price to sales ratio

TELUS CORP. (Toronto symbols T $31 and T.A $30; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 317.2 million; Market cap: $10.3 billion; Price-to-sales ratio: 1.0; SI Rating: Above Average) has 4.2 million phone customers and 2.1 million Internet subscribers in Alberta, British Columbia and parts of Quebec. Telus also operates a national wireless service with 6.1 million subscribers. Wireless provides roughly half of Telus’s revenue and earnings. This is a much higher percentage than other Canadian telephone companies. In 2008, Telus’s revenue rose 6.4%, to $9.65 billion from $9.1 billion in 2007. Wireless revenues rose 8.6%, thanks to the growing popularity of smartphones, which let users access the Internet and send and receive email. (Telus charges higher fees for these services than it does for regular voice calls.) Telus also successfully launched Koodo, a new brand aimed at first-time cellphone buyers, in March 2008. Revenue at Telus’s traditional phone division rose 4.4%, mainly on strong demand for high-speed Internet services. Telus’s 2008 earnings fell 10.3%, to $1.1 billion from $1.3 billion in the prior year. Earnings per share fell 6.6%, to $3.51 from $3.76, on fewer shares outstanding. The earnings drop was mainly because of lower taxes in 2007 thanks to one-time income-tax adjustments....

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $25 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Units outstanding: 227.6 million; Market cap: $5.7 billion; Price-to-sales ratio: 1.7; SI Rating: Above Average) has 3.1 million telephone customers in Atlantic Canada and rural parts of Ontario and Quebec. As part of the deal that created the trust in 2006, Bell Aliant transferred most of its wireless business to BCE, which owns 44% of Bell Aliant. Strong demand for high-speed Internet service is helping Bell Aliant offset the loss of regular phone customers. In 2008, revenue grew 0.9%, to $3.28 billion from $3.25 billion in 2007. However, earnings rose 6.9%, to $331.9 million from $310.4 million. Per-unit earnings rose just 1.5%, to $2.07 from $2.04, on more units outstanding. These figures include restructuring and related charges....

BCE INC. $24 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 803.1 million; Market cap: $19.3 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) has over 7.5 million telephone and Internet customers in Ontario and Quebec. It also has 6.5 million wireless subscribers across Canada. BCE continues to lose traditional phone customers, but these losses are slowing. Meanwhile, BCE’s cellphone business is growing strongly. The wireless division’s 2008 revenue rose 7.6%, and its subscriber base grew by 4.5%. Wireless accounts for 25% of BCE’s revenue and 43% of its profit. BCE hopes to spur sales of its wireless and other services, like satellite TV, with a new deal to buy “The Source”, a 756-store home-electronics chain in Canada. BCE already operates about 750 retail stores....

Canada’s telephone companies face growing competition from cable companies and Internet-based phone services. New entrants in the wireless industry will also push the established wireless companies to cut their rates. We feel these four telecom companies will continue to dominate their markets. Steady cash flow from their traditional phone businesses will help them invest in new growth areas, like wireless, and maintain their high dividend yields. BCE INC. $24 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 803.1 million; Market cap: $19.3 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) has over 7.5 million telephone and Internet customers in Ontario and Quebec. It also has 6.5 million wireless subscribers across Canada....

CANADIAN PACIFIC RAILWAY LTD. $36 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 167.7 million; Market cap: $6 billion; Price-to-sales ratio: 1.2; SI Rating: Above Average) ships freight over a 25,000-kilometre rail network between Montreal and Vancouver. In the United States, its subsidiaries connect its Canadian lines to major hubs in the midwest and northeast. Alliances with other railways extend CP’s reach to Mexico. CP made 29% of its 2008 revenues hauling shipping containers loaded with a variety of goods. Grain accounted for 20% of its revenues, followed by industrial products (16%), coal (13%), fertilizers (10%), automotive products (7%) and forest products (5%). CP’s many revenue sources cut its reliance on any single commodity or industry. Thanks largely to expanding trade with Asia, CP’s revenue rose 20.6%, from $3.9 billion in 2004 to $4.7 billion in 2007. Earnings rose 87.1%, from $359.5 million in 2004 to $672.8 million in 2007. Earnings per share rose 91.2%, from $2.26 to $4.32 on fewer shares outstanding....

CP’s shares soared to a high of $90 in July 2007. They have since fallen 60%, to $36. The stock was probably overpriced at $90 and 21 times earnings. But it now trades at 9.1 times this year’s forecast earnings, and it yields 2.8%. This well-established company is a mainstay of the Canadian economy. It’s a rare low-risk treat to be able to buy it at today’s bargain level. CANADIAN PACIFIC RAILWAY LTD. $36 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 167.7 million; Market cap: $6 billion; Price-to-sales ratio: 1.2; SI Rating: Above Average) ships freight over a 25,000-kilometre rail network between Montreal and Vancouver. In the United States, its subsidiaries connect its Canadian lines to major hubs in the midwest and northeast. Alliances with other railways extend CP’s reach to Mexico....

BHP BILLITON LTD. ADRs $37 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.8 billion; Market cap: $103.6 billion; Price-to-sales ratio: 1.7; WSSF Rating: Average) is the world’s largest mining company. It has major operations in Australia, Chile, South Africa and the U.K. The company took its current form through the 2001 merger of Australia’s BHP Ltd. and U.K.-based Billiton plc. BHP has nine main segments: iron ore, which generates 20% of BHP’s revenues, metallurgical coal, used for making steel (17%), petroleum (15%), thermal coal, used for power generation (15%), base metals (11%), aluminum (9%), manganese (7%), stainless steel (4%) and diamonds and titanium (2%).

Acquisitions help fuel strong growth

Thanks to acquisitions and higher mineral prices, BHP’s revenue jumped by 159.9%, from $22.9 billion in 2004 to $59.5 billion in 2008 (its fiscal year ends June 30)....

HARTE-HANKS INC. $5.29 (New York symbol HHS; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 63.3 million; Market cap: $334.9 million; Price-to-sales ratio: 0.3; WSSF Rating: Average) provides direct mail and other marketing services. It also publishes free “shopper” newspapers in Florida and California. These papers rely solely on advertising for revenue. Due to weaker advertising and marketing spending, particularly by banks and retailers, Harte-Hanks’s 2008 revenue fell 6.9%, to $1.1 billion from $1.2 billion in the previous year. Its earnings dropped 32.3%, to $62.7 million from $92.6 million. Earnings per share fell 22.2%, to $0.98 from $1.26, because of a 13% drop in the number of shares outstanding. Harte-Hanks is aggressively cutting its costs, including closing printing plants and call centres. These moves should lower its expenses by $28.6 million in 2009. Harte-Hanks is a buy.

MCDONALD’S CORP. $54 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.1 billion; Market cap: $59.4 billion; Price-to-sales ratio: 2.6; WSSF Rating: Above Average) plans to open 500 new restaurants in China over the next three years. It opened 146 restaurants in 2008, and now operates about 1,015 restaurants in China out of about 32,000 worldwide. Expanding in China makes sense for McDonald’s, despite the country’s slowing economy. Demand for low-cost fast food is still strong, and construction and labour costs are falling. McDonald’s is a buy. J.C. PENNEY CO., INC. $16 (New York symbol JCP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 222.2 million; Market cap: $3.6 billion; Price-to-sales ratio: 0.2; WSSF Rating: Average) earned $2.57 a share in its fiscal year ended January 31, 2009, down 47.9% from $4.93 in the prior year. Sales fell 6.9%, to $18.5 billion from $19.9 billion. Same-store sales fell 8.5%. The drop was largely the result of lower consumer demand for jewelery and home furnishings, although sales of women’s clothing and cosmetics held steady....

HEWLETT-PACKARD CO. $30 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.4 billion; Market cap: $72 billion; Price-to-sales ratio: 0.6; WSSF Rating: Above Average) is half way toward its goal of cutting its costs by $1 billion in its current fiscal year. In its first fiscal quarter, which ended January 31, 2009, its earnings were unchanged at $2.3 billion from a year earlier. Earnings per share rose 8.1%, to $0.93 from $0.86 on fewer shares outstanding. These figures exclude one-time items, including integration costs related to Hewlett’s $13.9-billion purchase of Electronic Data Systems in August 2008. Revenue rose 1.2%, to $28.8 billion from $28.5 billion. Slowing demand for new computers will likely cut Hewlett’s full-year revenue by 2% to 5%. However, its earnings should rise to $3.82 a share, and the stock trades at just 7.9 times that forecast. Hewlett-Packard is a buy.