outstanding. These figures exclude unusual items, such as costs to integrate the new U.S. operations.
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p>TORONTO-DOMINION BANK $83 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 909.2 million; Market cap: $75.5 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.td.com) is Canada’s second-largest bank, with total assets of $773.7 billion. In December 2011, TD completed its $6.8-billion purchase of MBNA’s Canadian credit card operations from Bank of America (New York symbol BAC). These assets are a great fit for TD: They added 1.8 million clients to its 4.0 million credit card accounts. As well, MBNA is the largest MasterCard issuer in Canada. That diversifies TD’s credit card business beyond its current Visa cards.
The MBNA division should add $0.05 a share to TD’s annual earnings in the first year, and $0.10 a share thereafter.
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The MBNA division should add $0.05 a share to TD’s annual earnings in the first year, and $0.10 a share thereafter.
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ROYAL BANK OF CANADA $56 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $78.4 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s largest bank, with $815.0 billion of assets.
The U.S. Commodity Futures Trading Commission (CFTC) recently accused Royal of using a complex series of trades to cut its tax bill in Canada. Specifically, the CFTC says that divisions of the bank bought Canadian and U.S. dividend-paying stocks (plus futures contracts on these stocks) and quickly sold them to other divisions. These transactions would let Royal earn tax credits on the dividends it received from these holdings.
The CFTC claims that this process was a wash trade, in which the bank artificially set prices for these transactions, instead of letting the market determine the prices. Royal has denied these allegations, and we agree with Royal. As well, any potential fine would likely be small next to Royal’s earnings.
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The U.S. Commodity Futures Trading Commission (CFTC) recently accused Royal of using a complex series of trades to cut its tax bill in Canada. Specifically, the CFTC says that divisions of the bank bought Canadian and U.S. dividend-paying stocks (plus futures contracts on these stocks) and quickly sold them to other divisions. These transactions would let Royal earn tax credits on the dividends it received from these holdings.
The CFTC claims that this process was a wash trade, in which the bank artificially set prices for these transactions, instead of letting the market determine the prices. Royal has denied these allegations, and we agree with Royal. As well, any potential fine would likely be small next to Royal’s earnings.
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PENGROWTH ENERGY CORP. $8.96 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 360.3 million; Market cap: $3.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 9.4%; TSINetwork Rating: Average; www.pengrowth.com) has a long history of using acquisitions to expand, which adds risk. However, these purchases have increased its reserves and cash flow.
Its latest acquisition is NAL Energy Corp. (Toronto symbol NAE). NAL investors will receive 0.86 of a Pengrowth common share for each share they hold. That will give them 26% of the combined company. The deal should close by May 31, 2012.
Adding NAL’s properties in Alberta and B.C. (54% natural gas and 46% oil) will increase Pengrowth’s projected 2012 production by about 16%, to between 86,000 and 89,000 barrels of oil equivalent a day.
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Its latest acquisition is NAL Energy Corp. (Toronto symbol NAE). NAL investors will receive 0.86 of a Pengrowth common share for each share they hold. That will give them 26% of the combined company. The deal should close by May 31, 2012.
Adding NAL’s properties in Alberta and B.C. (54% natural gas and 46% oil) will increase Pengrowth’s projected 2012 production by about 16%, to between 86,000 and 89,000 barrels of oil equivalent a day.
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