price to sales ratio

AGILENT TECHNOLOGIES INC. $31 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 348.0 million; Market cap: $10.8 billion; Price-to-sales ratio: 2.3; No dividends paid; WSSF Rating: Average) makes testing systems that help manufacturers improve the quality of electronic products, such as cellphones and high-speed Internet equipment. It also makes measurement equipment for medical-research labs and drug developers. The company has completed its $1.5-billion purchase of California-based Varian Inc. Varian makes a wide range of medical and drug-testing equipment, such as mass spectrometers that detect and measure substances in blood and other patient samples. It also makes vacuum pumps and equipment that helps keep labs clean. Medical-equipment demand is much less cyclical than electronic-testing products. As well, clients must buy replenishable materials, like filters, for Varian’s products. That gives Agilent a new source of recurring revenue. So adding Varian cuts Agilent’s risk....

MTS SYSTEMS CORP. $29 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 16.4 million; Market cap: $475.6 million; Price-to-sales ratio: 1.3; Dividend yield: 2.1%; WSSF Rating: Average) earned $6.2 million, or $0.37 a share, in its second quarter, which ended April 3, 2010. That’s down 17.4% from $7.4 million, or $0.44 a share, a year earlier. The company recently cut 12% of its workforce. That should save it $21 million in fiscal 2010. Sales fell 12.4%, to $94.3 million from $107.7 million. MTS is seeing fewer testing-equipment orders from carmakers. However, demand for its sensors is improving. Still, the company needs a sustained economic recovery to spur its growth. MTS Systems is a hold.

PEPSICO INC. $61 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $97.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.2%; WSSF Rating: Above Average) will invest $2.5 billion in China over the next three years. To put this cost in perspective, PepsiCo earned $1.4 billion, or $0.89 a share, in the three months ended March 20, 2010. The company will use the money to build new soft-drink and snack-food plants. It will also spend more on research and advertising. These moves should help PepsiCo expand on its roughly 7% share of China’s soft-drink market. Rival Coca-Cola has about 15% of this market. PepsiCo is a buy....

SYMANTEC CORP. $14 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 798.9 million; Market cap: $11.2 billion; Price-to-sales ratio: 1.9; No dividends paid; WSSF Rating: Average) is buying the identity and authentication operations of VeriSign Inc. (Nasdaq symbol VRSN). This business makes Secure Sockets Layer (SSL) software certificates, which web site operators use to cut down on fraud and identitytheft. SSL certificates protect sensitive data, such as names and credit-card numbers, that customers send to web sites when they order products online. Over 2.3 million web sites use VeriSign’s certificates, which makes it the leader in this market. However, this business faces increasing competition from cheaper, though less secure, products. Still, Symantec sees VeriSign’s technology as a good fit with its existing data-security products. Symantec is paying $1.3 billion for these operations. To put this figure in context, Symantec earned $1.2 billion, or $1.51 a share, in its latest fiscal year, which ended April 2, 2010. The deal should close by September 30. The company expects the purchase to lower its earnings by $0.09 a share in its 2011 fiscal year. However, the new business will begin adding to its earnings by September 2011....

UNITED TECHNOLOGIES CORP. $66 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 933.1 million; Market cap: $61.6 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.6%; WSSF Rating: Above Average) has six main businesses: Pratt & Whitney makes aircraft engines (24% of 2009 revenue, 26% of earnings); Otis makes and services elevators (22%, 35%); Carrier makes heating and air-conditioning equipment (21%, 11%); Sikorsky makes helicopters (12%, 9%); Hamilton Sundstrand makes electronic aircraft controls (11%, 12%); and UTC Fire & Security sells burglar alarms and fire-protection services (10%; 7%). The U.S. government is the company’s biggest customer, and accounts for roughly 18% of its yearly revenue.

Recession hurt growth in 2009

Revenue rose 38.8%, from $42.3 billion in 2005 to $58.7 billion in 2008. However, revenue fell 9.8% in 2009, to $52.9 billion, as the recession cut demand for United Technologies’ aerospace and building-related products....

TIM HORTONS INC. $34 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 176.2 million; Market cap: $6.0 billion; Price-to-sales ratio: 2.7; Dividend yield: 1.5%; SI Rating: Average) is one of Canada’s largest fast-food restaurant chains. Its 3,015 outlets mainly serve coffee and donuts. The company also has 563 stores in the U.S. Franchisees operate 99.5% of Tim Hortons’ coffee-and-donut shops. The company gets about two-thirds of its revenue from supplying these outlets with coffee, baked goods and related items. (Rents and franchise fees account for the remaining third of its revenue.) Tim Hortons owns its own bakeries and warehouses. That gives it strong quality control, and lets it use its buying power to negotiate better ingredient costs. In 2009, Tim Hortons’ earnings rose 4.1%, to $296.4 million from $284.7 million in 2008. However, its 2008 earnings were depressed by a $15.4-million (after tax) charge for non-recurring costs, including writedowns....

SAPUTO INC. $29 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 207.2 million; Market cap: $6.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.0%; SI Rating: Average) is Canada’s largest producer of dairy products, including milk, butter and cheese. It also makes snack cakes and tarts. Aside from Saputo, the company’s main brands are Neilson, Stella and Dairyland. The company also has operations in the U.S., Argentina and Europe. In the three months ended December 31, 2009, Saputo’s earnings jumped 80.4%, to $104.3 million, or $0.50 a share. A year earlier, it earned $57.8 million, or $0.28 a share. That’s mainly because of contributions from its Neilson Dairy subsidiary, which Saputo bought from George Weston Ltd. (Toronto symbol WN) on December 1, 2008. The higher earnings came despite a 20% increase in milk prices over the past year. (Milk is the main raw material of Saputo’s dairy businesses, which provide 98% of its earnings.) The company has been able to offset most of these extra costs by raising its selling prices for cheese in Canada....

MAPLE LEAF FOODS INC. $9.37 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 136.8 million; Market cap: $1.3 billion; Price-to-sales ratio: 0.2; Dividend yield: 1.7%; SI Rating: Average) is Canada’s largest food-processing company. It mainly makes its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. Maple Leaf also owns 89.8% of Canada Bread. Maple Leaf’s strong brands and customer loyalty are helping it continue its recovery from a 2008 listeriosis outbreak at its Toronto meat-processing plant. These strengths should also help it pass along higher costs for pork and other ingredients to its customers over the next few months. In the three months ended March 31, 2010, Maple Leaf’s sales fell 6.9%, to $1.2 billion from $1.3 billion a year earlier. That’s mainly because of a 7.5% drop in sales of frozen baked goods. As well, Maple Leaf gets 23% of its sales from outside of Canada, and the higher Canadian dollar hurt the contributions of its foreign operations....

CANADA BREAD CO. LTD. $47 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.5%; SI Rating: Above Average) is Canada’s second-largest producer of baked goods, after Weston Bakery. It also makes specialty pastas and sauces. Its main brands include Dempster, Tenderflake and Olivieri. In the three months ended March 31, 2010, Canada Bread’s earnings fell 14.5% to $12.7 million, or $0.50 a share. It earned $14.9 million, or $0.59 a share, a year earlier. Without unusual items, mainly the cost of building a new bakery in Hamilton, Ontario, to replace three older Toronto bakeries, earnings per share would have fallen 8.3%, to $0.55 from $0.60. Sales fell 7.6%, to $381.9 million from $413.1 million, mainly because the company lost a major U.S. restaurant customer. That pushed down sales of frozen bagels and breads to restaurants by 16.9%. Sales of fresh baked goods fell 2.2%....

SUNCOR ENERGY INC. $33 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $52.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.2%; SI Rating: Average) became Canada’s largest oil company when it bought Petro-Canada (old symbol PCA) on August 1, 2009. Petro-Canada shareholders received 1.28 Suncor shares for each Petro-Canada share they held. Conventional oil and natural gas account for about 60% of the merged company’s production. The remaining 40% comes from oil sands. That includes its 12% stake in the massive Syncrude oil-sands development. Suncor also operates four refineries and over 1,800 retail gas stations under the Petro-Canada banner. The company wants to expand its oil sands operations until they account for about 70% of its production. To that end, it is selling some conventional and offshore properties that belonged to Petro-Canada. However, Suncor will probably keep Petro-Canada’s projects in Libya and Syria....