price to sales ratio

Loblaw and Metro have cut their costs and upgraded their inventory-management systems. The resulting savings are helping increase their profits, even with higher food costs and rising competition. Loblaw has a higher p/e ratio than Metro, but that reflects its wider geographic reach and expansion into non-food businesses, like clothing. Metro’s subordinate-voting shares also weigh on its p/e. LOBLAW COMPANIES LTD. $39 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 280.6 million; Market cap: $10.9 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer, with 1,000 company-owned and franchised stores. Loblaw continues to offer more private-label foods, including its President’s Choice products. It earns higher profits on these items than national brands. That’s part of the reason why Loblaw’s earnings rose 22.7% in the quarter ended March 26, 2011, to $162 million, or $0.58 a share. A year earlier, it earned $132 million, or $0.48....

ROYAL BANK OF CANADA $53 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $74.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.rbc.com) plans to enter the fast-growing market for exchange-traded funds (ETFs) in Canada. The bank will offer eight new ETFs that will mirror the performance of various corporate bond indexes. Unlike regular mutual funds, ETFs trade on stock exchanges. They also have lower management fees. This move will help Royal compete with large, U.S.-based investment firms, such as Vanguard Group Inc., which will soon start selling its ETFs to Canadian investors. Royal Bank is a buy.

POTASH CORP. OF SASKATCHEWAN $56 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 854.8 million; Market cap: $47.9 billion; Price-to-sales ratio: 6.4; Dividend yield: 0.5%; TSINetwork Rating: Average; www.potashcorp.com) sells its potash fertilizer to customers outside of North America through Canpotex, a marketing and exporting firm that is equally owned by Potash Corp. and rival producers AGRIUM INC. $85 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $13.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.1%; TSINetwork Rating: Average; www.agrium.com) and Mosaic Co. (New York symbol MOS). Canpotex recently agreed to sell potash to China for $470 U.S. a tonne. That’s 4.4% higher than the previous contract, and higher than the consensus forecast price of $450 U.S. a tonne. This contract should make it easier for Canpotex to demand similar prices from buyers in India and other countries. Potash Corp. is still a hold, but Agrium is a buy....

SNC-LAVALIN GROUP INC. $57 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.8 million; Market cap: $8.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.snclavalin.com) is buying the money-losing Candu nuclearreactor business of Atomic Energy of Canada Ltd. from the federal government. Reactor demand has suffered in the wake of the Japanese earthquake and tsunami, which damaged the Fukushima nuclear plant and allowed radiation to escape. Moreover, Germany recently announced plans to shut down all of its nuclear reactors by 2022. However, the $15-million price is just 20.3% of the $73.9 million, or $0.49 a share, that SNC earned in the three months ended March 31, 2011. As well, Candu is nearly finished refurbishing three reactors. Once they’re completed, SNC will cut Candu’s workforce of 2,000 by 40%. The resulting lower costs should make Candu more profitable....

THOMSON REUTERS CORP. $35 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 835.6 million; Market cap: $29.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.thomsonreuters.com) has two main divisions: Markets (which supplied 57% of its 2010 revenue and 48% of its earnings) sells financialinformation products to banks and other financial institutions. Professional (43%, 52%) sells specialized information to professionals in the legal, accounting, scientific and health-care fields. Merger sent results soaring The company’s revenue rose 96.8%, from $6.6 billion in 2006 to $13.1 billion in 2010. That’s mainly because it bought the U.K.-based Reuters news agency for $16 billion in cash and shares in 2008 (all amounts except share price and market cap in U.S. dollars)....

It pays to be skeptical of companies that mainly grow through acquisitions. That’s because many purchases come with hidden problems that can hurt the buyer’s future earnings. The buyer can also weaken its balance sheet with excessive debt if it borrows heavily to fund an acquisition. However, we like AT&T’s recent purchase of rival U.S. wireless carrier T-Mobile. The company’s extra wireless frequencies (or “spectrum”) are a hidden asset that will help AT&T handle rising demand for wireless data as more people access the Internet with mobile devices, like smartphones. As well, AT&T has a long history of integrating new businesses. That cuts the risk of this purchase. AT&T INC. $31 (New York symbol T; Conservative Growth & Income Portfolios, Utilities sector; Shares outstanding: 5.9 billion; Market cap: $182.9 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.5%; TSINetwork Rating: Average; www.att.com) gets 50% of its revenue from its wireless division, which has 97.5 million customers in the U.S. The wireline division, which supplies 48% of AT&T’s revenue, sells traditional landline phone services to 40.6 million customers in 22 states. It gets the remaining 2% by selling ads in phone directories....

PFIZER INC. $20 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 7.9 billion; Market cap: $158.0 billion; Price-to-sales ratio: 2.4; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.pfizer.com) is a major pharmaceutical maker. It also makes hospital and consumer products, and animal-health drugs. Pfizer sells its products in more than 150 countries; overseas sales account for about 57% of Pfizer’s total sales. Pfizer has a lot in common with AT&T. It, too, is facing falling sales in its older businesses, as patents on its top-selling drugs, such as Lipitor (for high cholesterol) expire. Like AT&T, Pfizer has used acquisitions to fuel its growth. That includes its big, $68-billion purchase of rival drug maker Wyeth in 2009, which gave it a number of promising new drugs, including Enbrel (psoriasis) and Zosyn (bacterial infections)....

On January 4, 2011, shareholders of the old Motorola Inc. received one share of Motorola Mobility for every eight Motorola shares they own. Following the distribution, the old Motorola changed its name to Motorola Solutions. It also consolidated its shares on a 1-for-7 basis, as many pension plans and institutional investors avoid stocks that trade below a certain price. Breakups like this help unlock hidden value, and generally lead to above-average results over time. We initially saw both stocks as buys, but we now prefer Motorola Solutions to Motorola Mobility. MOTOROLA SOLUTIONS INC. $46 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 339.5 million; Market cap: $15.6 billion; Price-to-sales ratio: 0.8; No dividends paid; TSINetwork Rating: Average; www.motorolasolutions.com) makes specialized equipment, such as bar-code scanners, and radios for police and fire vehicles....

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 convinced the U.S. Supreme Court to dismiss a class-action lawsuit that accused the retailer of paying female employees less than male workers. The ruling means that these claims can only proceed as individual cases, not as a single class-action lawsuit. That greatly reduces any possible damages that Wal-Mart might have to pay. Wal-Mart is a buy.

These three beverage makers face rising ingredient costs. However, all three have restructured their operations, and the resulting savings have put them in a better position to face these challenges. As well, their strong brands will help them pass higher costs on to their customers. Moreover, all three are expanding in fast-growing overseas markets. PEPSICO INC. $69 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $110.4 billion; Price-to-sales ratio: 1.8; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.pepsico.com) is the world’s second-largest soft-drink maker, after Coca-Cola. It also makes other products, such as Frito-Lay snack foods, Tropicana fruit juices and Quaker Oats. Last year, PepsiCo bought its two main bottling firms, Pepsi Bottling Group Inc. and PepsiAmericas Inc., for $7.8 billion in cash and shares. Starting in 2012, the company should save $550 million a year by merging plants and administrative functions....