price to sales ratio

ATCO and its main subsidiary, Canadian Utilities, have two major pluses that help them cut their risk: both get around two-thirds of their earnings from regulated power and gas utilities, and both have many clients under long-term contracts. The resulting stable revenue streams help them invest in new projects and raise their dividends. ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $61 and ACO.Y [class II voting] $61; Income Portfolio, Utilities sector; Shares outstanding: 57.7 million; Market cap: $3.5 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.atco.com) is a holding company. Its main subsidiary is 52.7%-owned Canadian Utilities. ATCO has four main divisions: Utilities (which distributes electricity and natural gas); Energy (which operates power plants); Structures & Logistics (which provides buildings and related services, such as fire protection, to construction and resource companies); and its Australian business (which operates power plants and distributes natural gas in Australia.) ATCO owns 75.5% of the Structures division; Canadian Utilities owns the remaining 24.5%....

EMERA INC. $33 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 122.2 million; Market cap: $4.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 4.1%; TSINetwork Rating: Average; www.emera.com) will invest an extra $83 million U.S. in seven American wind-power projects after its partner, Algonquin Power & Utilities Corp. (Toronto symbol AQN), dropped out of the joint venture. As a result, Emera will pay $333 million U.S. for 49% of this venture; First Wind Holdings LLC owns the remaining 51%. That’s roughly equal to nine months’ cash flow. Wind power relies heavily on politically sensitive government subsidies. However, wind projects represent just a small portion of Emera’s overall operations. Emera is a buy.

TELUS CORP. (Toronto symbols T $57 and T.A $54; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 324.5 million; Market cap: $18.5 billion; Price-to-sales ratio: 1.8; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.telus.com) has paid an undisclosed sum for Wolf Medical Systems, which makes software that helps hospitals and clinics convert patient records to electronic form. Doctors can also use Wolf’s products to access this information from a wide variety of devices, including smartphones and tablet computers. Adding Wolf’s expertise enhances Telus’s current electronic health record services. There is also plenty of room for the company to grow in this market: right now, just 32% of Canada’s medical records are digital....

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%....

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.

Big purchase starting to pay off

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We’ve chosen IBM as our “Stock of the Year”for 2012. After nearly going bankrupt in the 1990s, the company decided to shift toward selling its expertise and away from making computers. IBM now gets most of its revenue from steady, predictable long-term support and maintenance contracts. That cuts its risk. The company is now using its rising profits to expand into promising new areas, such as cloud computing and software that helps businesses quickly analyze large amounts of data. IBM’s strong reputation is also helping it expand in Asia and Latin America. That makes it less reliant on slower-growing regions like North America and Europe....

TUPPERWARE BRANDS CORP. $62 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 57.4 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.tupperwarebrands.com) was our Stock of the Year for 2011. Like IBM, Tupperware continues to see strong demand for its products, particularly in fast-growing countries like Brazil, Indonesia and Turkey. These markets now supply 63% of the company’s sales. Also like IBM, Tupperware continues to aggressively repurchase its shares. Buybacks raise earnings per share and other per-share calculations, and give the remaining shareholders a larger stake in the company....

In addition to IBM, we also like the outlook for these three other tech leaders. They come with significantly more risk, so these stocks should make up only a small portion of your portfolio. APPLE INC. $447 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 932.2 million; Market cap: $416.7 billion; Price-to-sales ratio: 3.1; No dividends paid; TSINetwork Rating: Average; www.apple.com) makes computers and a wide range of electronic devices, including the iPhone and iPad tablet computer. Apple recently teamed up with several leading textbook publishers to make more titles available to iPad and iPhone users. The company has also launched its new iBooks 2 software, which makes it easy for students to use Apple devices to take notes and search within text. Publishers can also use the program to quickly update content and add features, like video....

CONAGRA FOODS INC. $27 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 412.6 million; Market cap: $11.1 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.conagrafoods.com) is paying an undisclosed sum for the Canadian operations of Del Monte Foods. This business makes packaged fruits, fruit snacks and vegetables under the Del Monte brand, as well as canned tomato products under the Aylmer label. The new operations look like a nice fit with ConAgra’s existing operations in Canada, and will add $150 million to its annual sales of $12.8 billion. ConAgra is a buy.

INTERNATIONAL FLAVORS & FRAGRANCES INC. $57 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.9 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.7; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.iff.com) aims to make its fragrances division more profitable. This business makes compounds that improve the smells of soaps, detergents and air fresheners. As part of this plan, IFF will increase its focus on emerging markets. As a result, it will cut 70 employees worldwide. It will pay severance and other costs of $10 million, or $0.08 a share; IFF earned $81.8 million, or $1.00 a share, in the third quarter of 2011. The plan should save it $9 million a year, starting in 2012. International Flavors & Fragrances is a buy.