Stock Buybacks by US Firms are Soaring

US firms are buying back their own stocks at a much higher rate than last year. After the corporate tax rate was slashed from 35% to 21%, American companies decided to put their cash hoardings to use by buying back stocks.

S&P estimates US firms are expected to spend $650 billion on share buybacks this year.

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Chart Source: Barron’s

Source: Share buybacks are soaring – is this a sign of market turmoil ahead?, Money Observer

The Top 10 British Dividend Stocks

The British equity market is one of the best markets for investors looking for dividend stocks. The UK has a strong dividend culture and compared to the 2% or so on the S&P 500, British firms tend to have much higher dividend yields. In addition, US investors do not have to worry about dividend withholding taxes (except REITs).

The top 10 dividend stocks by yield among the publicly traded British companies are shown in the chart below:

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Note: Data shown is as of April 20, 2018 and is based on the domestic market.

Source: Dividend Ranking

Disclosure: No Positions

On The Return of Foreign Oil Producers Year-to-Date

Oil prices have soared in the past year with some experts predicting $100 or $80 per barrel this year. The WTI Crude Oil closed at $71.01 for a rise of over 48% in one year. As oil prices rise so do the stocks of most oil producers.

Some of the exchange-listed foreign oil producers have soared by more than 25% so far this year. The table below shows the year-to-date price returns of foreign oil ADRs:

S.No.ADR NameTickerStock Price (as of May 18, 2018)Year-to-Date Change(%)Country
1Petroleo Brasileiro-PetrobrasPBR16.4857.24%Brazil
2EcopetrolEC21.8447.71%Colombia
3China Petroleum & ChemicalSNP102.0840.88%China
4China National Offshore Oil-CNOOCCEO179.1726.73%China
5StatoilSTO27.3226.70%Norway
6EniE39.0817.08%Italy
7PetroChinaPTR77.9416.77%China
8TOTALTOT63.9915.86%France
9BPBP47.1912.73%United Kingdom
10Royal Dutch Shell - B SharesRDS.B76.211.04%United Kingdom
11SasolSSL37.9310.76%South Africa
12Royal Dutch Shell - A SharesRDS.A73.338.87%United Kingdom
13YPFYPF20.07-12.31%Argentina
14Petrobras ArgentinaPZE11.26-16.63%Argentina
15Transportadora de Gas del SurTGS17.81-20.06%Argentina
16CGGCGG2.9-35.12%France

Note: Returns shown above are based on price only (excluding dividends).

A few observations:

  • The best performer in the above list Brazilian oil major Petrobras(PBR). After a major corruption scandal the stock fell from over $60 a few years and now is on the path to recovery.
  • Colombia’s EcoPetrol(EC) used to be another hi-flier that fell back to earth to trade at below $10 a share. Currently the stock on a nice upward trajectory and as tensions in middle east increase oil producers in other regions rise faster. Ecopetrol paid out a decent dividend earlier this year and could double from current levels by next year.
  • Compared to the performance of emerging market oil producers the developed market companies have not performed very well. For example, Italian oil producer Eni(E) is up 17% and France’s Total(TOT) has shot up by only 16% year-to-date.

For US oil and gas producers check out the following links:

Disclosure: Long EC, PBR

Performance of Argentina’s Merval Index: Charts

The equity market in Argentina performed very well last year and was one of the best performing frontier market. However this year has been a roller-coaster ride with the Merval Index falling to the 26,000 range from a peak of over 35,000 after the central bank raised interest rate to 40%, the third raise in eight days and the peso fell sharply. Since the plunge earlier this month, Argentinian stocks are recovering strongly after the country secured a credit line of  $30 billion from the IMF.

The 5-year return of the benchmark Merval Index:

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The 1-year return of the benchmark Merval Index:

Source: Yahoo Finance

The key takeaway for investors is that frontier markets are inherently unstable than developed and emerging markets and sudden downfalls can occur any time. The current volatility in the Argentina equity market caught even the supposedly smart and sophisticated large investors caught off-guard. While those investors can survive a wipeout most small retail investors may not be able to stomach huge losses. So extreme caution is warranted with investing in frontier stocks.

Related ETF:

  • The Global X MSCI Argentina ETF (ARGT)

Related article:

Disclosure: No Positions

Global Penetration of Electric Vehicles by Country

Sale of Electric Vehicles(EVs) is growing globally on an annual basis. The latest data show that global sales of EVs exceeded 2 million in 2016. Though this figure is tiny when compared to the annual vehicle fleet of over 1.2 billion it is still significant since it is growing rapidly.

The top country for EV penetration is China followed by the US. The chart below shows the global penetration of EVs by country:

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Source: The road ahead for electric vehicles,  Manning & Napier

From the above article:

On a broader scale, while the global penetration rate for EVs remains very low, the recent growth in EVs should not be ignored. The latest data from the International Energy Agency shows that global EV sales hit a new record in 2016, with China—the largest market for EVs—accounting for 45% of purchases. This was more than double the sales in the second largest market, the US, which accounted for 21%. After being virtually non-existent just five years ago, the number of EVs on the road surpassed 2 million in 2016 (see accompanying chart).

Related Stock:

  • Tesla, Inc. (TSLA)

Disclosure: No Positions