price to sales ratio
WAL-MART STORES INC. $53 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.5 billion; Market cap: $185.5 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.walmart.com) has started streaming high-definition movies through its web site. Customers can either rent or buy these films. Demand for movie-streaming services is growing strongly. This new service will help Wal-Mart offset slowing sales of regular DVDs. Wal-Mart is a buy.
BROADRIDGE FINANCIAL SERVICES INC. $23 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 123.4 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.6%; TSINetwork Rating: Average; www.broadridge.com) has been chosen by Charles Schwab Corp. (Nasdaq symbol SCHW) to help operate a new online service that will let Schwab’s customers trade stocks and currencies in 12 foreign markets. Schwab plans to launch this service next year. Broadridge will provide the technology to process the currency trades, and handle accounting and reporting. Schwab is the world’s largest online brokerage firm. Broadridge could benefit further as Schwab expands its services for investing in international markets....
NCR CORP. $20 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 158.6 million; Market cap: $3.2 billion; Price-to-sales ratio: 0.7; No dividends paid; TSINetwork Rating: Average; www.ncr.com) has developed a new self-serve kiosk that will help immigrants to the U.S. fill out government forms. The machines will help users save time, and will be much cheaper than using an immigration consultant. ClearPath Inc., a private firm founded by former U.S. immigration officials, will supply the software for the kiosks. The U.S. government receives more than 100 million immigration forms each year, so these kiosks could see strong demand. The company will install the first five machines in stores that provide financial services to new immigrants in Houston, Texas....
UNITED TECHNOLOGIES CORP. $84 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 908.7 million; Market cap: $76.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.utc.com) has six main businesses: Pratt & Whitney makes aircraft engines (24% of 2010 revenue, 25% of profit); Otis makes and services elevators (21%, 32%); Carrier makes heating and air-conditioning equipment (21%, 14%); UTC Fire & Security sells burglar alarms and fire-protection services (12%, 9%); Sikorsky makes helicopters (12%, 8%); and Hamilton Sundstrand makes aircraft controls (10%, 12%). The U.S. government supplied 18.2% of United Technologies’ 2010 revenue, and is its biggest customer.
Top brands keep clients coming back
The company operates in cyclical industries. That adds to its risk. But it owns some of the top brands in its main markets, which helps it attract and retain customers. Moreover, many of its products, such as jet engines and elevators, need constant maintenance. The company now gets 40% of its revenue from ongoing sales of spare parts and services....
Pengrowth quickly became Canada’s largest oil and gas income trust after it was formed in 1989. As a trust, it paid out most of its cash flow to its unitholders. That left it with little to invest in exploration or growth projects. At the start of 2011, Pengrowth converted to a corporation in response to the federal government’s new tax on income-trust distributions, which came into effect on January 1 of this year. Unitholders received one common share for each unit they held. Now that it is a corporation, Pengrowth is using some of the cash from its conventional properties to expand into more risky areas, such as oil sands and shale gas. However, these projects have strong long-term potential, and their cash flows will help Pengrowth maintain its high dividend yield....
CGI GROUP INC. $23 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 264.6 million; Market cap: $6.1 billion; Price-to-sales ratio: 1.4; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) has gained 27.1% since we named it our “#1 Stock of the Year” for 2011. CGI is Canada’s largest provider of computer-outsourcing services. The company’s services can automate certain routine functions, such as accounting and buying supplies. That makes its clients more efficient. The company’s strong reputation continues to help it win new contracts....
When picking high dividend stocks, we continue to recommend that you look beyond yield (dividend rate divided by share price). Instead, focus on high-quality companies with long histories of rising payouts, such as these four utilities (including Canadian Utilities, see box on page 74). Their steady cash flows are helping them maintain or raise their dividends, and invest in new growth projects. FORTIS INC. $32 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 196.8 million; Market cap: $6.3 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.fortisinc.com) is the main supplier of electrical power in Newfoundland and Prince Edward Island. It also operates power plants in other parts of Canada, as well as the U.S., Belize and the Cayman Islands. In addition, Fortis operates hotels and other businesses in Canada. The company has been working to lower its reliance on Atlantic Canada. In May 2004, it bought regulated electrical utilities in Alberta and B.C. for $1.5 billion in cash and stock. In May 2007, it paid $3.7 billion for the regulated gas-distribution business of Terasen Inc. (now called FortisBC Energy), which has 940,000 customers in B.C. Fortis issued $1.15 billion of shares to help pay for this purchase....
GENNUM CORP. $7.09 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.6 million; Market cap: $252.4 million; Price-to-sales ratio: 1.8; Dividend yield: 2.0%; TSINetwork Rating: Average; www.gennum.com) makes equipment for TV broadcasters that stores, manipulates and transfers video signals. It also makes chips that make computer networks work more quickly. On April 6, 2011, Gennum acquired Nanotech Semiconductor Ltd. for $35.9 million (all amounts except share price and market cap in U.S. dollars). Based in Bristol, U.K., Nanotech designs chips for high-speed communication networks. In its 2011 second quarter, which ended May 31, 2011, Gennum earned $3.6 million, or $0.10 a share, down 12.5% from $4.1 million, or $0.12 a share, a year earlier. The drop was mainly due to the costs of the Nanotech acquisition. However, sales rose 8.7%, to $34.4 million from $31.7 million. That’s entirely due to the Nanotech purchase, which added $2.2 million to Gennum’s sales....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $57 and CU.X [class B voting] $57; Income Portfolio, Utilities sector; Shares outstanding: 125.9 million; Market cap: $7.2 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.canadian-utilities.com) earned $166 million in the three months ended March 31, 2011. That’s up 7.8% from $154 million a year earlier. Earnings per share rose 6.6%, to $1.30 from $1.22, on more shares outstanding. Revenue rose 6.6%, to $809 million from $759 million. Higher selling prices for electricity offset lower prices for natural-gas storage. The strong results prompted the company to raise its quarterly dividend by 6.6%, to $0.4025 a share from $0.3775. The new annual rate of $1.61 yields 2.8%. This was the 39th consecutive year that Canadian Utilities raised its dividend. Canadian Utilities is a buy. The more liquid class “A” non-voting shares are the better choice.
RESEARCH IN MOTION INC. $27 (Toronto symbol RIM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.1 million; Market cap: $14.2 billion; Price-to-sales ratio: 0.7; No dividends paid; TSINetwork Rating: Above Average; www.rim.com) has dropped by 50% since March 2011, and now trades at a low 5 times earnings. That’s mainly because the company has run into delays in launching new smartphones. As a result, RIM is losing market share, particularly in the consumer market, to the Apple iPhone and smartphones powered by Google’s Android operating system. RIM’s recent problems have drawn comparisons with one-time tech giant Nortel Networks, which went bankrupt in 2009. However, Nortel bought a number of telecom companies during the Internet boom of the early 2000s, when telecom was headed for a deep decline. In contrast, the smartphone industry continues to grow rapidly, particularly overseas. RIM now has 68 million users worldwide, up 24% from 55 million users in November 2010....