price to sales ratio
LINAMAR CORP. $15 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $970.5 million; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; TSINetwork Rating: Extra Risk; www.linamar.com) makes engines, transmissions and other precision-machined parts for the North American, European and Asian car and truck markets. The company has 39 plants in Canada, the U.S., Mexico, Germany, France, Hungary, South Korea and China. The company gets 90% of its revenue by selling auto parts. It gets the remaining 10% from industrial products, like its Skyjack self-propelled, scissor-type elevating work platforms. Linamar also makes parts for lawnmowers, wind turbines and drilling equipment.
Revenue rebounded after recession
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We still think investors will profit most — and with the least risk — by buying shares of well-established, dividend-paying stocks with strong business prospects. These are companies that have strong positions in healthy industries. They also have strong management that will make the right moves to remain competitive in a changing marketplace. Stocks like these give investors an additional measure of safety in today’s volatile markets. And the best ones offer an attractive combination of low p/e’s (the ratio of a stock’s price to its per-share earnings), steady or rising dividend yields (annual dividend divided by the share price) and promising growth prospects....
MCGRAW-HILL COMPANIES INC. $43 (New York symbol MHP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 301.3 million; Market cap: $13.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.3%; TSINetwork Rating: Average; www.mcgraw-hill.com) plans to 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....
ABB LTD. ADRs $18 (New York symbol ABB; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 2.3 billion; Market cap: $41.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.abb.com) is a leading maker of power technologies for utilities. The Switzerland-based company’s products include transformers, transmission systems and circuit breakers. ABB also makes automation systems and robotics. Clients in a wide range of industries use these systems to make their facilities more productive. ABB is taking advantage of the slow economy to make acquisitions. In January 2011, it paid $4.3 billion for Arkansas-based Baldor Electric Co., which makes electric motors and related products, such as conveyor belts, fans and pumps. Adding Baldor helped strengthen ABB’s North American operations. There is still plenty of room to grow in this region: right now, the Americas account for just 23% of ABB’s business. In the three months ended June 30, 2011, ABB’s revenue rose 27.8%, to $9.7 billion from $7.6 billion a year earlier. The gain was mainly due to Baldor’s contribution. If you exclude the positive impact of the low U.S. dollar on the company’s international operations, its revenue would have risen 17%. Earnings jumped 43.3%, to $893 million, or $0.39 per ADR (each American Depositary Receipt represents one ABB common share). A year earlier, the company earned $623 million, or $0.27 per ADR....
THE JONES GROUP INC. $10 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 85.9 million; Market cap: $859.0 million; Price-to-sales ratio: 0.3; Dividend yield: 2.0%; TSINetwork Rating: Average; www.jonesgroupinc.com) has completed its $350-million purchase of Kurt Geiger, a U.K.-based company that owns and operates 49 shoe stores in Europe. It also sells its products in upscale department stores. Without unusual items, including costs related to the Kurt Geiger purchase, Jones would have earned $27.2 million, or $0.33 a share, in the three months ended June 30, 2011. That’s down 27.5% from $37.5 million, or $0.45 a share, a year earlier. Sales rose 3.2%, to $887.4 million from $859.6 million. That’s because acquisitions offset slower sales of its jeanswear and other clothing. Jones Group is a hold....
MOTOROLA SOLUTIONS INC. $43 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 343.1 million; Market cap: $14.8 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.0%; TSINetwork Rating: Average; www.motorolasolutions.com) makes specialized equipment, such as bar-code scanners and radios for police and fire vehicles. It gets two-thirds of its revenue by selling its products to governments; The remaining third comes from businesses. The company’s earnings jumped 54.1% in the three months ended July 2, 2011, to $0.57 a share from $0.37 a year earlier. These figures exclude several unusual items, including costs related to the break-up of the old Motorola Inc. in January 2011. Revenue rose 6.1%, to $2.1 billion from $1.9 billion. Motorola Solutions now plans to pay quarterly dividends of $0.22 a share, for an annualized yield of 2.0%. It also aims to buy back $2 billion of its shares by the end of 2012. The company can easily afford this: it holds cash of $6.6 billion, or $19.39 a share. Its long-term debt is just $1.5 billion....
MCCORMICK & CO. INC. $46 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 132.3 million; Market cap: $6.1 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.7%; TSINetwork Rating: Average; www.mccormick.com) is the world’s leading maker of spices, herbs, seasonings, flavourings, sauces and extracts. It sells its products to consumers, restaurants and industrial food processors. Top brands include McCormick, Club House, Zatarain’s, Ducos and Schwartz. The company likes to grow by purchasing other spice makers. Contributions from these acquisitions are the main reason why McCormick’s revenue rose 22.8%, from $2.7 billion in 2006 to $3.3 billion in 2010 (the company’s fiscal year ends November 30). Earnings rose 54.1%, from $1.72 a share (or a total of $231.9 million) in 2006 to $2.65 a share (or $356.3 million) in 2010.
Acquisitions work for McCormick
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MANITOBA TELECOM SERVICES INC. $33 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 65.7 million; Market cap: $2.2 billion; Price-to-sales ratio: 1.2; Dividend yield: 5.2%; TSINetwork Rating: Average; www.mtsallstream.com) has over 1.3 million telephone and wireless customers in Manitoba. This business now accounts for 54% of the company’s revenue. The remaining 46% comes from its Allstream division, which provides integrated telephone, Internet and other communication services to businesses across Canada. In 2010, Manitoba Telecom cut its quarterly dividend by 34.6%, to $0.425 a share from $0.65. The stock now yields 5.2%. The company also let shareholders reinvest their dividends in new shares at a 3% discount. These moves freed up cash for investments in its wireless and Internet networks. As a result of these investments, the company was able to start up its new Manitoba wireless network in March 2011. This new network is letting Manitoba Telecom sell more smartphones, including the hugely popular Apple iPhone. Strong demand for these phones and wireless data helped push up the company’s wireless revenue by 8.9% in the second quarter of 2011. Average revenue per user rose 3.8% from a year earlier....
TELUS CORP. (Toronto symbols T $53 and T.A $51; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 352.9 million; Market cap: $18.7 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.telus.com) continues to expand its wireless business. As a result, it now gets 52% of its earnings from its 7.1 million wireless subscribers across Canada. The company gets the remaining 48% of its earnings from its traditional phone business, which has 3.7 million customers in B.C., Alberta and eastern Quebec. Telus also has 1.2 million Internet subscribers. The company continues to profit from rising demand for smartphones and wireless data. Smartphones now account for 42% of its wireless users under long-term contracts, up from 25% a year earlier....
BCE INC. $39 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 777.5 million; Market cap: $30.3 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.3%; TSINetwork Rating: Above Average; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. The company’s main subsidiary, Bell Canada, has 6.3 million residential and business customers in Ontario and Quebec. BCE sells wireless services to 7.3 million subscribers across Canada. As well, it has 2.1 million high-speed Internet customers and 2.0 million TV subscribers. Through Bell Media, the company owns the CTV Television Network (28 TV stations), 29 specialty channels and 33 radio stations. It also owns 45% of Bell Aliant....