price to sales ratio
CANADA BREAD CO. LTD. $52 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 0.5%; SI Rating: Above Average) is Canada’s second-largest maker of baked goods after Weston Bakery. The company also makes specialty pastas and sauces. Its main brands include Dempster, Tenderflake and Olivieri. Like Maple Leaf, Canada Bread is developing new products that should help fuel its earnings. These include new versions of its main products that use whole grains and natural ingredients to promote better digestion. The company has also introduced low-sodium, high-fibre products that help lower cholesterol. Canada Bread is closing its three outdated bakeries in Toronto, including one housed in a building that’s over 100 years old. The company will shift their production into a new plant that it plans to build in southwestern Ontario. This new facility will be the biggest bakery in Canada. The company will choose a location for the new plant in the next month or two. Construction should begin later this year, with production starting in late 2011....
CANADIAN NATIONAL RAILWAY CO. $54 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 471.0 million; Market cap: $25.4 billion; Price-to-sales ratio: 3.3; Dividend yield: 2.0%; SI Rating: Above Average) is spending $100 million to build a new rail hub in Calgary. To put this figure in context, CN earned $1.5 billion, or $3.24 a share, in 2009. When this facility opens in 2013, it will make CN more efficient by speeding up the flow of trains in western Canada. CN Rail is a buy....
BOMBARDIER INC. (Toronto symbols BBD.A $5.40 and BBD.B $5.42; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market share: $9.2 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.9%; SI Rating: Extra Risk) delivered 302 aircraft in its latest fiscal year, which ended January 31, 2010. That’s down 13.5% from 349 in the prior year. Business-jet deliveries fell 25.1%, while commercial-aircraft deliveries rose 10.0%. The company estimates that both business and commercial aircraft deliveries will fall in fiscal 2011. However, demand should pick up in 2012. Meanwhile, Bombardier’s railcar division continues to win new orders as governments stimulate their economies with new investments in public-transit systems. Bombardier is a buy. The “B” shares are the better choice.
INDIGO BOOKS & MUSIC INC. $16 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.5 million; Market cap: $392.0 million; Price-to-sales ratio: 0.3; Dividend yield; 2.5%; SI Rating: Average) is Canada’s largest bookseller. The company operates 96 superstores under the Indigo and Chapters banners. It also has 151 mall-based stores under the Coles, Indigo, Indigospirit, SmithBooks and The Book Company banners. Indigo continues to expand its Internet businesses. The company already sells books, music and movies through its web site, and it is becoming a leader in the fast-growing field of electronic books. It recently merged its shortcovers.com web site with a new downloading service called Kobo (an anagram of “book”). Indigo’s $5-million contribution gave it a 57.7% stake in Kobo.
Kobo has strong long-term potential
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CAMPBELL SOUP CO. $33 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 342.9 million; Market cap: $11.3 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.3%; WSSF Rating: Above Average) is the world’s largest maker of canned soups. It also makes Prego canned pasta and sauces, Pepperidge Farm cookies and V8 vegetable juices. Like Heinz, Campbell aims to spur long-term growth by increasing sales in emerging markets, such as China and Russia. The company now gets 30% of its overall sales from international markets. Campbell is also doing a good job of developing new products. For example, it now sells low-sodium soups and baked goods made from whole grains. These premium products should appeal to health-conscious consumers. These foods also generate higher profit margins than Campbell’s regular products....
H.J. HEINZ CO. $44 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 315.6 million; Market cap: $13.9 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.8%; WSSF Rating: Above Average) is a leading maker of condiments. Its flagship product, Heinz ketchup, accounts for about 60% of U.S. ketchup sales. The company also makes frozen potatoes (under the Ore-Ida brand), pasta sauces (Classico) and diet foods (Weight Watchers). Heinz gets 60% of its sales from overseas markets, and the company continues to look to foreign markets for growth. That’s partly because rising sales in Mexico, India and Russia are helping it offset lower sales to U.S. restaurants. The falling U.S. dollar is also expanding the contribution of Heinz’s overseas sales. In its second quarter, which ended October 28, 2009, the company’s earnings fell 11.6%, to $0.76 a share from $0.86 a year earlier. However, if you disregard an $0.18-a-share foreign-currency hedging gain in the year-earlier quarter, earnings per share would have risen by 11.8%....
GENERAL MILLS INC. $72 (New York symbol GIS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 329.5 million; Market cap: $23.7 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.7%; WSSF Rating: Above Average) is the second-largest maker of breakfast cereals in the U.S., after Kellogg. The company’s major brands include Cheerios, Wheaties and Total. General Mills also makes Betty Crocker baking mixes, Green Giant canned and frozen vegetables, and Yoplait yogurt. In its second quarter, which ended November 29, 2009, General Mills earned $565.5 million. That’s up 49.5% from $378.2 million a year earlier. Earnings per share rose 52.3%, to $1.66 from $1.09, on fewer shares outstanding. Without unusual items, such as gains on commodity-hedging contracts, earnings per share would have risen 13.2%, to $1.54 from $1.36. Even though General Mills cut the prices of certain products, its sales rose 1.7%, to $4.1 billion from $4.0 billion....
KRAFT FOODS INC. $28 (New York symbol KFT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $42.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 4.1%; WSSF Rating: Above Average) is the world’s second-largest food company after Switzerland-based Nestle S.A. Its leading brands include Kraft cheese, Maxwell House coffee, Nabisco cookies and Oscar Meyer meats. Kraft is buying U.K.-based Cadbury plc (New York symbol CBY). Cadbury is a leading maker of confectioneries, including chocolate, candy and gum. Buying Cadbury will help Kraft sell more of its foods in developing countries. Moreover, chocolates and candies generate higher profit margins than Kraft’s packaged foods. Kraft will pay $19.4 billion in cash and stock. That’s 17.6% more than its initial offer of $16.5 billion. As well, Kraft raised the cash portion to 60% from 40%. The deal should close by mid-2010....
MCCORMICK & CO. INC. $38 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 130.9 million; Market cap: $5.0 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.7%; WSSF Rating: Average) is the world’s leading maker of spices, herbs, seasonings, flavourings, sauces and extracts. It sells its products to consumers, restaurants and industrial food processors. Its top brands include McCormick, Club House, Zatarain’s, Ducos and Schwartz. The company likes to increase its sales through acquisitions. In 2008, it paid $604 million for the Lawry’s and Adolph’s brands of marinades and seasonings. It also bought Canadian honey producer Billy Bee Honey Products Ltd. for $76.4 million. McCormick earned $75.1 million, or $0.57 a share, in its third quarter, which ended August 31, 2009. That’s up 9.5% from $68.6 million, or $0.52 a share, a year earlier. The company’s new businesses were the main reason for the gain....
CONAGRA FOODS INC. $23 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 443.4 million; Market cap: $10.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.5%; WSSF Rating: Above Average) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter and Orville Redenbacher popcorn. The company gets 64% of its revenue by selling its products to consumers, so the company benefits as more people eat at home because of the slow economy. That has helped offset slower sales to businesses, such as restaurants, which account for the remaining 36% of its revenue. ConAgra continues to benefit from its plan to lower its annual costs by $250 million. These measures mainly include selling slow-growing, low-margin brands. Falling ingredient prices are also helping increase earnings....