price to sales ratio

MANITOBA TELECOM SERVICES INC. $32 (Toronto symbol MBT; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 79.3 million; Market cap: $2.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 4.1%; TSINetwork Rating: Average; www.mts.ca) recently completed the sale of its Allstream division to U.S.-based Zayo Group Holdings (New York symbol ZAYO). Prior to the deal, Allstream, which offers telephone, Internet and other communication services to businesses across Canada, supplied 40% of Manitoba Telecom’s revenue. The remaining 60% came from its MTS division, which has 1.3 million telephone and wireless customers in Manitoba. Manitoba Telecom received $420.0 million, net of transaction costs, for Allstream. The company will use $200.0 million to buy back roughly 8% of its outstanding shares. It will put a further $190.0 million to its total debt of $1.1 billion, which is equal to 44% of its market cap. The company will hang on to the remaining $30.0 million for now....

POTASH CORP. OF SASKATCHEWAN $21 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 836.5 million; Market cap: $17.6 billion; Price-to-sales ratio: 3.2; Dividend yield: 6.6%; TSINetwork Rating: Average; www.potashcorp.com) earned $1.52 a share in 2015, down 16.5% from $1.82 in 2014 (all amounts except share price and market cap in U.S. dollars). Revenue declined 11.7%, to $6.3 billion from $7.1 billion. High global potash inventories have cut demand, while record North American harvests have hurt crop prices, leaving farmers with less to spend on fertilizers. In response, Potash Corp. has suspended production at its $2.2-billion (Canadian) potash mine in Picadilly, New Brunswick, which only started up in early 2015. It also cut its dividend by 34.2%; the new annual rate of $1.00 U.S. a share yields 6.6%....

ROYAL BANK OF CANADA $66 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.5 billion; Market cap: $99.0 billion; Price-to-sales ratio: 2.9; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.rbc.com) is selling its RBC General Insurance subsidiary to Aviva Canada. This business mainly sells home and auto insurance. As part of the sale, Royal’s customers can also access all of Aviva’s insurance products for the next 15 years. The sale makes sense, as regulators prevent Canadian banks from selling insurance policies through their branches. That limits Royal’s ability to expand this business. However, the bank will continue to sell life and health insurance through separate offices and online....

BCE has outperformed the market during the current downturn: the stock has gained 7.9% since the start of 2016, compared to a 6.3% decline in the S&P/TSX Composite Index. The company continues to benefit from upgrades to its wireless and fibre-optic Internet and TV networks. These improvements have helped it attract new customers, and hang on to existing ones. More-reliable networks will also help BCE handle new competitors. That includes cable company Shaw Communications, which is buying wireless carrier Wind Mobile. The stock is trading just below its recent peak of $59 in October 2015. Even so, it’s still attractive in relation to BCE’s projected earnings. The company’s strong prospects give it plenty of room to keep raising its dividend....

SUNCOR ENERGY INC. $30 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.4 billion; Market cap: $42.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.9%; TSINetwork Rating: Average; www. suncor.com) is Canada’s largest oil producer. It also operates four refineries and 1,500 Petro-Canada gas stations, which supply 63% of its revenue. The company produced an average of 577,800 barrels of oil equivalent a day in 2015, up 8.0% from 534,900 barrels in 2014. Suncor’s oil sands projects accounted for 80% of its output. However, Suncor lost $2.0 billion, or $1.38 a share, mainly because it wrote down the value of its reserves in response to the oil-price drop. It also wrote down its operations in Libya and some of its offshore projects. But without unusual items, Suncor earned $1.01 a share. In 2014, it earned $4.6 billion, or $3.15 a share....

CAE INC. $14 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 269.9 million; Market cap: $3.8 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.1%; TSINetwork Rating: Average; www.cae.com) earned $59.4 million in its fiscal 2016 third quarter, which ended December 31, 2015....

IMPERIAL OIL LTD. $41 (Toronto symbol IMO; Conservative Growth and Income Portfolios, Shares outstanding: 847.6 million; Market cap: $34.8 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.4%; TSINetwork Rating: Average; www.imperialoil.ca) gets about 90% of its crude oil from its Alberta oil sands operations, including its 25% stake in the Syncrude project. In addition, it has conventional oil and natural gas operations, also in Western Canada, and owns stakes in projects off the coast of Atlantic Canada. Imperial also owns three refineries, petrochemical plants and 1,700 gas stations, which operate under the Esso banner....

In addition to BCE (see page 21), we also like these two other leading telcos. Both Telus and Manitoba Telecom are doing a good job attracting new customers, and hanging on to their current subscribers. Recent cost-cutting plans should also give them more cash to improve their networks and increase their dividends. TELUS CORP. $40 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 599.9 million; Market cap: $24.0 billion; Price-to-sales ratio: 1.9; Dividend yield: 4.4%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest wireless telephone service provider, after Rogers Communications, with 8.5 million subscribers. Wireless now supplies 56% of Telus’s revenue and 66% of its earnings. The remaining 44% of revenue and 34% of earnings come from its wireline division, which serves 1.5 million residential phone customers in B.C., Alberta and eastern Quebec. This business also has 1.6 million high-speed Internet users and 1.0 million TV clients....

PENGROWTH ENERGY CORP. $0.91 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 543.0 million; Market cap: $494.1 million; Price-to-sales ratio: 0.8; Dividend suspended in January 2016; TSINetwork Rating: Speculative; www.pengrowth.com) has suspended its $0.01-a-share quarterly dividend in response to the sharp decline in oil prices. It will also reduce its capital spending to between $60 million to $70 million in 2016, from $184 million in 2015. The company has also laid off workers, which should save it $25 million in 2016, and aims to sell $600 million of less important properties. It will probably put these funds toward its $2.1-billion debt, which is now a high 4.3 times its depressed market cap. Pengrowth is a hold.

POTASH CORP. OF SASKATCHEWAN $21 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 836.5 million; Market cap: $17.6 billion; Price-to-sales ratio: 3.2; Dividend yield: 6.6%; TSINetwork Rating: Average; www.potashcorp.com) earned $1.52 a share in 2015, down 16.5% from $1.82 in 2014 (all amounts except share price and market cap in U.S. dollars). Revenue declined 11.7%, to $6.3 billion from $7.1 billion. High global potash inventories have cut demand, while record North American harvests have hurt crop prices, leaving farmers with less to spend on fertilizers. In response, Potash Corp. has suspended production at its $2.2-billion (Canadian) potash mine in Picadilly, New Brunswick, which only started up in early 2015. It also cut its dividend by 34.2%; the new annual rate of $1.00 U.S. a share yields 6.6%....