price to sales ratio

CHEVRON CORP. $72 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.0 billion; Market cap: $144.0 billion; Price-to-sales ratio: 0.8; Dividend yield: 4.0%; WSSF Rating: Above Average) is the second-largest integrated oil company in the U.S., after ExxonMobil. Chevron gets 95% of its earnings by producing oil and natural-gas. The remaining 5% comes from its refineries, petrochemical operations and gas stations. In response to the BP oil spill, the Obama administration has banned some drilling in the Gulf of Mexico. This forced Chevron to temporarily shut down an operational well and an exploratory well. However, these shutdowns will probably have little impact on Chevron. That’s because these wells represent a small fraction of its operations in the gulf. As well, the gulf accounts for just 9% of its overall production....

Kraft’s stock fell from $29 to below $26 after it launched its takeover bid for U.K.-based chocolate maker Cadbury in September 2009. That’s partly because prominent Kraft shareholders, including billionaire Warren Buffett, felt the price for Cadbury was too high. (Buffett later cut his stake in Kraft to 6% from 8%.) Buying Cadbury also increased Kraft’s exposure to Europe. Investors worry that high levels of government debt in Greece, Spain and other European countries will hurt Kraft’s overall earnings. These debt problems will probably have little impact on chocolate demand. However, concern about European debt is pushing down the euro. That means Kraft’s European profits translate into fewer U.S. dollars. Of course, growing by acquisition exposes Kraft to hidden risks. But Cadbury, which began making chocolate in the 1850s, owns some of the industry’s best-known brands. That makes it hard for competitors to cut into its market share, no matter how good their products. Cadbury’s growing presence in developing markets should also help expand sales of Kraft’s other foods....

YUM! BRANDS INC. $41 (New York symbol YUM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 467.4 million; Market cap: $19.2 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.1%; WSSF Rating: Average) was the first western fast-food company to enter China (in 1987), and is now the largest, with 3,000 restaurants in 650 Chinese cities. China now accounts for a third of Yum’s earnings, even though Chinese outlets are a fraction of the 37,000 restaurants that Yum now operates in more than 110 countries. The company hopes to repeat this success in India, where it has 160 Pizza Hut and 70 KFC outlets. It wants to expand the total to 1,000 by 2015....

In response to the BP oil spill in the Gulf of Mexico, regulators will probably require offshore drillers to install more equipment aimed at preventing future spills. These extra costs would hurt the profits of companies that are active in the Gulf, including Chevron and Apache. However, any new costs would have little impact on their long-term prospects. As well, the spill should make less-risky onshore producers more attractive. That would favour Encana, with its growing unconventional natural-gas reserves, and Cenovus, which focuses on the oil sands. CHEVRON CORP. $72 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.0 billion; Market cap: $144.0 billion; Price-to-sales ratio: 0.8; Dividend yield: 4.0%; WSSF Rating: Above Average) is the second-largest integrated oil company in the U.S., after ExxonMobil. Chevron gets 95% of its earnings by producing oil and natural-gas. The remaining 5% comes from its refineries, petrochemical operations and gas stations....

NVIDIA CORP. $12 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 572.2 million; Market cap: $6.9 billion; Price-to-sales ratio: 1.8; No dividends paid; WSSF Rating: Average) earned $137.6 million, or $0.23 a share, in its first quarter, which ended May 2, 2010. A year earlier, it lost $201.4 million, or $0.37 a share. However, the year-earlier loss included a $140.2-million charge related to its buyback of worthless stock options from its employees. Revenue jumped 50.8%, to $1.0 billion from $664.2 million. The chipmaker spent 21.8% of its revenue on research in the latest quarter. Inventories rose by 17% in the past three months, which suggests chip demand is slowing. However, Nvidia’s new focus on chips for mobile devices makes it less reliant on cyclical computer sales. Nvidia is a buy.

H.J. HEINZ CO. $45 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 318.1 million; Market cap: $14.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 4.0%; WSSF Rating: Above Average) is buying privately held Foodstar, a leading maker of soy sauces in China. Heinz will pay $165 million for Foodstar. That’s equal to 18% of the $914 million, or $2.87 a share, that Heinz earned in the fiscal year ended April 28, 2010. The company aims to close the deal in a few months. Heinz feels its marketing and distribution expertise will help Foodstar expand its share of China’s soy-sauce market, which is growing by 7% to 8% a year....

Sherwin-Williams and La-Z-Boy are doing a good job of cutting costs in response to weak housing markets, which are hurting paint and furniture demand. The resulting savings have boosted both companies’ earnings and share prices. However, their sales will likely remain weak for the next year or two. SHERWIN-WILLIAMS CO. $74 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 109.7 million; Market cap: $8.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.9%; WSSF Rating: Above Average) is North America’s largest paint producer. Sherwin also operates over 3,300 paint stores, which account for 60% of its sales. In the three months ended March 31, 2010, Sherwin’s earnings fell 12.5%, to $32.6 million from $37.3 million a year earlier. Sherwin is an aggressive buyer of its own stock. Due to fewer shares outstanding, earnings per share fell 6.3%, to $0.30 from $0.32....

BRIGGS & STRATTON CORP. $19 (New York symbol BGG; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 50.0 million; Market cap: $950.0 million; Price-to-sales ratio: 0.5; Dividend yield: 2.3%; WSSF Rating: Above Average) is the world’s largest lawnmower engine maker. This business accounts for 60% of Briggs’ revenue. It gets the remaining 40% by making other home and garden equipment, such as pressure washers and snow blowers. Briggs’ sales have steadily fallen since their 2005 peak. That’s because the recession and high unemployment cut demand for discretionary items like lawnmowers. In response, the company closed plants and cut its workforce....

ARCHER DANIELS MIDLAND CO. $27 (New York symbol ADM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 643.1 million; Market cap: $17.4 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.2%; WSSF Rating: Above Average) earned $421 million, or $0.65 a share, in its third quarter, which ended March 31, 2010. That’s a big gain over the $3 million, or nil per share, it earned a year earlier. However, a $132-million loss from currency-hedging contracts at its Mexican affiliate depressed the year-earlier earnings. (Archer Daniels owns 23% of Mexico-based Gruma, the world’s largest maker of corn flour and tortillas). Earnings at the oilseed processing business, which makes vegetable oils, rose 80.8%. The corn-processing division’s earnings jumped 112.2%. Overall sales rose 2.0% in the quarter, to $15.1 billion from $14.8 billion. These gains partly reflect rising demand for biofuels, such as ethanol. Biofuel demand should continue to improve with the global economy....

MOTOROLA INC. $7.30 (New York symbol MOT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.3 billion; Market cap: $16.8 billion; Price-to-sales ratio: 0.8; No dividends paid since January 2009; WSSF Rating: Average) has settled a three-year-long patent dispute with Research in Motion Ltd. (Nasdaq symbol RIMM). Research in Motion makes the popular BlackBerry smartphone. Research in Motion will pay Motorola an undisclosed sum, as well as regular royalties related to certain wireless technologies. The two companies also agreed to drop all outstanding lawsuits. Setting this dispute improves the prospects for Motorola’s cellphone business, which it plans to spin off as a separate company next year. However, this business is still losing money. It also faces increasing competition from other smartphones, including Apple’s iPhone and the BlackBerry....