price to sales ratio

CAE INC. $7.25 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 254.9 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.3; SI Rating: Average) makes flight simulators and trains commercial and military pilots. During its fiscal year ended March 31, 2009, CAE won $1.1 billion in military-related contracts, up 47% from the previous year. This is a new company record. CAE gets about 45% of its revenue and earnings from its military operations. This reduces its exposure to the airline industry, which has been struggling lately. CAE is a buy.

AGRIUM INC. $52 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 157 million; Market cap: $8.2 billion; Price-to-sales ratio: 0.8; SI Rating: Average) makes fertilizers from natural gas, mainly at five facilities in North America. It also owns 50% of a plant in Argentina. This business supplies 45% of its revenue, but 70% of its earnings. Most of Agrium’s remaining revenue and earnings comes from its 872 agricultural-products stores in the U.S., Argentina and Chile. Steady revenues from these retail outlets help cut company’s exposure to sometimes volatile fertilizer prices. Agrium earned $7 million, or $0.04 a share, before unusual items in the three months ended March 31, 2009. (all amounts except share price and market cap in U.S. dollars). It earned $195 million, or $1.23 a share a year earlier. The earnings drop was mainly due to unusually wet and cold weather in the U.S., which prompted farmers to delay spreading fertilizer and planting new crops....

PRECISION DRILLING TRUST, $5.84 (Toronto symbol PD.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 241.2 million; Market cap: $1.4 billion; Price-to-sales ratio: 0.7; SI Rating: Extra Risk) provides contract-drilling services in Canada and the United States through a fleet of 380 rigs. Precision is raising cash to pay down debt related to last December’s $2-billion purchase Grey Wolf Inc., which operates 123 rigs in the U.S. To this end, Precision sold $280 million worth of new units and notes to the Alberta Investment Management Corporation (AIMCo) in April 2009. AIMCo is a crown corporation that manages Alberta’s public-sector pension plans and other special funds. The deal gives AIMCo 15% of the trust. Precision plans to raise an additional $103 million by selling new units to its existing investors....

SHAWCOR LTD. $21 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 71.3 million; Market cap: $1.5 billion; Price-to-sales ratio: 1.1; SI Rating: Average) will pay a special dividend of $0.26 on May 29, 2009. It has also increased its regular quarterly dividend by 7.7%, to $0.07 a share from $0.065. The new annual rate of $0.28 yields 1.3%. In the first quarter of 2009, earnings rose 21.6%, to $0.45 a share from $0.37 a year earlier, partly due to cost controls. Revenue rose 4.8%, to $307.5 million from $293.4 million. ShawCor prices most of its pipeline-coating contracts in U.S. dollars, and the lower Canadian dollar added $26.9 million to the company’s revenue. ShawCor is a buy.

TORSTAR CORP. $5.32 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.9 million; Market cap: $419.7 million; Price-to-sales ratio: 0.3; SI Rating: Above Average) reported a first-quarter loss of $21.4 million, or $0.27 a share. However, that was largely caused by a $0.23-a-share charge related to employee layoffs and a change in Torstar’s senior management. The company lost $3 million, or $0.04 a share, a year earlier. Revenue fell 3.5%, to $339 million from $351.3 million. Torstar’s newspapers and web sites account for 70% of its revenue and 60% of its profits. This division lost $4.8 million in the latest quarter, compared with a profit of $12.4 million a year earlier. The recession and growing competition from the Internet have hurt its advertising revenue. However, profits at the Harlequin book-publishing division rose 19.1%, to $20.6 million from $17.3 million. As well, Torstar’s restructuring should lower its annual expenses by $37.9 million. Torstar is a buy....

TELUS INC. (Toronto symbols T $30 and T.A $29; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 318 million; Market cap: $9.5 billion; Price-to-sales ratio: 1.0; SI Rating: Above Average) hopes to improve its sales by bundling its phone and Internet services with satellite TV. Under a new deal with BCE INC. $24 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 780.6 million; Market cap: $18.7 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average), Telus will sell BCE’s satellite-TV service in Alberta and British Columbia under the Telus brand. BCE and Telus will share the proceeds from these sales. The deal also lets BCE keep selling satellite service in the same region under the “Bell TV” name. Telus is a buy. The cheaper, non-voting “A” shares are the better choice. BCE is also a buy.

METRO INC. $37 (Toronto symbol MRU.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 111.4 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.4; SI Rating: Average) operates roughly 660 grocery stores in Quebec and Ontario. Metro, Super C and Food Basics are some of its major banners. Metro also operates or supplies 270 drugstores, and owns about 23% of Quebec-based convenience-store operator Alimentation Couche-Tard Inc. (Toronto symbol ATD.B) To reduce its reliance on Quebec, which accounted for nearly all of its revenue, Metro bought A&P Canada for $1.7 billion in 2005. The chain consisted of 240 food stores in Ontario, mostly under the A&P and Dominion names.

Sales, earnings surge after purchase

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The original Dun & Bradstreet split itself into two separate companies in September 2000. From then till 2007, both stocks were terrific performers. Moody’s peaked at $76 in February 2007, while Dun & Bradstreet hit $108 in July 2007. Since then, the credit crisis, which took hold in 2008, has dampened their earnings and stock prices. As well, regulators are investigating the role rating agencies played in triggering the recession. The result could be greater restrictions on their operations, including the way they are paid. However, because rating firms provide independent, publicly available opinions, constitutional free-speech guarantees help protect them from shareholder lawsuits. We feel both firms will continue to profit from their well-established brands and large customer bases. Both are also cutting costs and expanding internationally....

FORD MOTOR CO. $4.28 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.8 billion; Market cap: $12 billion; Price-to-sales ratio: 0.1; WSSF Rating: Speculative) is in better shape than General Motors or Chrysler. The bankruptcy of one or the other would give Ford an opportunity to increase its market share, but it could force some auto-parts suppliers to go out of business. This would make it difficult for Ford to keep operating. The uncertainty surrounding GM and Chrysler has helped Ford’s sales in the past few weeks. As a result, the stock is up over fourfold from its November low of $1.01. Still, it will take several more years before Ford becomes profitable again. Ford is a hold, but only for highly aggressive investors.

APACHE CORP. $66 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 334.9 million; Market cap: $22.1 billion; Price-to-sales ratio: 1.8; WSSF Rating: Average) owns 52.5% of the Van Gogh offshore natural-gas field near western Australia. Apache had planned to begin production at Van Gogh later this year, but a fire on a key transport ship will probably delay this for a few months. Australia accounts for just 5% of Apache’s production, so this delay will only have a minor impact on the company’s earnings. Moreover, production at the Australian operations should rise this year now that Apache has repaired most of the damage caused by last June’s explosion at its Varanus Island natural-gas processing facility. Apache is a buy.