price to sales ratio
ENBRIDGE INC. $38 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 782.3 million; Market cap: $29.7 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.enbridge.com) plans to build a new pipeline that would pump shale oil from the Bakken region of North Dakota to refineries in the U.S. and Canada. If it can sign up enough oil shippers, this new line would increase Enbridge’s capacity in the region by 67,000 barrels a day by the end of 2013. Right now, the company’s North Dakota pipelines can pump 210,000 barrels a day. The new line would cost $650 million, which is equal to 59% of the $1.1 billion, or $1.48 a share, that Enbridge earned in 2011. However, investments like this will help it take advantage of rising oil production in North Dakota, which has quadrupled since 2005. Enbridge is a buy.
TIM HORTONS INC. $53 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 157.4 million; Market cap: $8.3 billion; Price-to-sales ratio: 3.0; Dividend yield: 1.6%; TSINetwork Rating: Average; www.timhortons.com) operates 3,295 coffee-and-donut stores in Canada and 714 in the U.S. It also has five recently-opened outlets in the Persian Gulf. The company’s new menu items, such as espresso-based coffee drinks, continue to be extremely popular. Warmer-than-usual winter weather has also spurred customer traffic. These two factors pushed up Tim Hortons’ sales by 12.5% in 2011, to $2.9 billion from $2.5 billion in 2010. If you exclude the positive impact of foreign currency rates, sales rose 7.4% in 2011. Same-store sales rose 6.3% at its U.S. outlets, and 4.0% in Canada....
The long-term outlook for these two fertilizer producers is bright as population growth prompts farmers to plant more crops. However, we prefer Agrium for new buying, as its retail operations help cushion it from volatile fertilizer prices. POTASH CORP. OF SASKATCHEWAN $43 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 858.7 million; Market cap: $36.9 billion; Price-to-sales ratio: 4.0; Dividend yield: 1.3%; 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. Thanks to a 30.4% rise in potash prices, the company’s earnings rose 73.6% in 2011 to $3.1 billion from $1.8 billion in 2010 (all amounts except share price and market cap in U.S. dollars). Earnings per share rose 80.0%, to $3.51 from $1.95, on fewer shares outstanding. Revenue gained 33.3%, to $8.7 billion from $6.5 billion....
SUNCOR ENERGY INC. $34 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $54.4 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.3%; TSINetwork Rating: Average; www.suncor.com) produced an average of 361,000 barrels of oil per day at its oil-sands projects in February 2012. That’s up 1.7% from 355,000 barrels in January 2012. Suncor aims to expand its oil-sands production by 10% a year. That will help it reach its goal of producing over 1 million barrels (including conventional oil and natural gas) per day by 2020. Suncor is a buy.
TRANSCANADA CORP. $44 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 703.0 million; Market cap: $30.9 billion; Price-to-sales ratio: 3.3; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.transcanada.com) is expanding its Tamazunchale pipeline, which pumps natural gas from Mexico’s state-owned oil company to gas-fired power plants. This extension will cost $500 million U.S., which is roughly equal to 30% of the $1.6 billion (Canadian), or $2.23 a share, that TransCanada earned in 2011. The company expects to complete the project in 2014. The company has a 25-year supply deal with the state-owned power company, which cuts the risk of this project. Mexico continues to convert oil-fired power plants to gas, and TransCanada’s expertise should help it win more pipeline contracts....
MAPLE LEAF FOODS INC. $12 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 139.5 million; Market cap: $1.7 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.3%; TSINetwork Rating: Average; www.mapleleaf.ca) is starting to see the benefits of its a major restructuring plan, which mainly involves closing older meat-processing plants and bakeries and shifting their operations to modern facilities. Excluding all unusual items, earnings per share would have risen 38.4%, to $1.01 in 2011 from $0.73 in 2010. Sales for the year fell 1.5%, to $4.9 billion from $5.0 billion. If you disregard operations that the company sold and unfavourable foreign currency rates, sales would have risen by 4.7%. The company plans to raise its selling prices, which will help it offset rising ingredient costs. The savings from the restructuring plan, which Maple Leaf expects to complete in 2014, will also help it absorb these higher costs....
LOBLAW COMPANIES LTD. $35 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 281.4 million; Market cap: $9.8 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer. George Weston Ltd. (Toronto symbol WN) owns 64% of the company’s shares. Loblaw continues to make progress with its multi-year plan to streamline its supply chain and avoid product shortages. These actions mainly included closing 11 distribution centres and opening eight new ones, and installing new computer systems. The company claims that about 99% of its products are now in stock at its 1,000 supermarkets across Canada.
Big restructuring starting to pay off
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MCGRAW-HILL COMPANIES INC. $42 (New York symbol MHP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 293.4 million; Market cap: $12.3 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.4%; TSINetwork Rating: Average; www.mcgraw-hill.com) announced in September 2011 that it will split into two separate, publicly traded companies. One of these new firms, McGraw-Hill Markets, will sell a variety of financial-information products. This business will include Standard & Poor’s, which provides credit ratings on bonds, and McGraw-Hill’s J.D. Power market-research firm. McGraw-Hill Markets will have annual revenue of $4 billion. International sales will account for 40% of that total. The other company, McGraw-Hill Education, will publish textbooks for schools and colleges. This business will have $2.4 billion of annual revenue....
CGI GROUP INC. $20 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.9 million; Market cap: $5.2 billion; Price-to-sales ratio: 1.2; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is Canada’s largest provider of computer outsourcing services. It also operates in 15 other countries. Canada and the U.S. each accounted for 47% of its revenue in the latest fiscal year; Europe and Asia supplied the remaining 6%.
The company often uses acquisitions to fuel its growth. It cuts the risk of this strategy by focusing on smaller companies that enhance its products or expand its geographic reach.
The company often uses acquisitions to fuel its growth. It cuts the risk of this strategy by focusing on smaller companies that enhance its products or expand its geographic reach.
Big purchase starting to pay off
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METRO INC. $52 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 100.7 million; Market cap: $5.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.7%; TSINetwork Rating: Average; www.metro.ca) has converted its class A subordinate voting shares (one vote per share) and class B multiple voting shares (16 votes per share) into a single class of common shares (one vote per share). The new shares trade under the MRU symbol (old symbol MRU.A).
Meanwhile, the supermarket operator’s sales rose 3.4% in the three months ended December 17, 2011, to $2.7 billion from $2.6 billion a year earlier. Metro recently paid $157.3 million for 55% of Marché Adonis, which sells foods from Greece, Turkey, Lebanon and other Mediterranean countries. This purchase added $33 million to Metro’s sales in the quarter. On a same-store basis, sales rose 1.7%.
Earnings rose 8.6%, to $103.7 million from $95.5 million. Earnings per share rose 11.0%, to $1.01 from $0.91, on fewer shares outstanding. The company also raised its quarterly dividend by 11.7%, to $0.215 a share from $0.1925. The new annual rate of $0.86 yields 1.7%.
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Meanwhile, the supermarket operator’s sales rose 3.4% in the three months ended December 17, 2011, to $2.7 billion from $2.6 billion a year earlier. Metro recently paid $157.3 million for 55% of Marché Adonis, which sells foods from Greece, Turkey, Lebanon and other Mediterranean countries. This purchase added $33 million to Metro’s sales in the quarter. On a same-store basis, sales rose 1.7%.
Earnings rose 8.6%, to $103.7 million from $95.5 million. Earnings per share rose 11.0%, to $1.01 from $0.91, on fewer shares outstanding. The company also raised its quarterly dividend by 11.7%, to $0.215 a share from $0.1925. The new annual rate of $0.86 yields 1.7%.
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