price to sales ratio

FORD MOTOR CO. $16 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.5 billion; Market cap: $56.0 billion; Price-to-sales ratio: 0.1; No dividends paid; TSINetwork Rating: Speculative; www.ford.com) is lowering its stake in Japanese carmaker Mazda Motor Corp. to 3.5% from 11.0%. This will let Ford and Mazda end a three-way joint venture with a Chinese carmaker. Ford will then be free to form new ventures in China. Ford will sell these shares through an auction process. It expects to receive $372 million. That’s equal to 20% of the $1.9 billion, or $0.48 a share, that Ford earned in its latest quarter. Ford is a buy.

INVACARE CORP. $27 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.4 million; Market cap: $874.8 million; Price-to-sales ratio: 0.5; Dividend yield: 0.2%; TSINetwork Rating: Average; www.invacare.com) makes wheelchairs, motorized scooters and other mobility and home-care products. The company is using a new $400-million line of credit to buy back $146 million of 9.75% notes. This will significantly lower its annual interest expense of roughly $23 million. Meanwhile, Invacare continues to benefit from a restructuring, which involved shifting production to low-cost countries and simplifying its product line. In the three months ended September 30, 2010, earnings before one-time items rose 9.0%, to $18.2 million from $16.7 million a year earlier. Earnings per share rose 7.7%, to $0.56 from $0.52, on more shares outstanding. Sales rose 0.8%, to $437.5 million from $434.0 million. If you exclude the impact of foreign-exchange rates, sales would have risen 2.4%....

WELLS FARGO & CO. $27 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 5.3 billion; Market cap: $143.1 billion; Price-to-sales ratio: 1.6; Dividend yield: 0.7%; TSINetwork Rating: Average; www.wellsfargo.com) has agreed to settle a lawsuit stemming from its 2008 purchase of troubled banking firm Wachovia Corp. Citigroup Inc. (New York symbol C) had originally agreed to buy Wachovia with the help of U.S. banking regulators. However, Wachovia accepted a higher offer from Wells Fargo. Citigroup claimed that Wachovia broke an exclusivity deal that prevented it from negotiating with other banks. Wells Fargo will now pay Citigroup $100 million. That’s small next to the $3.2 billion, or $0.60 a share, that Wells Fargo earned in the three months ended September 30, 2010....

DIEBOLD INC. $33 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.7 million; Market cap: $2.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.3%; TSINetwork Rating: Average; www.diebold.com) is a leading maker of automated teller machines (ATMs). It also makes safes, vaults and building-security systems. The recent financial crisis forced banks to conserve cash to meet stricter capital requirements. That left them with less to spend on ATMs. However, Diebold continues to cut its reliance on ATMs and other equipment by selling more services to its banking clients. Examples include managing ATM networks, processing customer transactions and upgrading software. Services now account for 55% of Diebold’s revenue.

Overseas focus helps cut risk

...

FORTIS INC. $32 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 173.7 million; Market cap: $5.6 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.fortis.ca) is the main supplier of electrical power in Newfoundland and Prince Edward Island. It also operates power plants in other parts of Canada, as well as the U.S., Belize and the Cayman Islands. Fortis’ other businesses include Terasen Inc., which distributes natural gas in B.C., and hotels in Atlantic Canada. Fortis earned $45 million in the three months ended September 30, 2010. That’s up 25.0% from $36 million a year earlier. Earnings per share rose 23.8%, to $0.26 from $0.21, on more shares outstanding. Earnings rose at the company’s power businesses. That helped offset a $5 million loss at Terasen, which makes most of its money in the winter, when customers need gas to heat their homes. Revenue rose 8.3%, to $720 million from $665 million. The company will spend $6.6 on capital upgrades over the next six years, including $1.1 billion in 2010. One of its projects is a new hydroelectric plant near the Waneta Dam south of Trail, B.C. Fortis will own 51% of this new facility, and the B.C. government will own the remaining 49%. BC Hydro, the provincial power authority, will buy most of the power from this plant when it begins operating in 2015. That cuts the risk of this investment....

CAE INC. $12 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 256.6 million; Market cap: $3.1 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.3%; TSINetwork Rating: Average; www.cae.com) makes military and airline flight simulators. It also runs commercial and military pilot-training schools in over 20 countries. In its second quarter, which ended September 30, 2010, CAE’s earnings rose 0.3%, to $40.0 million from $39.9 million a year earlier. Earnings per share were unchanged at $0.16. Revenue rose 6.1%, to $386.6 million from $364.5 million. Revenue from civilian clients rose 8%. CAE sold 16 flight simulators in the first half of fiscal 2011, and expects to sell around 25 for the full year. Revenue from military clients rose 4%....

TRANSALTA CORP. $21 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 220.3 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.5%; TSINetwork Rating: Average; www.transalta.com) operates over 85 unregulated power plants in Canada, the U.S. and Australia. Coal-fired plants generate 53% of TransAlta’s power. Natural gas accounts for 25%, and the remaining 22% comes from hydroelectric and renewable sources. Lower power prices in Alberta and the northwestern U.S. continue to weigh on TransAlta’s earnings. In the three months ended September 30, 2010, earnings fell 42.4%, to $38 million from $66 million a year earlier. Earnings per share fell 50.0%, to $0.17 from $0.34, on more shares outstanding. However, cash flow per share rose 7.1%, to $1.05 from $0.98. As well, revenue rose 5.1%, to $700 million from $666 million. These increases mainly came from the 21 power plants that TransAlta gained following its 2009 purchase of Canadian Hydro Developers Inc. The new plants also pushed up production by 9.8% in the latest quarter. As well, TransAlta’s plants operated at 91.0% of capacity, up from 83.9% a year earlier....

BOMBARDIER INC. (Toronto symbols BBD.A $4.97 and BBD.B $4.98; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $8.5 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.bombardier.com) is the world’s third-largest commercial-aircraft maker, behind Boeing and Airbus. Its aerospace division supplies roughly half of its revenue. The other half comes from its transportation division, which is the world’s largest maker of passenger railcars. In its 2011 second quarter, which ended July 31, 2010, the company earned $0.08 a share (all amounts except share prices and market cap in U.S. dollars). That’s down 27.2% from $0.11 a share, a year earlier. Revenue fell 17.5%, to $4.1 billion from $4.9 billion. The uncertain economy continues to hurt demand for Bombardier’s jets. It delivered 46 aircraft in the latest quarter. That’s down from 80 a year earlier. However, Bombardier received orders for 29 new planes (net of cancellations) in the latest quarter. A year ago, it had negative 38 net orders. The railcar division received $4.3 billion of new orders, up 43.3% from $3.0 billion a year earlier....

EMERA INC. $31 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 114.0 million; Market cap: $3.5 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.2%; TSINetwork Rating: Average; www.emera.com) gets 70% of its revenue from Nova Scotia Power Inc., which is Nova Scotia’s main electrical-power supplier. The rest comes from its investments in pipelines and power companies in the U.S. and Caribbean. Emera is expanding into other businesses and countries. For example, it recently paid $85 million U.S. for 38% of Barbados Light & Power Co. Ltd. As well, its $350-million Brunswick Pipeline, which pumps natural gas from Saint John, New Brunswick, to the U.S. border, began operating on July 16, 2009. Thanks to these new operations and a lower tax bill, Emera’s earnings rose 20.1%, to $44.8 million from $37.3 million a year earlier. Earnings per share rose 18.2%, to $0.39 from $0.33, on more shares outstanding. Revenue rose 10.1%, to $373.5 million from $339.1 million....

ATCO LTD. (Toronto symbols ACO.X (class I non-voting) $57 and ACO.Y (class II voting) $57; Income Portfolio, Utilities sector; Shares outstanding: 58.1 million; Market cap: $3.3 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.atco.com) is a holding company. Its main subsidiary is 52.2%-owned Canadian Utilities (see CANADIAN UTILITIES LTD. - Toronto symbols CU $50 and CU.X $50). ATCO recently grouped its businesses into three main divisions: Utilities (which distributes electricity and natural gas); Energy (which operates power plants); and Structures & Logistics (which sells services to construction companies and firms that explore for oil and natural gas). ATCO owns 75.5% of the Structures & Logistics division; Canadian Utilities owns the remaining 24.5%. The company earned $1.02 a share (or a total of $59.1 million) in the three months ended September 30, 2010. That’s up 10.9% from $0.92 a share (or $53.3 million) a year earlier. These figures exclude one-time items, such as losses on hedging contracts. Regulators let ATCO’s utilities businesses increase their rates. As well, rising oil and mineral prices have prompted mining and energy firms to increase exploration. That has lifted earnings at ATCO’s structures business. Revenue rose 11.2%, to $761.1 million from $684.3 million....