price to sales ratio
FINNING INTERNATIONAL INC. $28 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.4 million; Market cap: $4.8 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.finning.com) will supply mining equipment and services to Thompson Creek Metals Company Inc. (Toronto symbol TCM) for its Mt. Milligan gold/copper mine in B.C. The company will begin fulfilling this contract in 2012. It did not reveal the value of this contract, but it could lead to more deals, as the mine’s reserves should last 22 years. Finning is a buy.
These companies on this page offer investors a way to diversify their Finance sector holdings beyond the big five banks. However, they are only for investors who can tolerate the added risk. DUNDEE CORP. $25 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 70.7 million; Market cap: $1.8 billion; Price-to-sales ratio: 2.3; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) is a holding company that invests in publicly listed and private companies in three main areas: wealth management, real estate and resources. The company recently sold its 48% stake (60% voting interest) in DundeeWealth Inc. to Bank of Nova Scotia (Toronto symbol BNS). DundeeWealth owns the Dynamic family of mutual funds....
HOME CAPITAL GROUP INC. $58 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.6 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. Home Capital continues to do a good job of identifying problem loans early, which makes it easier to adjust repayment terms. That’s why bad loans fell to 0.58% of its total loans in 2010 from 0.85% in 2009. The stock has gained 2,800.0% since we first recommended it in the July 1998 issue of Stock Pickers Digest, our newsletter that focuses on aggressive investments (we moved Home Capital to The Successful Investor in December 2007). Even so, we feel it still has lots of growth ahead. Home Capital Group is a buy.
IGM FINANCIAL INC. $49 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 259.7 million; Market cap: $12.7 billion; Price-to-sales ratio: 4.8; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.igmfinancial.com) had $134.1 billion of assets under management on March 31, 2011. That’s up 8.7% from $123.4 billion a year earlier. The rebounding stock market was the main reason for the gain. IGM’s fee income varies with the value of the mutual funds and other securities it manages, so the company’s revenue and earnings gain when the value of these assets rises. IGM Financial is a buy....
GREAT-WEST LIFECO INC. $27 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 948.5 million; Market cap: $25.6 billion; Price-to-sales ratio: 0.8; Dividend yield: 4.6%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) gets most of its revenue from selling life insurance and wealth-management services to individuals. It also sells catastrophe insurance to other property and casualty insurance companies. The company estimates that claims stemming from the recent earthquake and tsunami in Japan will cut its earnings by $75 million in the three months ended March 31, 2011. To put that in context, Great-West earned $1.9 billion, or $1.96 a share, in 2010. Great-West Lifeco is a buy.
ENCANA CORP. $32 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.3 million; Market cap: $23.6 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.4%; TSINetwork Rating: Average; www.encana.com) is one of North America’s largest natural-gas producers. The company prefers to focus on large unconventional reserves, including shale gas, which is natural gas that is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the natural gas. At current production rates, Encana’s proven reserves should last 12 years.
Encana has lagged behind Cenovus
Encana took its current form when the old EnCana Corp. split itself into two separate companies in December 2009. Since then, the new Encana has gained just 8%. The other company, Cenovus Energy Inc. (Toronto symbol CVE), which focuses on oil-sands projects, has jumped 38%....
MCKESSON CORP. $78 (New York symbol MCK; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 254.3 million; Market cap: $19.8 billion; Price-to-sales ratio: 0.2; Dividend yield: 0.9%; TSINetwork Rating: Average; www.mckesson.com) is the largest wholesale drug distributor in the U.S. and Canada. It also owns 49% of Mexico’s largest drug distributor. McKesson’s customers include 40,000 pharmacies, as well as doctor’s offices, hospitals and clinics. The company also supplies surgical tools and health and beauty products. McKesson continues to see strong growth from its technology-solutions division, which makes computers and software that help pharmacies and clinics manage their drug inventories. This division accounted for just 3% of McKesson’s sales, but around 25% of its earnings. In its 2011 third quarter, which ended December 31, 2010, McKesson’s earnings fell 52.5%, to $155 million, or $0.60 a share. It earned $326 million, or $1.19 a share, a year earlier. The drop was mainly due to a $189-million charge related to a class-action lawsuit that accused the company of inflating prescription-drug prices. If you exclude all unusual items, McKesson would have earned $1.22 a share in the latest quarter....
BAXTER INTERNATIONAL INC. $52 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 579.4 million; Market cap: $30.1 billion; Price-to-sales ratio: 2.4; Dividend yield: 2.4%; TSINetwork Rating: Average; www.baxter.com) has two divisions: Medical Products (which accounted for 56% of Baxter’s 2010 sales) makes intravenous pumps, syringes and kidney-dialysis equipment; and BioScience (44%), makes vaccines and drugs. The company makes a wide range of products, and overseas markets account for 60% of its sales. That cuts its risk. As well, Baxter gets about half of its sales from single-use medical products that continually need to be reordered. Baxter’s sales rose 2.2% in 2010, to $12.8 billion from $12.6 billion in 2009. However, earnings fell 35.6%, to $1.4 billion from $2.2 billion. Earnings per share fell 33.4%, to $2.39 from $3.59, on fewer shares outstanding....
C.R. BARD INC. $96 (New York symbol BCR; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 85.0 million; Market cap: $8.2 billion; Price-to-sales ratio: 3.1; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.crbard.com) makes medical devices in four main areas: vascular products, such as stents and catheters (28% of 2010 sales); oncology products that detect and treat various types of cancer (27%); urology products, such as drainage and incontinence devices (26%); and surgical tools (16%). Other medical products supply the remaining 3%. The company has several plans to spur its growth. For example, it aims to increase its international sales, which now account for 30% of its total sales. As well, Bard wants to launch more new products. It spent 6.8% of its sales on research in 2010. It aims to raise that to 7.5% in 2011....
INVACARE CORP. $30 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.4 million; Market cap: $972.0 million; Price-to-sales ratio: 0.6; Dividend yield: 0.2%; TSINetwork Rating: Average; www.invacare.com) makes home-care and mobility products, including wheelchairs and motorized scooters. Many of Invacare’s customers rely on certain Medicare and Medicaid programs to help them pay for motorized wheelchairs and other equipment. However, the future of this funding is uncertain in light of high government deficits. That uncertainty has weighed on Invacare’s sales in the past few years....