price to sales ratio

CEDAR FAIR L.P. $7.84 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.1 million; Market cap: $432 million; Price-to-sales ratio: 0.4; WSSF Rating: Average) owns amusement parks, water parks and hotels in the U.S. and Canada. Cedar Fair pays quarterly distributions of $0.48 a unit, for a current yield of 24.5%. However, its $1.7- billion debt is a high 3.9 times its market cap. Cedar Fair will probably cut its distributions to free up cash for debt repayments. Even if it does, the lower rate would still yield around 10%. Meanwhile, attendance at Cedar Fair’s parks rose 3% in 2008, to 22.7 million visitors. However, inpark spending per guest fell 1.2%, which is why overall revenues rose just 0.9%, to $996.2 million from $987 million in 2007. Earnings improved to $0.10 a unit from a loss of $0.08. If you disregard a writedown of goodwill and other unusual items, per-unit earnings rose 94.6%, to $1.81 from $0.93....

BUCKEYE PARTNERS L.P. $37 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 48.4 million; Market cap: $1.8 billion; Price-to-sales ratio: 0.9; WSSF Rating: Average) operates over 8,700 kilometres of pipelines that pump gasoline, jet fuel and other petroleum products. In 2008, Buckeye’s earnings rose 17.9%, to $183.2 million from $155.4 million in 2007, largely as a result of acquisitions, including a natural gas storage facility in northern California. It issued new units to help pay for these purchases. Consequently, earnings per unit grew just 3.3%, to $3.13 from $3.03. Revenue rose 265.2%, to $1.9 billion from $519.3 billion. The slowing economy has hurt fuel demand in the past few months. However, higher pipeline rates have helped Buckeye offset the lower volume. This let Buckeye raise its quarterly distribution by 1.4%. The new annual rate of $3.55 yields 9.6%....

Buckeye and Cedar Fair operate in industries that are difficult to enter, which limits competition. This competitive advantage should continue to let both of them pay above-average distribution yields, despite the difficult economy. BUCKEYE PARTNERS L.P. $37 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 48.4 million; Market cap: $1.8 billion; Price-to-sales ratio: 0.9; WSSF Rating: Average) operates over 8,700 kilometres of pipelines that pump gasoline, jet fuel and other petroleum products. In 2008, Buckeye’s earnings rose 17.9%, to $183.2 million from $155.4 million in 2007, largely as a result of acquisitions, including a natural gas storage facility in northern California. It issued new units to help pay for these purchases. Consequently, earnings per unit grew just 3.3%, to $3.13 from $3.03. Revenue rose 265.2%, to $1.9 billion from $519.3 billion....

CONAGRA FOODS INC. $16 (New York symbol CAG, Income Portfolio, Consumer sector; Shares outstanding: 447.1 million; Market cap: $7.2 billion; Price-to-sales ratio: 0.5; WSSF Rating: Above Average) reports that a recent salmonella outbreak has lowered sales of its Peter Pan peanut butter. However, the source of the contamination, Peanut Corp. of America, is not one of its suppliers. In 2007, salmonella contamination at its own plant forced ConAgra to recall Peter Pan products. The company has launched a new advertising campaign to reassure consumers that its peanut butter is safe, and the related discount coupons should help improve Peter Pan’s sales. ConAgra also feels that new products, such as value-priced frozen meals, will help it reach its earnings target of $1.50 a share for the year ending May 31, 2009. The stock trades at 10.7 times that figure. ConAgra is a buy.

SHERWIN-WILLIAMS CO. $46 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 116.9 million; Market cap: $5.4 billion; Price-to-sales ratio: 0.7; WSSF Rating: Above Average) is North America’s largest paint producer. It also operates over 3,300 retail paint stores, which supply 60% of its sales. In 2008, Sherwin’s sales fell 0.3%, to $7.98 billion from $8.01 billion in the prior year. Price increases helped offset lower retail sales volumes. However, sales at its international division grew 7.8% in 2008, partly due to acquisitions of smaller paint producers in Europe and Asia. Overseas markets now account for 20% of Sherwin’s sales. Sherwin’s 2008 earnings dropped 22.5%, to $476.9 million from $615.6 million. The company bought back 6% of its shares in 2008, so earnings per share fell 14.9%, to $4.00 from $4.70. If you exclude writedowns of goodwill, per-share earnings fell 9.8%, to $4.31 from $4.78....

The bleak outlook for the U.S. housing industry continues to weigh on Sherwin-Williams and La-Z-Boy. Their cost-control plans and industry-leading brands should help them cope, but both will probably make little progress in the next few months. SHERWIN-WILLIAMS CO. $46 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 116.9 million; Market cap: $5.4 billion; Price-to-sales ratio: 0.7; WSSF Rating: Above Average) is North America’s largest paint producer. It also operates over 3,300 retail paint stores, which supply 60% of its sales. In 2008, Sherwin’s sales fell 0.3%, to $7.98 billion from $8.01 billion in the prior year. Price increases helped offset lower retail sales volumes. However, sales at its international division grew 7.8% in 2008, partly due to acquisitions of smaller paint producers in Europe and Asia. Overseas markets now account for 20% of Sherwin’s sales....

AT&T INC. $24 (New York symbol T; Income Portfolio, Utilities sector; Shares outstanding: 6 billion; Market cap: $144 billion; Price-to-sales ratio: 1.1; WSSF Rating: Average) plans to upgrade its Internet capacity, which will let it store and distribute more content. AT&T hopes these enhancements will help it attract more business customers, whose online payroll and accounting services require reliable data connections and lots of bandwidth. Increasing revenue from businesses also cuts AT&T’s reliance on consumers, who tend to buy fewer phones and services during recessions. This project will cost AT&T $1 billion in 2009, which is equal to 6% of its 2008 earnings of $16.7 billion, or $2.81 a share. AT&T is a buy.

WEYERHAEUSER CO. $26 (New York symbol WY; Conservative Growth Portfolio; Resources sector; Shares outstanding: 211.3 million; Market cap: $5.5 billion; Price-to-sales ratio: 0.7; WSSF Rating: Average) is looking to lower its annual expenses by $375 million including cutting its workforce by 3%, as weak housing markets have hurt demand for its lumber. In 2008, it lost $5.57 a share (or a total of $1.2 billion) compared with a profit of $3.60 a share ($790 million) in 2007. These figures include several unusual items, such as non-cash writedowns of goodwill and its real-estate holdings. Revenue fell 25.9%, to $8 billion from $10.8 billion. To conserve cash, Weyerhaeuser has cut its quarterly dividend by 58.3%, to $0.25 a share from $0.60. The new annual rate of $1.00 yields 3.8%. The savings will help it pay down its long-term debt of $5.2 billion, which is a high 95% of its market cap. Weyerhaeuser needs a rebound in the housing market to show significant growth, but the company’s vast timberlands are an under-appreciated asset....

APACHE CORP. $60 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 334.7 million; Market cap: $20.1 billion; Price-to-sales ratio: 1.7; WSSF Rating: Average) explores for and produces oil and natural gas, mostly in North America. Apache prefers to sell its oil at the current spot price, instead of locking in prices through hedging contracts. This strategy let it take full advantage of rising oil and natural-gas prices in the first half of 2008. Thanks to a 27.5% rise in its average oil prices, and a 25.5% jump in gas prices, Apache’s 2008 earnings rose 30.5%, to $3.8 billion from $2.9 billion in the prior year. Earnings per share climbed 29.6%, to $11.22 from $8.66. The 2008 earnings exclude a $3.6-billion writedown of Apache’s properties that was caused by falling energy prices in the second half of 2008. This is a non-cash accounting adjustment, and had no impact on the company’s cash balances. Apache’s revenue rose 23.9%, to $12.4 billion from $10 billion....

ENCANA CORP. $38 (New York symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.4 million; Market cap: $28.5 billion; Price-to-sales ratio: 0.7; WSSF Rating: Average) is a leading North American producer of natural gas and oil. Natural gas accounts for about 80% of EnCana’s production. EnCana focuses on what it calls “key resource plays”. These are unconventional properties, such as early-stage gas fields and oil-sands projects, that have much longer production lives than conventional properties. EnCana’s oil-sands operations consist of two 50- 50 joint ventures with ConocoPhillips — one operates the oil-sands properties, while the other processes the heavy, tar-like oil at refineries in Texas and Illinois. Oil-sands projects cost more to operate and face greater environmental opposition than regular oil fields, so this arrangement cuts EnCana’s risk....