price to sales ratio
BHP BILLITON LTD. ADRs $64 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.7 billion; Market cap: $172.8 billion; Price-to-sales ratio: 2.4; Dividend yield: 2.9%; TSINetwork Rating: Average; www.bhpbilliton.com) plans to spend $4.5 billion in 2012 to develop its North American shale gas properties. This spending will rise to $5.5 billion a year by 2015, and to $6.5 billion a year in 2020. BHP can easily afford these outlays; its cash flow was $30.1 billion, or $10.92 per ADR, in the year ended June 30, 2011. These investments will help BHP profit as more coal-burning power plants in the U.S. convert to natural gas. As well, the company plans to export liquefied natural gas to Europe and Asia. BHP Billiton is a buy.
WESTERN UNION CO. $16 (New York symbol WU; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 619.1 million; Market cap: $9.9 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.westernunion.com) earned $249.4 million in the three months ended September 30, 2011. That’s up 0.6% from $247.9 million a year earlier. Due to fewer shares outstanding, earnings per share rose 8.1%, to $0.40 from $0.37. These figures exclude costs related to a recent restructuring, which mainly involved laying off workers and closing unneeded facilities. Revenue rose 6.1%, to $1.4 billion from $1.3 billion. In November 2011, the company completed its $945-million purchase of the business-payments division of U.K.-based Travelex Holdings Ltd. This company processes payments for 35,000 businesses in 14 countries. Integration costs will hurt Western Union’s 2012 earnings, but the purchase should add $0.04 a share to its 2013 earnings. Western Union is a buy....
T. ROWE PRICE GROUP INC. $49 (Nasdaq symbol TROW; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 252.6 million; Market cap: $12.4 billion; Price-to-sales ratio: 4.7; Dividend yield: 2.5%; TSINetwork Rating: Average; www.troweprice.com) saw the value of mutual funds and other assets it manages fall 5.9%, to $453.5 billion on September 30, 2011, from $482.0 billion at the start of the year. The uncertainty over European sovereign debt and a slowing global economy cut stock prices and spurred investors to redeem their mutual fund units. Most of these redemptions were made by institutional investors. However, the company saw strong demand for its target-date retirement funds for individuals. As a result, T. Rowe Price’s revenue rose 15.9% in the third quarter of 2011, to $679.4 million from $586.1 million a year earlier. Earnings rose 9.6%, to $184.6 million, or $0.71 a share, from $168.4 million, or $0.64 a share. T. Rowe Price is a buy.
FAIR ISAAC CORP. $33 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.7 million; Market cap: $1.2 billion; Price-to-sales ratio: 2.0; Dividend yield: 0.2%; TSINetwork Rating: Average; www.fairisaac.com) sells products and services that help businesses around the world make better decisions on customer creditworthiness. The company is best known for its FICO credit scores, which creditors use to decide if they should give a customer a mortgage, a credit card or any other type of loan. Fair Isaac also makes software that helps credit-card issuers control fraud and analyze cardholders’ spending patterns. Banks and insurance companies provide 78% of Fair Isaac’s revenue.
Recovering from subprime crisis
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New technologies are helping to unlock the vast reserves of the oil sands and shale-gas fields in North America. However, the extra production could hold back oil and natural gas prices. That’s why we feel it’s a great time to own our favourite integrated oil producer Imperial Oil. Besides drilling for oil, Imperial also owns refineries which convert crude oil into gasoline and other fuels. These operations profit when oil prices fall, because they pay less for the crude they refine. Imperial also operates 1,850 Esso gas stations. That helps diversify the company’s business, and further cuts its risk. IMPERIAL OIL LTD. $42 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $35.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.0%; TSINetwork Rating: Average; www.imperialoil.ca) is Canada’s third-largest publicly traded oil company, after Suncor Energy Inc. and Canadian Natural Resources Ltd. Imperial is a 69.6%-owned subsidiary of U.S.-based ExxonMobil Corp. (New York symbol XOM)....
TRANSCANADA CORP. $41 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 703.0 million; Market cap: $28.8 billion; Price-to-sales ratio: 3.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.transcanada.com) may have to kill its proposed Keystone XL pipeline, which will pump oil from oil-sands projects in Alberta through Oklahoma to refineries on the U.S. Gulf Coast. That’s mainly because the Governor of Nebraska now wants TransCanada to re-route the pipeline around underground water tables. As well, the U.S. State Department is reviewing its recent decision that Keystone XL will have no significant impact on the environment. These delays would add to Keystone XL’s $7-billion U.S. cost, and might prompt oil shippers and refineries to cancel their commitments....
Canada’s big five banks avoided the problems with subprime mortgages and European sovereign debt that have crippled many of the world’s largest financial firms. The big banks are now using their strong balance sheets to make acquisitions, often at bargain prices, and to upgrade their holdings. ROYAL BANK OF CANADA $45 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $63.0 billion; Price-to-sales ratio: 1.8; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s largest bank, with $730.6 billion of assets....
INDIGO BOOKS & MUSIC INC. $9.12 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 25.2 million; Market cap: $229.8 million; Price-to-sales ratio: 0.2; Dividend yield: 4.8%; TSINetwork Rating: Average; www.chapters.indigo.ca) has agreed to sell Kobo Inc., which sells electronic books and reader devices. Indigo owns 51.4% of Kobo. Japanese e-commerce company Ratuken Inc. will pay $315 million U.S. for 100% of Kobo. Indigo will receive $140 million U.S. to $150 million U.S. when the sale closes in early 2012. That’s equal to two-thirds of its market cap. Sales of e-books are growing strongly. Indigo will keep selling Kobo products through its bookstores and web site, however, the Kobo reader is no match for Amazon’s Kindle....
PENGROWTH ENERGY CORP. $10 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 330.1 million; Market cap: $3.3 billion; Price-to sales ratio: 2.4; Dividend yield: 8.4%; TSINetwork Rating: Average; www.pengrowth.com) produced an average of 74,568 barrels of oil equivalent per day (including natural gas) in the third quarter of 2011. That’s up 2.6% from 72,704 barrels a year earlier. Production was weighted 51% to oil and 49% to natural gas. Cash flow rose 0.7%, to $150.4 million from $149.3 million. However, cash flow per share fell 8.0%, to $0.46 from $0.50, on more shares outstanding. Pengrowth is drilling more wells on its properties in Alberta. As a result, it now expects to spend $610 million on capital projects in 2011. That’s $60 million more than its earlier forecast. The company will fund this expansion by selling $300 million of new shares. That will increase the total outstanding by about 9%....
ENCANA CORP. $20 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.3 million; Market cap: $14.7 billion; Price-to-sales ratio: 1.9; Dividend yield: 4.1%; TSINetwork Rating: Average; www.encana.com) has agreed to sell some of its natural gas properties in northern Texas for $975 million (all amounts except share price and market cap in U.S. dollars). To put that in context, Encana earned $171 million, or $0.23 a share, in the three months ended September 30, 2011. The sale is part of Encana’s ongoing plan to focus on its main properties in Alberta, B.C., Wyoming, Colorado and Louisiana. Including this sale, Encana has sold $1.7 billion of properties in 2011. That’s within its target of $1 billion to $2 billion....