price to sales ratio

Canada’s big five banks have posted strong results since the 2007-2009 financial crisis. All five should have no trouble complying with new international regulations aimed at avoiding another crisis. As well, their strength is helping them buy other financial companies in the U.S. and other countries, often at bargain prices. 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: 3.8%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s largest bank, with total assets of $726.2 billion. In its 2010 fiscal year, which ended October 31, 2010, Royal earned $5.2 billion, or $3.46 a share. That’s up 35.4% from $3.9 billion, or $2.57 a share, in fiscal 2009....

CAE INC. $12 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 256.2 million; Market cap: $3.1 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.3%; TSINetwork Rating: Average; www.cae.com) is paying an undisclosed sum for the training operations of privately held CHC Helicopter. These assets include four flight simulators in Canada, Norway and the U.K. CAE will also train CHC’s pilots and maintenance engineers under a long-term contract. The deal will help CAE take advantage of rising demand for helicopter pilots, particularly as oil companies build more offshore drilling platforms. CAE is a buy.

ARBOR MEMORIAL SERVICES INC. $25 (Toronto symbol ABO.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 10.6 million; Market cap: $265.0 million; Price-to-sales ratio: 0.9; Dividend yield: 1.8%; TSINetwork Rating: Average; www.arbormemorial.com) earned $2.17 a share in the fiscal year ended October 31, 2010. That’s up 16.7% from $1.86 in 2009. Revenue rose 15.2%, to $281.8 million from $244.7 million. Arbor’s clients rushed to buy burial spaces and other funeral services before the new harmonized sales tax took effect in Ontario and B.C. on July 1, 2010. That was the main reason for the higher revenue and earnings. Arbor Memorial Services is a hold.

SHAWCOR LTD. $35 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.6 million; Market cap: $2.5 billion; Price-to-sales ratio: 2.4; Dividend yield: 0.9%; TSINetwork Rating: Average; www.shawcor.com) has won a contract from Chevron Corp. (New York symbol CVX) to coat pipelines that will pump oil from Chevron’s Jack/St. Malo offshore oilfield in the Gulf of Mexico. ShawCor will start work on this contract later this year, and complete the job in mid-2012. The deal is worth $40 million U.S. That’s just 4% of ShawCor’s annual revenue of over $1 billion (Canadian). However, it will probably lead to more pipeline-coating contracts from Chevron. ShawCor is a buy.

TRANSALTA CORP. $22 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 220.3 million; Market cap: $4.8 billion; Price-to-sales: ratio: 1.7; Dividend yield: 5.3%; TSINetwork Rating: Average; www.transalta.com) operates over 85 unregulated power plants in Canada, the U.S. and Australia. Ottawa recently announced plans to phase out coal-fired power plants by around 2025. That would hurt TransAlta, which uses coal to generate 55% of its power. Under the proposals, TransAlta would have to close its coal-fired plants when they reach 45 years of age or when their power-purchase contracts with provincial electricity regulators expire, whichever is later....

ENCANA CORP. $29 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.3 million; Market cap: $21.4 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.8%; TSINetwork Rating: Average; www.encana.com) continues to cut its capital spending in response to low natural-gas prices. Gas prices have suffered because new drilling technologies have made it easier to extract gas from shale rock and other unconventional sources. That has increased gas supplies. In 2010, Encana had planned to spend $5 billion to explore and develop its properties (all amounts except share price and market cap in U.S. dollars). However, it later cut that to $4.8 billion. The company will probably spend between $4.0 billion and $4.5 billion in 2011, but it can quickly raise spending and boost production if gas prices improve. Encana is a buy.

ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $61 and ACO.Y [class II voting] $60; Income Portfolio, Utilities sector; Shares outstanding: 58.1 million; Market cap: $3.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.atco.com) has won a new, three-year contract to provide emergency services to NATO forces at the Kandahar airfield in Afghanistan. These services include rescuing aircrew in the event of a crash or fire and operating ambulances. The company did not reveal the contract’s value. Operating in Afghanistan entails considerable risk. However, ATCO has a long history of building structures and providing support services to NATO and the Canadian military. ATCO is a buy. The cheaper, more liquid class I non-voting shares are the better choice....

EMERA INC. $33 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 114.0 million; Market cap: $3.8 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.9%; TSINetwork Rating: Average; www.emera.com) has completed its purchase of California Pacific Electric Co., which generates and distributes electricity to 47,000 customers in Lake Tahoe, California. Emera bought this business through a 50/50 partnership with Algonquin Power & Utilities Corp. (Toronto symbol AQN), which holds interests in 45 renewable-power facilities in Canada and the northeastern U.S., as well as 14 thermal-energy plants and 19 water-distribution and waste-water facilities. When the partners announced the purchase in April 2009, the price was $116 million U.S. However, the slow pace of regulatory approvals pushed up the final price to $132 million U.S....

SNC-LAVALIN GROUP INC. $60 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.2 million; Market cap: $9.1 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.1%; TSINetwork Rating: Average; www.snclavalin.com) is a leading Canadian engineering and construction company. SNC designs and builds large-scale public-works projects, such as roads, bridges, transit systems and water-treatment plants. It also builds mines, chemical plants and electrical-power systems. The company is working on projects in over 100 countries, but it gets about 55% of its revenue from Canada. Concession projects, such as roads and airports, are a growing part of SNC’s business. (Concessions are rights granted by governments to run public facilities.) Right now, concessions account for about 15% of SNC’s earnings.

407 is an underappreciated asset

...

ALCOA INC. $14 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.0 billion; Market cap: $14.0 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.9%; TSINetwork Rating: Average; www.alcoa.com) is one of the world’s largest aluminum producers. Its customers are mainly in the aerospace, automotive and construction industries. The company produced 12.0% more raw alumina ore in its latest quarter than a year ago. That helped offset a 5% drop in selling prices. That’s why Alcoa’s revenue rose 14.6% in the three months ended September 30, 2010, to $5.3 billion from $4.6 billion a year earlier. The higher revenue helped spur a 31.5% jump in Alcoa’s earnings, to $96 million from $73 million. Earnings per share rose 28.6%, to $0.09 from $0.07, on more shares outstanding. These figures exclude several unusual items, including repair costs after a flood damaged the company’s smelter in Spain....