price to sales ratio

VERIGY LTD. $8.84 (Nasdaq symbol VRGY; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 60.0 million; Market cap: $530.4 million; Price-to-sales ratio: 1.1; No dividends paid; TSINetwork Rating: Extra Risk; www.verigy.com) designs and makes test systems that are used in the production of computer chips. The company recently agreed to acquire rival LTXCredence Corp. (Nasdaq symbol LTXC) in an all-stock deal. Verigy shareholders will own 56% of the combined company, which will keep the Verigy name and trading symbol. LTX investors will own the remaining 44%. The merger will let Verigy offer its customers a wider variety of testing systems, and expand its market share. As well, the company feels that combining manufacturing and other operations will save it $25 million a year....

CEDAR FAIR L.P. $15 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.3 million; Market cap: $829.5 million; Price-to-sales ratio: 0.9; Dividend yield: 2.1%; TSINetwork Rating: Average; www.cedarfair.com) owns and operates 11 amusement parks, six outdoor water parks, one indoor water park and five hotels. Cedar Fair recently refinanced some of the loans it used to fund its $1.24-billion purchase of five theme parks in 2006. Its long-term debt of $1.6 billion is still a high 1.9 times its market cap, but the partnership now has up to six years to repay it. Thanks to the new financing, Cedar Fair will pay a $0.25-a-unit special distribution in December 2010. It will also resume regular quarterly payments of $0.08 a unit. The annual rate of $0.32 yields 2.1%....

MTS SYSTEMS CORP. $37 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 15.3 million; Market cap: $566.1 million; Price-to-sales ratio: 1.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.mts.com) makes equipment and software that tests materials, machines and structures. This helps manufacturers lower their costs and improve the quality of their products. MTS recently paid $6.3 million, or $0.24 a share, to settle a patent-infringement lawsuit. Even so, the company’s earnings rose 6.8%, to $18.6 million, in the fiscal year ended October 2, 2010. In the prior year, MTS earned $17.4 million. Earnings per share rose 10.7%, to $1.14 from $1.03, on fewer shares outstanding....

Visa has been around since the 1960s, but only recently became a publicly traded company. eBay started up in 1995. Because of its unique business model, the company was able to avoid the implosion of the dot-com bubble in the early 2000s. We feel both companies offer an attractive way for investors to add to their Finance-sector holdings without exposing themselves to the mortgage-related problems that continue to depress bank stocks. Visa is suitable for all investors. eBay is more risky. VISA INC. $76 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 836.9 million; Market cap: $63.6 billion; Price-to-sales ratio: 7.9; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest retail electronic-payments network. The company processes credit, debit, prepaid and commercial payments under the Visa, Visa Electron, Interlink and PLUS brands. Visa’s credit cards are accepted around the world, and Visa/PLUS is one of the largest global automated-teller machine networks, offering cash access in more than 200 countries....

These four companies dominate their niche markets. That gives them protection from new competitors, and helps them stay profitable during economic downturns. Still, only three are buys right now. AGILENT TECHNOLOGIES INC. $36 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 346.0 million; Market cap: $12.5 billion; Price-to-sales ratio: 2.3; No dividends paid; TSINetwork Rating: Average; www.agilent.com) makes testing systems that help improve electronic products, such as cellphones and networking equipment. In May 2010, Agilent bought Varian Inc. for $1.5 billion. Varian makes a wide range of medical and drug-testing equipment, such as mass spectrometers that detect and measure substances in blood and other samples. Medical-equipment demand is less cyclical than testing products, so this move cuts Agilent’s risk....

SYSCO INC. $29 (New York symbol SYY; Conservative Growth Portfolio; Consumer sector; Shares outstanding: 585.1 million; Market cap: $17.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 3.6%; TSINetwork Rating: Average; www.sysco.com) distributes food and supplies to over 400,000 North American restaurants. Sysco’s revenue rose 7.4% in its first quarter, which ended October 2, 2010, to $9.8 billion from $9.1 billion a year earlier. That’s mainly due to rising prices for meat, dairy and seafood products, However, earnings per share fell 7.3%, to $0.51 from $0.55, because of higher taxes and employee pension costs. Even so, Sysco raised its quarterly dividend by 4.0%, to $0.26 from $0.25. The new annual rate of $1.04 yields 3.6%. Sysco is a hold.

WINDSTREAM CORP. $13 (Nasdaq symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 483.7 million; Market cap: $6.3 billion; Price-to-sales ratio: 1.7; Dividend yield: 7.7%; TSINetwork Rating: Average; www.windstream.com) will buy privately held Hosted Solutions LLC of Houston, Texas. This company hosts the web sites of over 600 businesses. The deal should close by the end of 2010. Windstream will pay $310 million for Hosted Solutions. To put that in perspective, Windstream earned $85.2 million, or $0.18 a share, in the latest quarter. However, the purchase will let Windstream sell its services to Hosted’s clients, and lower its reliance on traditional telephone operations. Windstream also expects the purchase to give it $52 million in tax breaks. Windstream is a hold.

Buckeye Partners and Cedar Fair are master limited partnerships (MLPs). Investors who hold their units have similar rights to ownership and dividends as common shareholders in regular corporations. MLPs pay out most of their income to investors. That lets them avoid federal and state income taxes. In Canada, MLPs are not eligible for RRSPs or RRIFs. So you’ll be subject to a 35% U.S. withholding tax on income from these investments. However, you can usually claim a non-refundable Canadian tax credit to offset that U.S. withholding tax....

AUTODESK INC. $35 (Nasdaq symbol ADSK; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 227.1 million; Market cap: $7.9 billion; Price-to-sales ratio: 4.3; No dividends paid; TSINetwork Rating: Average; www.autodesk.com) earned $0.32 a share in its third quarter, which ended October 31, 2010. That’s up 23.1% from $0.26 a year earlier. These figures exclude unusual costs, including expenses related to a restructuring that included cutting 10% of its workforce and merging facilities. Revenue rose 14.3%, to $476.7 million from $416.9 million. Manufacturing activity continues to increase after the recession. That’s spurring demand for Autodesk’s 3D design software. Autodesk is a buy.

More advertisers are targeting audiences that are more specific than those offered by traditional media, like newspapers and TV. That’s helping marketing specialists like Teradata and Harte-Hanks. This trend should spur both companies’ growth for years to come. TERADATA CORP. $41 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector: Shares outstanding: 167.5 million; Market cap: $6.9 billion; Price-to-sales ratio: 3.7; No dividends paid; TSINetwork Rating: Average; www.teradata.com) makes computers and software that capture and store large amounts of a business’s data. Teradata then analyzes this information and identifies buying habits and trends. Teradata is taking advantage of the weak economy to hire new salespeople. That’s helping it enter new markets and offer more technology and services to its existing clients. These efforts should add $70 million to Teradata’s 2010 sales. As well, it continues to spend around 7% of its revenue on research. Resulting new products should also fuel its growth....