price to sales ratio
RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; Units outstanding: 262.1 million; Market cap: $6.7 billion; Price-to-sales ratio: 7.2; Dividend yield: 5.6%; TSINetwork Rating: Average; www.riocan.com) stands to gain from the acquisition of the Zellers department-store chain by U.S.-based Target Corp. (New York symbol TGT). Target plans to convert 21 of the 34 Zellers stores in RioCan’s malls to the Target banner. It will make a decision on the rest later this year. If Target decides not to convert the remaining stores, they will operate as Zellers stores until their leases expire. The Target stores should help draw more shoppers to RioCan’s malls. As a result, it would receive higher revenue from leases that are based on a percentage of a tenant’s sales. More customer traffic would also make it easier to charge higher rents....
LINAMAR CORP. $20 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $1.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.6%; TSINetwork Rating: Extra Risk; www.linamar.com) makes transmission and driveline systems for carmakers in North America, Europe and Asia. Other products include engines and self-propelled, scissor-type elevating work platforms, which it sells under the Skyjack name. The stock fell to $2 in March 2009, as the credit crisis and recession cut new car sales. Linamar responded with a restructuring, including layoffs. That helped it profit as car demand rebounded. Linamar also attracted new clients as some of its weaker competitors went out of business. In the three months ended March 31, 2011, Linamar’s sales rose 32.2%, to $675.2 million from $510.7 million a year earlier. Most of the gain was due to a 27.8% sales increase at the powertrain/driveline division (which accounted for 90% total sales). Sales at the industrial products division (10% of sales) jumped 94.4%....
Maple Leaf Foods and its subsidiary Canada Bread are cutting costs so they can better compete with larger, U.S.-based food companies. Both companies are closing smaller plants and merging their operations with larger facilities. We like both, but Maple Leaf offers better value. MAPLE LEAF FOODS INC. $11 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 140.0 million; Market cap: $1.5 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.4%; TSINetwork Rating: Average; www.mapleleaf.ca) is Canada’s largest food-processing company. It mainly makes its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. Maple Leaf also owns 90.0% of Canada Bread. In the three months ended March 31, 2011, Maple Leaf earned $10.5 million. That’s down 47.0% from $19.9 million a year earlier. Earnings per share fell 42.9%, to $0.08 from $0.14, on more shares outstanding. Without one-time items, such as restructuring costs, earnings per share would have jumped 157.1%, to $0.18 from $0.07. Sales fell 3.7%, to $1.15 billion from $1.19 billion a year earlier, mostly because the company sold some operations. If you exclude contributions from these businesses, sales would have risen 3.7%....
BOMBARDIER INC. (Toronto symbols BBD.A $6.88 and BBD.B $6.89; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.8 billion; Market cap: $12.4 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.4%; TSINetwork Rating: Average; www.bombardier.com) will use robots to assemble the cockpit and fuselage of its new CSeries jets....
IMPERIAL OIL LTD. $46 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $39.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.0%; TSINetwork Rating: Average; www.imperialoil.ca) now estimates that its Kearl oil-sands project will cost $10.9 billion. That’s 36% higher than its earlier estimate of $8 billion. The company owns 71% of Kearl, and Exxon-Mobil Corp. (New York symbol XOM) owns the remaining 29%. ExxonMobil also owns 69.9% of Imperial’s shares. Imperial has changed the original design of this project to make it easier to expand in the future, and to respond to new environmental regulations. These changes were the main reason for the higher costs....
INDIGO BOOKS & MUSIC INC. $13 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.7 million; Market cap: $321.1 million; Price-to-sales ratio: 0.3; Dividend yield: 3.6%; TSINetwork Rating: Average; www.chapters.indigo.ca) saw its revenue rise 5.0% in its 2011 fiscal year, which ended April 2, 2011, to $1.0 billion from $968.9 million in the prior year. Even so, earnings fell 67.5%, to $11.3 million, or $0.45 a share, from $34.9 million, or $1.39 a share. The earnings drop is due to ongoing investments in its 51.4%-owned Kobo electronic-book (e-book) operations. This business sells e-book downloads and the Kobo e-book reading device. Indigo and its partners recently invested an additional $50 million in Kobo; Indigo’s share was $13 million. Kobo has attracted 3.6 million users from more than 100 countries in just over 15 months. However, it faces fierce competition from market leader Amazon.com (Nasdaq symbol AMZN), which is now selling more e-books than paper books....
ENBRIDGE INC. $31 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 774.3 million; Market cap: $24.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.enbridge.com) gets 80% of its revenue by operating pipelines that pump crude oil and natural gas from western Canada to eastern Canada and the U.S. The remaining 20% mainly comes from distributing natural gas to 2 million consumers in Ontario, Quebec and parts of New York State. The company is also developing a gas distribution system in New Brunswick.
Big investments should pay off
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H&R BLOCK INC. $16 (New York symbol HRB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 305.3 million; Market cap: $4.9 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.hrblock.com) is the world’s largest provider of income-tax-preparation services. H&R Block’s U.S. offices prepared 20.8 million tax returns between November 1, 2010 and April 18, 2011. That’s up 6.1% from 19.6 million for the same period a year earlier. Most of this growth came from a 26.8% jump in returns processed over the Internet. However, the average fee per return fell 3.3%. The stock has gained over 40% since the start of 2011, but it has fallen lately due to H&R Block’s involvement with subprime mortgages. Even though it shut down its Option One mortgage business in December 2007, holders of bonds backed by Option One’s mortgages now aim to force H&R Block to buy back these securities. The cost would likely be much higher than the company’s $4.9-billion market cap. Still, it will likely take years to settle these claims....
WESTERN UNION CO. $21 (New York symbol WU; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 632.3 million; Market cap: $13.3 billion; Price-to-sales ratio: 2.5; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.westernunion.com) provides money-transfer and foreign-exchange services in over 200 countries. The company earned $210.2 million in the three months ended March 31, 2011, up 1.1% from $207.9 million a year earlier. Western Union spent $525.2 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share rose 6.7%, to $0.32 from $0.30. Excluding costs related to the company’s restructuring, which mainly consisted of layoffs, it earned $0.35 in the latest quarter. Revenue rose 4.1%, to $1.3 billion from $1.2 billion. Growth was strong in the Asia Pacific region, the Americas and much of Europe....
T. ROWE PRICE GROUP INC. $62 (Nasdaq symbol TROW; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 259.8 million; Market cap: $16.1 billion; Price-to-sales ratio: 6.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.troweprice.com) sells mutual funds and wealth-management services. Rising stock markets have lifted the value of the assets that T. Rowe Price manages. On March 31, 2011, these assets were worth a record $509.9 billion, up from $482.0 billion at the end of 2010. The company’s fees vary with the value of these assets. That’s why its revenue rose 22.7% in the first three months of 2011, to $682.4 million from $556.2 million a year earlier. Earnings rose 27.2%, to $194.6 million, or $0.72 a share, from $153.0 million, or $0.57 a share....