A Review of Bloomberg BusinessWeek 50

Posted by David Hunkar on 23 February 2013, 1:05 am

Bloomberg BusinessWeek recently published its annual ranking of the top 50 U.S. companies. From the article:

The Bloomberg Businessweek 50 ranks companies on how well they’ve done and how well analysts expect them to do. Half of the ranking is based on past performance: their stocks’ risk-adjusted returns over one and five years. The other half is based on outlook: analysts’ recommendations and forecasts for earnings growth. Companies at the top of the list have both strong track records and high expectations from Wall Street for growth ahead.

Here is the chart showing the BBW50 for 2013:

Click to enlarge

Source: Breaking Down the BBW50, Bloomberg BusinessWeek

A cool interactive chart can be found here.

The top 3 firms in terms of revenues are Apple(APPL), McKesson(MCK) and CVS CareMark(CVS) in descending order. However the top 3 firms based on market caps are Apple(APPL), Amazon(AMZN) and Comcase(CMCSA). In terms of Earnings Per Share the top 3 firms are Apple(APPL), Priceline.com(PCLN) and Mastercard(MA).

Five interesting names investors can consider for further research are:

1.Company: Airgas Inc (ARG)
Current Dividend Yield: 1.66%
Sector: Chemical Manufacturing

2.Company: Mastercard(MA)
Current Dividend Yield: 0.46%
Sector: Consumer Financial Services

3.Company: McKesson(MCK)
Current Dividend Yield: 0.78%
Sector: Biotechnology & Drugs

4.Company: Union Pacific Corp (UNP)
Current Dividend Yield: 2.06%
Sector: Railroads

5.Company:Ecolab Inc (ECL)
Current Dividend Yield: 1.24%
Sector: Personal & Household Products

Note: Dividend yields noted are as of Feb 22, 2013

Disclosure: No Positions

Knowledge is Power: Fossil Fuel Subsidy, Asia Growth, Robot Revolution Edition

Posted by David Hunkar on 21 February 2013, 7:15 pm

Why the free market fundamentalists think 2013 will be the best year ever (The Guardian)

Fossil fuel subsidies: billions up in smoke? (OECD Insights)

Why US winks at illegal migration (The Hindu Business Line)

The 40 most unusual economic indicators (Financial Post)

Gold stocks’ time to shine (Canadian Business)

Fired America (Economic Populist)

HSBC: Asia’s ‘worrying’ debt-led growth (Beyond Brics)

Why the Canadian dollar’s decline isn’t over yet (The Globe and Mail)

Investing in the Robot Revolution: Part 1 (AllianceBernstein blog)

Investing in the Robot Revolution: Part 2 (AllianceBernstein blog)

War Memorial, Kuala Lumpur, Malaysia

S&P 500 vs. FTSE 100 Returns

Posted by David Hunkar on 21 February 2013, 8:08 am

Reinvestment of dividends can enhance the return of an equity investment. Instead of simply focusing on price returns only investors should focus on the total return of an investment which includes price return plus dividend reinvestment return.

Over the past decade, UK’s FTSE 100 has consistently beaten the S&P 500. The FTSE 100 has had a total return of 171.87% compared to just 89.12% for the S&P 500 in British Pound terms according to a report in FE Trustnet.

However just looking at price charts will give misleading results. In the 10-year and 5 year charts below, the S&P 500(in blue) was ahead of FTSE 100 in US $ terms. But this is only based on price return. When reinvestment of dividends is included the charts will look entirely different with the FTSE beating the S&P by a wide margin. This is because the dividend yield on the S&P 500 is around 2% whereas the FTSE 100 has a much higher yield as British firms traditionally have higher payouts than US firms.

S&P 500 vs. FTSE 100 – 5 Year Return:

Click to enlagre

Source: Yahoo Finance

S&P 500 vs. FTSE 100 – 10 Year Return:

Source: Google Finance

Source: “Lost decade” a myth for equity income investors, FE Trustnet

Related ETFs:

iShares MSCI United Kingdom Index (EWU)
SPDR S&P 500 ETF (SPY)

Disclosure: No Positions

U.S. Unemployment Rate Since 1948

Posted by David Hunkar on 21 February 2013, 3:53 am

The U.S. unemployment rate stood at 7.9% in January this year. This rate has not changed much since September of 2012. Based on this official figure, currently there 12.3 million unemployed individuals in the country. The actual unemployment rate is much higher since the official rate drops out many unemployed persons such as those that stopped looking for work.

The labor-force participation rate was just 63.6% in January. The number of long-term unemployed (those jobless for 27 weeks or more) was about unchanged at 4.7 million and accounted for 38.1 % of the unemployed according to BLS data.

Here is a chart showing the U.S. unemployment rate by month since 1948:

Click to enlarge

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Source: U.S. Bureau of Labor Statistics

At the height of the global financial crisis in 2009, the rate reached 10%. Though the unemployment rate has slowly declined it is still stubbornly high at over 8.0%. The rate exceeded 10% during the 1980s as shown in the chart above.

Breakdown of an Apple iPhone 5 Component Costs

Posted by David Hunkar on 20 February 2013, 5:11 am

Apple(APPL) has sold millions of its famous iPhone over the years with the most recent model iPhone 5 selling like hotcakes late last year although sales volumes was not as great as expected. In China, the company sold over 2 million units in the first weekend alone.

The iPhone 5 was designed in the U.S. just like so many other Apple products but assembled in China. However assembly costs account for only 4% of the total cost of an iPhone 5. The various components of an unit come from different countries as shown in the chart below. In fact, by one study 90% of a phone’s components are from countries outside of the U.S. Apple’s iPhone 5 is also a representation of the success the globalization and the East Asian electronics production chain.

iPhone 5 Component Costs by Supplier Headquarters Location and China Assembly Cost:

Click to enlarge