Comparing the 5-Year Performance of Six Large-Cap Oil Stocks

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Crude oil prices have been volatile over the past few years. On Friday, the price rose $1.21 to reach $98.99 in New York. As fears of recession in the EU and the U.S. have decreased, the prices have jumped from $77.0 a barrel in early October to about $100 now.

Some investors hold the stocks of integrated oil majors in their long-term portfolios. So I wanted to check their performance in the past five years.

The following chart shows the 5-year equity returns based on just price appreciation of six major global oil companies:
Click to enlarge

Source: Google Finance

The table below shows the current dividends yield, market capitalization and the 5-year returns with dividends reinvested:

[TABLE=1050]

The table data shows that dividend reinvestment has boosted the returns.While British oil giant BP Plc (BP) and French major Total SA (TOT) yielded negative returns, US-based Chevron (CVX) was the best performer with a total return of about 82%. Chevron has performed much better than the widely held Exxon Mobil, the largest integrated oil company in the world. In addition, Chevron’s stock grew by about 145% over a 10-year period excluding dividends and Exxon Mobil (XOM) only doubled in price. In summary, most of the oil majors have performed well in the past few years and they must be an integral part of a well-diversified portfolio.

Note: Data noted above are known to be accurate based on sources used. Please use your own due diligence before making any investment decisions.

Disclosure: No Positions

Ten Italian Stocks Offer Potential Investment Opportunities

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The Italian equity market is one of the hardest hit markets in the world this year due to the European debt crisis and Italy’s own fiscal crisis that came to the forefront of investors’ attention this week. The FTSE MIB, Itlay’s benchmark equity index is down well over 20% YTD. However with the current Prime Minister Silvio Berlusconi finally stepping down and a new government led by Mario Monti taking shape, the current crisis will be contained and the economy may grow again. With the third-largest economy in EU and the eighth largest in the world, many Italian companies offer long-term investment opportunities.

Ten Italian stocks trading on the US markets are listed below for review:

1.Company: Eni SpA (E)
Current Dividend Yield: 6.63%
Sector: Oil & Gas – Integrated

2.Company: Enel SpA (ENLAY)
Current Dividend Yield: 6.12%
Sector: Utility

3.Company:Telecom Italia SpA (TI)
Current Dividend Yield: 7.33%
Sector: Telecom

4.Company: Snam Rete Gas SpA (SNMRY)
Current Dividend Yield: 7.54%
Sector: utility

5.Company: Autogrill SpA (ATGSY)
Current Dividend Yield: N/A
Sector: Food &Drug Retailer

6.Company: Saipem SpA (SAPMY)
Current Dividend Yield: 2.05%
Sector: Oil Well Services & Equipment

7.Company:Saras Raffinerie Sarde Spa (SAAFY)
Current Dividend Yield: N/A
Sector: Oil Well Services & Equipment

8.Company: Atlantia SpA (ATASY)
Current Dividend Yield: 7.29%
Sector: Highway operator

9.Company:Luxottica Group SpA (LUX)
Current Dividend Yield: 2.19%
Sector: Medical Equipment & Supplies

10.Company: Benetton Group SpA (BNGPY)
Current Dividend Yield: 6.73%
Sector: Apparel/Accessories

Disclosure: No Positions

One Year U.S. Interest Payments on National Debt

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The current US National Debt is over $14.8 Trillion. Much of this debt is owed to U.S. residents. Among the external creditors, China is the largest holder of U.S. debt.

The U.S. spends a large portion of its budget each year in the form of interest payments  to service the huge debt load. The following chart shows that the U.S. spent $414.0 billion on interest payments in 2010 which is higher than the amounts spent on many Federal departments. One can argue that the high interest expense deprives the U.S. from funding education, innovation , science and technology, healthcare, infrastructure and other important programs.

Source: The Heritage Foundation

The 50 Safest Emerging Market Banks 2011

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The Global Finance magazine has published its first-ever ranking of the Safest Banks in Emerging Markets. While the banking industry in the developed world is struggling to gain some credibility, investors are increasingly focusing their attention on emerging market banks which are much more risk-averse and have better potential for growth. In fact, many developed banks such as HSBC plc (HBC), Bank of Nova Scotia (BNS), etc. are expanding their operations in emerging countries to earn higher profits.

From the Global Finance report:

We evaluate the ratings and total assets of the main players in developing economies to create the rankings—providing an overview of the key banks in each region and which financial institutions offer the greatest security. Winners were selected through an evaluation of long-term credit ratings—from Moody’s, Standard & Poor’s and Fitch Ratings—and total assets of the 500 largest banks in emerging markets.

The rankings clearly show the ever-growing dominance of China’s banks both within Asia and throughout the emerging markets. Chilean and South Korean banks also feature prominently in the rankings, as do those of Kuwait, Saudi Arabia and the UAE.

The Safest Emerging Market Banks 2011:

[TABLE=1048]

Banco de Chile(BCH) and Banco Santander-Chile (SAN) currently have dividend yields of more than 4%. In spite of turmoil in global equity markets since the Global Financial Crisis (GFC) both the banks have performed very well. An investment of $10K five years ago in each bank would have grown to over $28K and $19K respectively according to S&P data.

Though many South Korean banks are present in this list, they are average to poor performers and hence they can be avoided. It is interesting to note that none of the banks from India, Brazil and Russia made it to this ranking.

In August 2010, I mentioned Czech-based Komercni Banka(KMBNY) in an article on foreign bank stocks trading on the OTC market.

Disclosure: Long BCH