price to sales ratio

CANADIAN UTILITIES LTD. (Toronto symbols CU (class A non-voting) $50 and CU.X (class B voting) $50; Income Portfolio, Utilities sector; Shares outstanding: 125.8 million; Market cap: $6.3 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.canadian-utilities.com) distributes electricity and natural gas in Alberta. It also operates a total of 20 power plants in Canada, Australia, and the U.K., and sells its expertise to other firms. ATCO Ltd. (see ATCO LTD. - Toronto symbols ACO.X $57 and ACO.Y $57) owns 52.2% of the company. Canadian Utilities earned $82.0 million, or $0.66 a share, in the three months ended September 30, 2010. That’s up 6.9% from $76.7 million, or $0.61 a share, a year earlier. These figures exclude unusual items, mostly gains and losses on hedging contracts that Canadian Utilities uses to lock in natural-gas prices. Revenue rose 2.5% in quarter, to $550.7 million from $537.1 million. Regulatory rulings helped offset lower power prices in Alberta. The company will probably earn $3.31 a share in 2010. The stock trades at 15.1 times that estimate. That’s a reasonable p/e ratio in light of the steady cash flows it gets from its regulated operations....

In the past few years, Telus has invested heavily in its wireless networks. These upgrades have been costly, but they are paying off, particularly as more people use mobile devices to access the Internet. The shift to wireless has forced Telus to restructure its traditional phone business. One-time costs, including severance payments, have held back its earnings in the past two years. The company has completed most of these changes, so its earnings should start rising again. As well, its improving outlook is freeing up more cash for dividends. TELUS CORP. (Toronto symbols T $45 and T.A $43; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 320.7 million; Market cap: $14.4 billion; Price-to-sales ratio: 1.5; Dividend yield: 4.7%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest telephone company after BCE Inc. (Toronto symbol BCE, see Updating BCE Inc., Royal Bank of Canada and Pengrowth Energy Trust)....

In light of today’s low interest rates, we continue to recommend that income-seeking investors buy high-quality utility stocks instead of bonds. These five utilities’ dividend yields have come down lately, but that’s because their stock prices are rising, not because they are cutting their payouts. In fact, all five have been raising their dividends, and their steady cash flows will let them continue to do so. 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....

TRANSCANADA CORP. $37 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 693.0 million; Market cap: $25.6 billion; Price-to-sales ratio: 3.0; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.transcanada.com) has opened its $350-million U.S. Kibby wind farm in Maine. The wind-power industry has grown quickly in recent years, largely due to government subsidies. However, high budget deficits have spurred rising political opposition to these subsidies. Still, wind-power accounts for just 4% of TransCanada’s total generating capacity of 10,800 megawatts. TransCanada is a buy.

SNC-LAVALIN GROUP INC. $56 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.2 million; Market cap: $8.5 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.2%; TSINetwork Rating: Average; www.snclavalin.com) has paid $37 million for an undisclosed stake in a private company that is building a toll highway in India. This is a small deal for SNC, which earned $128.2 million, or $0.84 a share, in the three months ended September 30, 2010. However, SNC has expertise in this area through its 16.77% stake in Ontario’s 407 toll highway. That will help make the Indian project more profitable, and cut its risk. SNC-Lavalin is a buy.

GENNUM CORP. $7.00 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.4 million; Market cap: $247.8 million; Price-to-sales ratio: 2.0; Dividend yield: 2.0%; TSINetwork Rating: Average; www.gennum.com) makes equipment that stores, manipulates and transfers video signals. It also makes chips that improve the flow of data inside computer networks. In its third quarter, which ended August 31, 2010, Gennum earned $5.3 million, or $0.15 a share (all amounts except share price and market cap in U.S. dollars). That’s a big improvement over the $4.3 million, or $0.12 a share, it lost a year earlier. However, the year-earlier results included a $5.5- million restructuring charge related to a 10% cut that Gennum made to its workforce. Sales rose 60.8%, to $34.4 million from $21.4 million. Gennum mainly sells its products to broadcasters, and the improving economy is giving them more money to spend on new equipment....

The recession forced airlines to cut spending on new planes, flight simulators and pilot training. However, airlines will have to start replacing their aging fleets in the next few years. That should spur a surge in orders for Bombardier and CAE. 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....

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $50 and TPX.B $49; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 186.1 million; Market cap: $9.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.3%; TSINetwork Rating: Average; www.molsoncoors.com) continues to enjoy the benefits of its February 2005 merger with U.S. brewer Coors, and its 2008 combination of its U.S. operations with those of SABMiller to form a new joint venture called MillerCoors. The savings from these two deals are helping it compete with larger, multinational brewers. In the three months ended September 25, 2010, the company’s beer volumes fell 4.0%. However, earnings before merger costs and other unusual items rose 12.3%, to $239.1 million, or $1.28 a share (all amounts except share prices and market cap in U.S. dollars). A year earlier, Molson Coors earned $212.9 million, or $1.14 a share. Savings from the MillerCoors merger and other costs cuts totalled $58.9 million in the latest quarter. Molson Coors is a buy. The more liquid “B” shares are the better choice.

BANK OF NOVA SCOTIA $54 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $54.0 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.scotiabank.com) will get $47 million in earnings from its Mexican subsidiary in its current quarter. To put this in context, Bank of Nova Scotia earned $1.1 billion, or $0.98 a share, in the three months ended July 31, 2010. The Mexican operation’s latest earnings are down 10.2% from a year earlier, largely because it wrote down the value of certain securities it holds. Without these writedowns, its earnings would have risen 11%. Bank of Nova Scotia is a buy....

DUNDEE CORP. $17 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 73.8 million; Market cap: $1.2 billion; Price-to-sales ratio: 1.0; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) is a holding company with subsidiaries in three main areas: wealth management, real estate and resources. The company’s main asset is its 49% stake (61% voting interest) in DundeeWealth Inc. (Toronto symbol DW), which provides investment-management, securities-brokerage, financial-planning and investment-advisory services. DundeeWealth also owns the Dynamic family of mutual funds. In the three months ended September 30, 2010, Dundee- Wealth’s earnings jumped 104.7% from a year earlier. That’s mainly because rising stock markets have increased the value of its assets under management by 26.8%; DundeeWealth’s fee income varies with the value of these assets. Rising mutual-fund sales are also fuelling this subsidiary’s earnings. Dundee Corp. is a buy.