Argentinian Stocks Are On The Move

Posted by David Hunkar on 27 October 2013, 8:35 am

Argentina was a pariah of global investors up until last year due to many reasons including the nationalization of the country’s oil company YPF in May.However investors have become bullish on Argentina for the past year according to an article in FT beyondbrics. The benchmark Merval index has almost doubled this year.

The following table shows the YTD performance of Argentina ADRs:

S.No.	Company	Ticker	Closing Share Price on Oct 24, 2013	YTD Change	Industry
1	Edenor	EDN	$6.10	212.82%	Electricity
2	IRSA Inversiones y Representaciones	IRS	$12.17	74.61%	Real Estate Inv&Serv
3	Pampa Energia	PAM	$5.96	73.26%	Electricity
4	Grupo Financiero Galicia	GGAL	$10.79	62.99%	Banks
5	Telecom Argentina	TEO	$18.37	61.42%	Mobile Telecom.
6	BBVA Banco Frances	BFR	$8.04	59.84%	Banks
7	Banco Macro	BMA	$27.65	52.43%	Banks
8	YPF	YPF	$22.00	51.20%	Oil & Gas Producers
9	Nortel Invesora - Series B	NTL	$20.56	49.96%	Mobile Telecom.
10	Alto Palermo	APSA	$23.40	49.62%	Real Estate Inv&Serv
11	Transportadora de Gas del Sur	TGS	$2.53	43.75%	Oil & Gas Producers
12	Cresud	CRESY	$11.55	38.82%	Food Producers
13	Petrobras Argentina S.A.	PZE	$6.35	33.68%	Oil & Gas Producers
14	Tenaris	TS	$48.05	14.62%	Indust.Metals&Mining
15	Ternium	TX	$25.65	8.92%	Indust.Metals&Mining

Source: BNY Mellon

Related ETF:

Global X FTSE Argentina 20 ETF (ARGT)

Disclosure: Long BMA

Knowledge is Power: Sensex 21000, Piling into Stocks, African Banks Edition

Posted by David Hunkar on 26 October 2013, 6:14 pm

21,000, but who’s counting? (The Hindu Business Line)

Why U.S. Dollar Will Remain World’s Reserve Currency, Despite Political Brinkmanship (Charles Schwab)

Investors pile into Spanish recovery (EuroMoney)

Investors pile into Argentine stocks (beyondbrics)

Can the Goldilocks sweet spot continue? (Fidelity)

5 reasons to love dividends (Financial Post)

Africa’s Top 200 Banks 2013 (The Africa Report)

Missing Workers: The Missing Part of the Unemployment Story (EPI)

Going Defensive? 3 Things to Consider First (BlackRock)

The most successful British privatisations of all time (Trustnet)

World’s Safest Banks in Asia 2013 (Global Finance)

‘If you build it, they will come’ – Russia’s financial field of dreams (RT)

Europe Is Emerging Market as Germany to Greece Recover (Bloomberg)

Source: DB Research

All Aboard The North American Railroad Stocks

Posted by David Hunkar on 24 October 2013, 7:36 pm

North American railroad stocks are on a tear. The railroad industry is dominated by a handful of Class I railroads that share the most of the freight traffic in the continent. Some of the factors the growth of railroad companies in the past few years include the shale oil boom in the U.S., limited pipeline capacity, issues with building new pipelines, growing shipment of coal and other commodities, etc. Despite the recent Lac Magentic tragedy in Canada the transportation of crude by rail has not declined and as the U.S. economy recovers railroads can be estimated to carry more freight.

Some of the railroad stocks are already trading over $100/share. Canadian National, Canadian Pacific(CP) and Norfolk Southern(NSC) have announced strong Q3 earnings with Canadian National (CNI) rewarding shareholders with a 2 for 1 stock split.

The following chart shows the 5-year performance of Canadian National vs. Canadian Pacific:

Click to enlarge

The following chart shows the 5-year performance of major U.S. railroads trading on the markets:

Source: Yahoo Finance

The biggest North American railroads article in the Financial Times gives a neat introduction of the railroads.

Here are the major railroad stocks with their current dividend yields:

1.Company: Canadian National Railway Co (CNI)
Current Dividend Yield: 1.50%
Country: Canada

2.Company: Canadian Pacific Railway Ltd(CP)
Current Dividend Yield: 0.94%
Country: Canada

3.Company: CSX Corp (CSX)
Current Dividend Yield: 2.30%
Country: USA

4.Company: Kansas City Southern (KSU)
Current Dividend Yield: 0.73%
Country: USA

5.Company: Kansas City Southern(KSU)
Current Dividend Yield: 2.08%
Country: USA

6.Company: Norfolk Southern Corp(NSC)
Current Dividend Yield: 2.42%
Country: USA

Another major railroad BNSF is private and is owned by Berkshire Hathaway Inc.

Disclosure: Long CSX, NSC and CNI

European Utility Stocks Are Rebounding

Posted by David Hunkar on 22 October 2013, 10:41 pm

Utility stocks were once considered to be safe, slow and steady growers. For years they were the favorite of income investors as utilities generally had a high dividend yield relative to other sectors and for the most part they were dull and boring. With the deregulation of the industry the stability and steady growth was gone. This was true both in the U.S. and Europe. Utility stocks were no longer dependable for the steady income and growth and they started to act like stocks in other volatile sectors. A recent article in The Economist noted that the top 20 European utilities have lost about half a trillion Euros since their peak in 2008.

From the article:

The decline of Europe’s utilities has certainly been startling. At their peak in 2008, the top 20 energy utilities were worth roughly €1 trillion ($1.3 trillion). Now they are worth less than half that (see chart 1). Since September 2008, utilities have been the worst-performing sector in the Morgan Stanley index of global share prices. In 2008 the top ten European utilities all had credit ratings of A or better. Now only five do.

Click to enlarge

As the chart shows above, European utilities are a long way from reaching the 2008 peak again. Though the overall equity markets have rebounded strongly in the five years, this sector went nowhere but down until last year. Now the sector is rebounding although at a slower pace than say the banking sector.

On the problems facing European utilities, The Economist article noted the following:

Two influences from outside Europe added to the problems. The first was the Fukushima nuclear disaster in Japan. This panicked the government of Angela Merkel into ordering the immediate closure of eight of Germany’s nuclear-power plants and a phase-out of the other nine by 2022. The abruptness of the change added to the utilities’ woes, though many of the plants were scheduled for closure anyway.

The other influence was the shale-gas bonanza in America. This displaced to Europe coal that had previously been burned in America, pushing European coal prices down relative to gas prices. At the same time, carbon prices crashed because there were too many permits to emit carbon in Europe’s emissions-trading system and the recession cut demand for them. This has reduced the penalties for burning coal, kept profit margins at coal-fired power plants healthy and slashed them for gas-fired plants. Gérard Mestrallet, chief executive of GDF Suez, the world’s largest electricity producer, says 30GW of gas-fired capacity has been mothballed in Europe since the peak, including brand-new plants. The increase in coal-burning pushed German carbon emissions up in 2012-13, the opposite of what was supposed to happen.

Source: European utilities – How to lose half a trillion euros, The Economist

The STOXX® Europe 600 Utilities Index composed of 26 of the major utilities in Europe is showing signs of recovery. In the past 5 years the index is down over 19% in Euro price terms. However the 2-year and year-to-date returns are over 2% and 7% respectively.

Investors looking to gain exposure to European utilities can consider some of them at current levels. Ten such companies are listed below with their current dividend yields:

1. Company:Electricite de France SA (ECIFY)
Current Dividend Yield: 4.64%
Country: France

2.Company:National Grid PLC (NGG)
Current Dividend Yield: 5.11%
Country: UK

3. Company:Edp Energias De Portugal SA (EDPFY)
Current Dividend Yield: 4.25%
Country: Portugal

4.Company: E.ON SE (EONGY)
Current Dividend Yield: 5.67%
Country: Germany

5. Company: RWE AG (RWEOY)
Current Dividend Yield: 7.01%
Country: Germany

6. Company: Enel SpA (ENLAY)
Current Dividend Yield: 4.45%
Country: Italy

7. Company: Fortum Oyj (FOJCY)
Current Dividend Yield: 5.69%
Country: Finland

8.Company:SSE PLC (SSEZY)
Current Dividend Yield: 5.65%
Country: UK

9. Company: Verbund AG (OEZVY)
Current Dividend Yield: 3.23%
Country: Austria

10.Company: Gas Natural SDG SA (GASNY)
Current Dividend Yield: 4.81%
Country: Spain

Note: Dividend yields noted are as of Oct 22, 2013. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: Long EONGY, RWEOY