Research, Innovation Make Canon a Buy

Article Excerpt

CANON INC. ADR’s $55 (New York symbol CAJ; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Above average) is a leading maker of business machines such as copiers and printers (67% of revenue), cameras (21%) and optical products such as chips and specialty lenses for TV sets and medical equipment (12%). Markets outside of Japan account for 75% of its total sales. Each Canon ADR represents one Canon common share. (All per ADR data adjusted for a 3-for-2 stock split in August 2006.) Canon’s revenue rose from $22.0 billion in 2001 to $33.3 billion in 2004. In 2005, sales fell to $31.8 billion due to the rise in the Japanese Yen. Excluding the currency effect, sales grew 8.3% in 2005. Earnings per ADR grew from $0.95 to $2.48 in 2004, but fell to $2.45 in 2005. Excluding exchange rates, earnings in 2005 rose 11.9%. New products fueled sales growth Canon spends close to 8% of its sales of $25 per ADR on research,…

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