price to sales ratio

RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; Units outstanding: 263.4 million; Market cap: $6.0 billion; Price-to-sales ratio: 6.0; Dividend yield: 5.2%; TSINetwork Rating: Average; www.riocan.com) has interests in 305 shopping malls in Canada, including 10 under development. RioCan also owns stakes in 35 malls in the U.S. through joint ventures. In the first six months of 2011, the trust bought or increased its stake in 16 properties. These purchases cost it a total of $230 million ($139 million in Canada and $91 million in the U.S.). That’s 25.7% more than its cash flow of $183 million, or $0.70 a unit, in the first half of 2011. However, these properties have grocery stores and other major retailers as anchor tenants. That cuts their risk. In the current quarter, RioCan plans to spend $245.9 million to buy or raise its interest in 11 more properties....

INDIGO BOOKS & MUSIC INC. $12 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 25.2 million; Market cap: $321.1 million; Price-to-sales ratio: 0.3; Dividend yield: 3.6%; TSINetwork Rating: Average; www.chapters.indigo.ca) owns 51.4% of Kobo Inc., which sells electronic books and e-book readers. U.S.-based bookseller Borders Group also owns 11% of Kobo. Borders recently declared bankruptcy, and is now in liquidation. It’s unclear if Indigo will buy this interest. Such a move would further weigh on the company’s earnings, which are already suffering because of its ongoing Kobo investments. As well, the closure of Borders’ bookstores cuts off an important distribution channel for the Kobo e-book reader....

HOME CAPITAL GROUP INC. $50 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.7 million; Market cap; $2.0 billion; Price-to-sales ratio: 3.8; Dividend yield: 1.2%; TSINetwork Rating: Average; www.homecapital.com) offers mortgages to borrowers who don’t meet the stricter criteria of larger, traditional lenders. Even though Home Capital caters to riskier borrowers, it has avoided the huge credit losses that have crippled many U.S. banks. That’s because it continues to do a good job of identifying problem loans early. It then uses this information to restructure a borrower’s repayment terms and adjust its lending policies. Home mortgages account for 90% of the company’s loan portfolio. The remaining 10% consists of other loans, such as non-residential mortgages and credit cards. Home Capital offers its loans through five retail branches in Toronto, Vancouver, Calgary, Montreal and Halifax....

Newell Rubbermaid dropped over 20%, from $18 to $14, in early June 2011, after it warned that slowing demand for its household goods, particularly in the U.S., are hurting its sales growth. We see this is a temporary setback, as Newell has a number of advantages that will help it rebound and thrive. For one, it has huge potential to expand in fast-growing markets, like Asia and Latin America (right now, it gets just 30% of its sales from outside North America). Moreover, its strong brands will give it an edge in attracting new customers as it expands into new markets. In addition, it continues to realize big savings from its multi-year restructuring plan, which has cut its manufacturing capacity by 60% since its 1999 purchase of Rubbermaid Inc. These savings are helping Newell deal with rising costs for plastic resins made from oil, a key raw material. As well, the lower costs are freeing up more cash that Newell can use to to develop and promote new, more-profitable products....

GOOGLE INC. $607 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 322.3 million; Market cap: $195.6 billion; Price-to-sales ratio: 6.0; No dividends paid; TSINetwork Rating: Above Average; www.google.com) operates the world’s leading Internet-search engine. The company’s search dominance helps it sell ads on its web sites and on sites owned by others. Ads now account for 97% of Google’s revenue. Google continues to expand rapidly. It now offers a range of other services, such as Gmail (email), YouTube (video sharing) and Google Chrome (web browser). These services help draw more users to Google’s sites. That lets it sell more ads and charge higher ad rates. The company recently launched two new services that should continue to fuel its growth: Its Android smartphone operating system will help it profit as more people access the Internet through mobile devices instead of computers. As well, its new Google+ social-networking site has already attracted over 20 million users since late June 2011. At this rate, it could soon rival market-leader Facebook, which has 750 million users....

These three industrial stocks continue to benefit from recent restructurings, which put them in a better position to weather the cyclical markets they serve. As well, lower costs will keep fuelling their earnings as demand continues to recover. Their stronger balance sheets will also let them expand by purchasing related companies. Moreover, all three trade at reasonable multiples to earnings, and have long histories of paying dividends. GENUINE PARTS CO. $53 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing sector; Shares outstanding: 157.3 million; Market cap: $8.3 billion; Price-to-sales ratio: 0.7; Dividend yield: 3.2%; TSINetwork Rating: Average; www.genpt.com) distributes auto parts to over 4,800...

FORD MOTOR CO. $12 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.8 billion; Market cap: $45.6 billion; Price-to-sales ratio: 0.4; No dividends paid since June 2006; TSINetwork Rating: Speculative; www.ford.com) sold 1.5 million cars and trucks in the three months ended June 30, 2011. That’s up 7.1% from 1.4 million a year earlier. The higher sales are largely due to the success of several new models. The company has 16.7% of the U.S. auto market, unchanged from a year earlier. In Europe, Ford’s market share rose to 8.4% from 7.9%. However, the extra costs to develop these new cars and trucks, along with higher prices for steel and plastics, caused Ford’s earnings to fall 7.7%, to $2.4 billion, or $0.59 a share. It earned $2.6 billion, or $0.61 a share, a year earlier. Revenue rose 13.4%, to $35.5 billion from $31.3 billion. The company expects its earnings in the second half of 2011 to be lower than the first half. Even so, Ford’s new cars should continue to increase its sales, particularly overseas....

GENERAL ELECTRIC CO. $18 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $190.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.ge.com) is seeing rising demand for consumer and business loans at GE Capital, its finance division. That’s helping the company offset slower growth at its industrial businesses, which make a variety of products, including jet engines, turbines and locomotives. In the three months ended June 30, 2011, GE Capital’s earnings jumped 117.0%, to $1.6 billion from $734 million a year earlier. That helped push up GE’s overall earnings by 10.5% in the quarter, to $3.5 billion, or $0.33 a share. A year earlier, it earned $3.2 billion, or $0.29 a share. Revenue fell 3.5%, to $35.6 billion from $36.9 billion. However, that’s partly because the company sold 51% of its NBC Universal entertainment business in February 2011. If you exclude the impact of this sale, revenue from GE’s ongoing businesses would have risen 7%....

CINTAS CORP. $33 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 137.6 million; Market cap: $4.5 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.cintas.com) gets 70% of its revenue by supplying uniforms to businesses. The remaining 30% comes from selling other business services and products, such as doormats, restroom supplies, document shredding, and fire alarms and extinguishers. It has over 800,000 clients, mainly in North America. The company’s revenue is improving with the overall economy. As well, Cintas has expanded its salesforce. That’s helping it win new clients and sell more services to its existing customers. As a result, Cintas’s revenue rose 7.4% in the fiscal year ended May 31, 2011, to $3.8 billion from $3.5 billion in fiscal 2010....

Unusual weather can cause big swings in gas and electricity demand. That can have a major impact on the earnings of Ameren and Alliant. Even so, their regulated businesses face little competition, and will continue to give them plenty of steady cash flows for dividends. Still, only one is a buy right now. AMEREN CORP. $30 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 241.1 million; Market cap: $7.2 billion; Price-to-sales ratio: 0.9; Dividend yield: 5.1%; TSINetwork Rating: Average; www.ameren.com) sells electricity and natural gas to 3.4 million customers in Illinois and Missouri. In the three months ended March 31, 2011, Ameren’s earnings fell 30.4%, to $71 million from $102 million a year earlier. Earnings per share fell 32.6%, to $0.29 from $0.43, on more shares outstanding. If you exclude unusual items, mainly gains on fuel-hedging contracts, earnings per share would have fallen 37.5%, to $0.25 from $0.40. The company had to repair storm damage, and paid higher coal prices; these were the main reasons for the lower earnings....