Nestle Tops Global Dairy Top 20 Rankings

Posted by David Hunkar on 16 July 2010, 2:44 am

Switzerland-based food and nutrition company Nestle SA(OTC: NSRGY) is the world’s top dairy company based on sales. In the “Global Dairy Top-20” list published by the Dutch financial services provider Rabobank Group, European and US players dominate the top 10 ranks.

Global Dairy Top-20

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Source: Rabobank

From the research report:

“Changing diets and strength in numbers are key to understanding the growth of demand in the Asian markets, according to Mark Voorbergen of Rabobankâ€™s Food & Agribusiness Research and Advisory. â€œThe Chinese government is helping create a whole new generation of dairy consumers by promoting a school milk programme. So Chinese dairy companies will have ample opportunity to increase sales simply by keeping up with domestic market growth.â€

Supply and demand
Putting consumption into perspective, Mark contrasts the 300 litres of dairy products consumed per person per year in the Netherlands with the current 20 litres per person per year in China. â€œWe expect the Chinese market to grow along the same lines as Japan or South Korea, from zero levels five years ago to a maximum of 50 litres per person per year.â€

But volume growth is only happening in developing regions like China, South East Asia and selected markets in the Middle East, Africa and Latin America. For the developed markets of Europe, the USA and New Zealand, the main growth challenge is to introduce new characteristics â€“ often related to health and convenience – to standard dairy products that the consumer is willing to pay for.”

It is interesting to note that emerging markets are represented by just two companies from China. As the report notes above, focusing on health benefits of dairy products is a major selling point in developed countries. For example, French company Danone(OTC: DANOY) is the world’s leading producer of fresh dairy products accounting for about 28% of the world market share. Growth of Danone’s products is mainly driven by innovation and the marketing of dairy products emphasizing the health benefits to consumers. The success of Activia brand of yogurts in the U.S. and other developed markets is a proof of this strategy.

Five Stocks To Invest In The Chinese Healthcare Market

Posted by David Hunkar on 15 July 2010, 5:01 am

One of the fast growing sectors in China that is often overlooked by investors is the healthcare market. One reason for this is that very little information is publicly available about the Chinese healthcare industry. CLSA Asia Pacific Markets undertook an unprecedented look into the healthcare market and has published a 300+ page comprehensive report titled “China pharma almanac”. The research report was based on interviews with over 500 middle class consumers, hospital drug purchasers, pharmacies, physicians and cosmetic surgery centers.

Some of the key takeaways from the report are:

China’s healthcare expenditure is projected to grow 20% annually and by 2014 it could reach $304.0 B providing universal healthcare toÂ its entire population of 1.3 billion
Hospitals derive 40-50% of total income from medicine sales
43% of China’s population live in urban areas which allow for greater access to healthcare services and technologies
Cardiovascular disease, obesity and other diseases is projected to increase with growing affluence and lifestyle changes
The prevalence of tuberculosisÂ (TB) and other infectious diseases in China offers potential for vaccine makers to prosper
Double-digit rise in patient traffic is boosting drug purchases especially for the treatment of chronic diseases including heart disease, cerebrovascular disease (or stroke), diabetes and hypertension
Healthcare consumers ranked the U.S. as the top country for producing the highest-quality products while Japan was ranked at No.4
Demand for cosmetic surgeries and procedures such as liposuction, wrinkle removal and blepharoplasty (eyelid surgery) is growing
Patients still revere traditional Chinese medicines as they believe that these medicines addresses the root cause of a disease whereas western medicines just suppress the symptoms. However doctors and hospital drug purchases prefer western drugs
There are 55 companies Chinese healthcare companies with market caps over US$1.0B and more than 20 companies have market caps in excess of US$2.0B

The opportunity for healthcare in China is significant and investors can take advantage of it. One way to invest in Chinese healthcare is to go with western drug companies that have strong presence in the Chinese market. In a survey conducted as part of this study, Beijing Tongrentang, Pfizer(PFE) and Yunnan Baiyao were ranked as the top three pharmaceutical brands. Local drug firm Beijing Tongrengtang is a maker of traditional Chinese medicines.

The top five foreign brands by quality are Pfizer(PFE), Glaxo – owned by Glaxo SmithKline(GSK), Novartis (NVS), Astra-Zeneca (AZN) and Johnson & Johnson(JNJ).Â UK-based GlaxoSmithKline(GSK) has a 5.07% dividend yield. Johnson & Johnson(JNJ) is a consistent long-term performer.

Jim Rogers: I Will Hold Gold Till $2,000

Posted by David Hunkar on 14 July 2010, 1:55 am

Gold futures increased more than 1% today. Gold for August delivery added $14.80 to settle $1,213.50 an ounce on the New York Mercantile Exchange. Prices reached a record high last month ending at $1,264.90 on June 21. On January 4, 2000 the price stood at $281.50 an ounce. As the global economic conditions continue to be volatile, investors are attracted to the yellow metal like never before.

In an interview with Outlook Money, the famous American investment guru Jim Rogers expressed his concern over the massive stimulus packages that governments have injected into their economies in the past few months. The following is the excerpt of the interview:

“What mainly drives gold prices?
There’s enormous debasement of money all over the world. Every government is printing huge amounts of money and running up huge debts during economic turmoil.So some people are looking at gold as a refuge as they have done throughout history. Governments are spending money they don’t have and printing money they don’t have.That,throughout history, has always led to problems with paper money. And paper money is just paper.Many politicians take advantage of people by printing more and more money, and so paper money becomes less and less valuable. So some people look for real assets, whether it’s silver, cotton or natural gas to protect themselves.

How do you see gold as an investment now?
I own gold and don’t plan to sell it now.I expect gold to be much higher over the next decade.However I don’t know if I would buy it today, given it’s making all-time highs as we speak. I think if you are buying precious metals right now, you might think of buying silver, platinum or palladium as they are down from their all-time high these days, in contrast to gold, and therefore make a good purchase.

How long do you plan to stay invested in gold?
At least till gold is over $2,000 [current price $1,246/oz-Ed.]. Who knows, it could go very, very high if governments continue to debase their currency.I hope I am smart enough to sell my gold, because someday gold will be in a mania phase.But that is a long way from now.

Might gold come off if there’s a global economic recovery?
Of course, there are always corrections in every market.Nothing goes up every week or every year even. And you know gold has gone up every year for the past nine years, it needs a correction and let’s hope it has a correction. A couple of years ago, gold went down 40 or 50 percent. It wasn’t the end of the bull market, it was just a major correction.

What is the best way to own gold?
I own gold coins and gold futures.If you want small denominations coins are a good way.And if you have lots of money and you know what you are doing, you can use leverage and have gold futures. But it really depends on what an individual prefers. There are ETFs now, which makes it extremely easy for many people to own gold.”

Note: The above interview appears in the print edition of the magazine.

The current U.S. Total Public Debt Outstanding is: $13,194,523,014,378.23

The Interest Expense on the Debt Outstanding for June, 2010: $106,661,088,328.82

Since 2006, the U.S. Federal Reserve stopped publishing the Money Supply (M3) number. Hence the accurate figure is not available.

The 15 Most Profitable Canadian Companies

Posted by David Hunkar on 13 July 2010, 9:50 pm

Recently Canadian Business magazine published its 11th annual ranking of Canada’s 500 largest publicly-traded companies. This list is grouped by various categories such as best value stocks, best dividend stocks, mid caps, small caps, etc. In this post lets review the companies that earned the largest profits.

The Top 15 Canadian companies based on profits:

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Note: Profit amount is in Canadian $ and the 5-year return is for the Toronto Exchange listed security

Unlike many other developed countries, Canadian banks have been highly profitable and have taken the top three ranks this list. Royal Bank of Canada (RY), Canada’s most profitable bank, also made the largest profit of C$3.8B among publicly traded companies. Railroad operator Canadian National Railway (CNI) beat competitor Canadian Pacific (CP) in total profits earned. All the companies shown above have also great 5-year returns with four exceeding 100%.