price to sales ratio

CONAGRA FOODS INC. $25 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 414.5 million; Market cap: $10.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.8%; TSINetwork Rating: Average; www.conagrafoods.com) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter and Orville Redenbacher popcorn. The company gets 65% of its sales from consumers. Businesses, such as restaurants, account for the remaining 35%. The company’s sales fell 3.5%, from $12.0 billion in 2007 to $11.6 billion in 2008. That’s because ConAgra sold its commodity trading operations. Sales rebounded to $12.7 billion in 2009, but fell 5.1%, to $12.1 billion, in 2010. Sales rose to $12.3 billion in 2011, thanks to acquisitions and price increases....

H.J. HEINZ CO. $53 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 321.0 million; Market cap: $17.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.heinz.com) makes a wide variety of processed foods, including condiments, sauces, soups, baked beans, pastas and baby food. Its flagship product, Heinz ketchup, accounts for about 60% of U.S. ketchup sales. Heinz’s sales rose 18.9%, from $9.0 billion in 2007 to $10.7 billion in 2011 (fiscal years end April 30). Earnings rose 16.6%, from $791.6 million in 2007 to $923.1 million in 2009. Earnings per share rose 21.8%, from $2.38 to $2.90, on fewer shares outstanding. Unfavourable foreign-exchange rates cut Heinz’s earnings to $914.5 million, or $2.87 a share, in 2010. In 2011, earnings rebounded to $991.9 million, or $3.08 a share....

These two well-established food makers are using different strategies to increase their sales and profits. Heinz continues to expand overseas, while ConAgra prefers to focus on its domestic business. Both companies continue to cut costs and improve their efficiency. Both strategies should help Heinz and ConAgra spur their longterm growth, and give them lots of room to keep raising their dividends. As well, both continue to trade at attractive multiples to earnings....

MCDONALD’S CORP. $92 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.0 billion; Market cap: $92.0 billion; Price-to-sales ratio: 3.6; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.mcdonalds.com) is a good example of a high-quality stock that continues to thrive despite stock-market weakness. The stock is now around 44.3% above the $63.75 peak that it hit prior to the 2009 market downturn. Its profits have grown thanks in part to new menus items, such as premium coffees and oatmeal. In the third quarter of 2011, sales rose 13.7%, to $7.2 billion from $6.3 billion a year earlier. Same-store sales rose 5.0%. Earnings rose 8.6%, to $1.5 billion from $1.4 billion. Earnings per share rose 12.4%, to $1.45 from $1.29, on fewer shares outstanding....

Chipmakers and software firms operate in highly competitive, fast-changing fields. To cut your risk, we recommend sticking with industry leaders who have built up strong reputations with their customers. These firms also have the financial strength to absorb the high cost of developing new products. Here are three tech companies that are leaders in their niche markets. Sales and earnings at all three are rising, but we see only two as buys at today’s prices. ADOBE SYSTEMS INC. $28 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 490.9 million; Market cap: $13.7 billion; Price-to-sales ratio: 3.4; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) makes software that lets...

INTEL CORP. $25 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.3 billion; Market cap: $132.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.intel.com) reported record revenue of $14.2 billion in the three months ended October 1, 2011. That’s up 28.2% from $11.1 billion a year earlier. Most of these gains came from strong sales of chips for notebook computers. Revenue from these products rose 21.7% in the quarter. Sales of chips for servers rose 14.9%. Earnings rose 17.4%, to a record $3.5 billion from $3.0 billion. During the quarter, Intel bought back $4.0 billion of its shares. Because of fewer shares outstanding, earnings per share rose 25.0%, to $0.65 from $0.52. The company spent 15.0% of its revenue on research in the latest quarter, so it’s more profitable than it seems. Intel is a buy.

SARA LEE CORP. $18 (New York symbol SLE; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 590.7 million; Market cap: $10.6 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.saralee.com) has agreed to sell most of its North American coffee operations to J.M. Smucker Co. (New York symbol SJM) for $350 million. The deal should close by the end of 2011. This business, which accounts for 6% of Sara Lee’s total revenue, sells a variety of coffee, tea and related equipment to restaurants. Smucker has also agreed to license Sara Lee’s coffee-making technology for an additional $50 million over the next 10 years. To put these figures in context, Sara Lee earned $338 million, or $0.54 a share, in the fiscal year ended July 2, 2011. This sale is part of Sara Lee’s plan to break itself into two separate, publicly traded companies. One of these firms will consist of Sara Lee’s international coffee and tea businesses. The other will focus on its North American packaged meat operations. The company aims to complete the breakup in the first six months of 2012....

WEYERHAEUSER CO. $17 (New York symbol WY; Conservative Growth Portfolio, Resources sector; Shares outstanding: 538.7 million; Market cap: $9.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.5%; TSINetwork Rating: Extra Risk; www.weyerhaeuser.com) is a leading maker of forest products. It owns or leases over 21 million acres of timberland in the U.S. and Canada. Weyerhaeuser recently converted to a real estate investment trust (REIT). In connection with this change, it paid a special dividend in September 2010 that consisted of $560 million in cash and 324 million common shares. Many of Weyerhaeuser’s rivals operate as REITs, so this conversion will help it compete. REITs pay little or no income tax, and must pay 90% of their earnings to their shareholders as dividends. Right now, Weyerhaeuser pays a regular quarterly dividend of $0.15 a share, for a 3.5% annualized yield....

Low interest rates, high unemployment and new banking regulations continue to weigh on the stock prices of Wells Fargo and J.P. Morgan. However, both companies have brought in tighter lending policies. That lowers their risk and improves their long-term outlooks. WELLS FARGO & CO. $26 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 5.3 billion; Market cap: $137.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.8%; TSINetwork Rating: Average; www.wellsfargo.com) provides a wide variety of financial services through roughly 9,000 branches in the U.S. It also operates in Canada, the Caribbean and Central America. Warren Buffett’s Berkshire Hathaway holding company owns 7% of Wells Fargo’s shares. In the quarter ended September 30, 2011, Wells Fargo earned $4.1 billion, up 21.4% from $3.3 billion a year earlier. Earnings per share rose 20.0%, to $0.72 from $0.60, on more shares outstanding. More clients are repaying their loans on time. As a result, loan-loss provisions fell 47.4%, to $1.8 billion from $3.4 billion. That was the main reason for the earnings increase....

AMERICAN EXPRESS CO. $51 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.2 billion; Market cap: $61.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.4%; TSINetwork Rating: Average; www.americanexpress.com) earned $1.2 billion, or $1.03 a share, in the three months ended September 30, 2011, up 13.0% from $1.1 billion, or $0.90 a share, a year earlier. Loan-loss provisions fell 33.2%, to $249 million from $373 million. Amex’s cardholders have above-average credit scores and incomes, so they are less likely to fall behind on their payments. Revenue in the quarter rose 8.6%, to $7.6 billion from $7.0 billion, as cardholders increased their spending by 16%. American Express is still a hold.