Top Nine Canadian Energy Stocks

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The S&P ADR Index, which tracks some of the large foreign companies traded in the U.S. markets, also includes many ordinary Canadian equities. The top nine energy companies of Canada are listed below. Energy trusts are excluded.

1.Cameco Corp. (CCJ)
Sector: Mining – Uranium
Earnings Growth (5 year): 10.21%

2.Canadian Natural Resources Ltd.(CNQ)
Sector: Integrated oil and gas
Earnings Growth (5 year): 13.85%

3.Enbridge Inc (ENB)
Sector: Oil Well Services & Equipment
Earnings Growth (5 year): 13.85%

4.EnCana Corp. (ECA)
Sector: Integrated oil and gas
Earnings Growth (5 year): 23.61%

5.Imperial Oil Ltd. (IMO)
Sector: Integrated oil and gas
Earnings Growth (5 year): 23.41%

6.Nexen Inc (NXY)
Sector: Integrated oil and gas
Earnings Growth (5 year): 28.21%

7.Suncor Energy Inc (SU)
Sector: Integrated oil and gas
Earnings Growth (5 year): 17.41%

8.Talisman Energy (TLM)
Sector: Integrated oil and gas
Earnings Growth (5 year): 33.99%

9. TransCanada Corporation (TRP)
Sector: Oil
Earnings Growth (5 year): 9.72%

Most of the companies noted above are in the oil and natural gas sector. This sector accounts for one of the large export revenue generators for Canada. Most of the oil and gas exports go to USA, its largest trading partner.The U.S. considers Canada to be an important and secure source of crude oil.

Most of the Canadian crude oil is extracted from the tar sands in Alberta. Calgary, Alberta-based Suncor Energy (SU) acquired Petro-Canada,another large integrated oil company in March this year. Petro-Canada operates gas stations under the same name. Imperial oil operates gas stations under the Esso brand.

Last month, the U.S. State Department granted approval for the construction of the US portion of the Enbridge (ENB) Alberta Clipper pipeline. The pipeline will carry crude oil to the U.S. midwest.The pipeline goes from Hardisty,Alberta to Superior,Wisconsin on the U.S. side costs about $3.7B to build. When completed it will transport 450,000 barrels per day with a maximum capacity of 800,000 per day if required.

Peru and Colombia – Top Emerging Economies in Latin America

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A recent article in The Banker magazine praises Columbia and Peru for their economic growth. In the article On the Brink, author Jason Mitchell writes:

“While the Western world has been struggling through the global financial crisis, Latin America has shown a remarkable resilience to the upheaval. Two countries in particular – Colombia and Peru – are showing particularly impressive growth, and look set to become important emerging economies.

With the prudent macroeconomic policies pursued in Colombia and Peru over the past five years starting to bear fruit, the two countries are set to become much more important emerging markets in Latin America over the course of the next decade.“

Both Peru and Colombia are commodity-based economies. Colombia has oil, gold and copper while Peru is blessed with copper, gold and zinc. As the demand for these commodities grew exponentially worldwide in the past few years, these two economies soared. Between 2003 and 2008, the GDP grew at an average of 5.4% and 7% per year for Colombia and Peru respectively.

“According to the IMF, Peru’s GDP was $128bn last year (with a total population of 28 million people), while Colombia’s stood at $240bn (with 44.7 million inhabitants). The two countries have much smaller economies than Brazil and Mexico (at $1570bn and $1080bn, respectively), but are middle-ranking in size, comparable with Argentina and Chile (at $326bn
and $169bn, respectively).”

For US investors, 2 ADRs from Colombia and 2 from Peru are available for investment.

1. EcoPetrol (EC) is an integrated oil producer and distributor of Colombia with operations in Colombia and Northern Peru. EC stock is up about 54% YTD. The stock pays a 5.20% dividend yield. I wrote a post on EcoPetrol when it first listed its ADR on the NYSE last year.For more details go here.

2.BanColombia(CIB) is a full-service commercial bank offering a wide-range of services to its 6.4 million customers in Colombia.The current yield is 2.86%. CIB is up about 75% YTD.

3. Compania de Minas Buenaventura (BVN) is mining company with interests in silver, gold, zinc, lead and copper. The beta is 0.9. Average profit margin is about 51% and last year the company had total revenues of $762M.

4.The Peruvian financial services firm Creditcorp(BAP) is now domiciled in Bermuda. BAP has a dividend yield of 1.94%. The beta is 1.6. Average annual earnings growth in the past 5 years is 34% and the profit margin is about 19%.

Related ETFs:
GlobalX Funds’ Colombia ETF(GXG)

iShares MSCI All Peru Capped Index Fund (EPU)

The World’s Biggest Banks by Assets Held

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The following graphic from the Wall Street Journal shows the biggest banks of the world based on total assets as of the most recent quarter:

top-banks-by-assets


As the banking sector continues to get reshaped after the credit crisis new players are appearing at the top ranks. The French banking giant BNP Paribas (OTC: BNPQY) is the largest bank with an asset base of $3.21 Trillions. British banks Royal Bank of Scotland (RBS) and Barclays (BCS) take the 2nd and 3rd spots. Among the U.S. banks, Citibank (C) is missing form this list.

Global Saving and Investment Trends 2009

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The September edition of the Reserve Bank of Australia’s “Reserve Bank Bulletin” has an excellent article titled “Patterns and Trends in Global Saving and Investment Ratios”. The article compares saving and investment ratios of different countries and regions and their impact on the current deficits.

In this post, let me present some of the key points from the article. Saving and investment ratios tend to vary across regions and countries. Traditionally Asian countries have had high saving ratios. In recent times, the investment ratios of Asian countries is also tending higher as shown in the graph below.

China and India are among the top savers in the world. India’s saving accounts for over 35% of GDP. For China, it is close to 60%. Developed countries have low saving ratios. The United States has the lowest saving ratio in the developed world. In addition to high Saving ratio, the Chinese have high investment ratio as well.

Saving-Ratios-Country-Regions

Investment-Ratios-Country-Regions

In Asia, saving ratios traditionally exceeded investment ratios producing a large current account surplus. China has run a current account surplus since 2000. Oil exporting countries in the Middle East and Russia also have current account surplus. These countries supply their global saving to developed countries. The advanced economies historically have run current account deficits. Since the early 90s, the current account deficit has increased sharply in US.

Current-Account-balance-Countries

On the development in saving and investment ratios in the U.S., the article noted:

“As noted, the current account deficit in the United States widened sharply between the late 1990s and mid 2000s as the saving ratio fell – with a large decline in public saving in particular – while its investment ratio was boosted by a rise in housing construction. But since the mid 2000s, the US investment and saving ratios have changed by a broadly similar magnitude, and hence the US current account has been comparatively steady.” This analysis is absolutely correct since residential construction was one of the major drivers of the US economy until a few years ago. Large and small banks handed out loans liberally for investment purposes in the real estate sector. While that strategy boosted profits in the short run and increased the investment ratio for a few years, the negative effects of that reckless lending is being felt on a daily basis in the US. For example, the total number of failed banks has risen to 94 as of last Friday.

US-Investment-SAving-Ratios

The effect of rise in construction spending leading to high investment ratio is evident in Spain as well as the chart below shows. The chart also shows that since the 1990s Germany has had a high saving ratio but low investment ratio.

EU-Investment-SAving-Ratios

The article concludes that declining domestic demand and tight financial conditions will lead to a sharp fall in investment in the U.S. Globally the economic downturn is projected to lead to a decline in saving and investment ratios in major countries and regions.

Top Emerging Market Mining ADR Stocks

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One of the fastest growing sectors in emerging countries is the mining sector. Many of the emerging countries are heavily commodity-based economies. Russia is dependent on crude oil, Chile is dependent on copper, Brazil for a wide variety of natural resources, South Africa for gold and other precious metals, etc. As a result, when the prices of commodities rise these emerging markets perform very well.

One way to identify the top mining and metal sector companies in emerging markets is to review an index that specializes in this area. The Dow Jones Emerging Markets Metals & Mining
Titans 30 Index is one such index. It contains 30 of the largest emerging-market companies in the this sector. These companies are selected based on “rankings by float-adjusted market capitalization, revenue and net profit.”

In 2008, this index lost 65%. However this year as of August 31st, it was up by an incredible 90.94%. The current dividend yield is 1.65%. About 50% of the portfolio is composed of stocks from Brazil and South Africa.

The following is a brief overview of the Top 10 Components in this index:

1.Brazil-based Vale S.A.(VALEP) is a steel mining company. Vale pays no regular dividends.Yesterday Rio Tinto Plc of U.K. closed the sale of a mine to Vale for $750 M.

2.Impala Platinum Holdings Ltd.(IMPUY) owns the world’s biggest platinum mine, the Rustenburg mine. Impala mines platinum and other precious metals.

3.China Shenhua Energy Co. Ltd.(CSUAY) is a Chinese coal miner. It pays a 1.46% dividend.

4.AngloGold Ashanti Ltd. (AU) is one of the largest gold producers in the world with over 21 operations. The company has interests in silver, uranium oxide and sulphuric acid. Last year’s revenue was $3.2B and the stock has a beta of 0.8.

5.Russia-based Norilsk Nickel Mining & Metallurgical Co. (NILSY) is a nickel producer. It pays not regular dividends.

6.Companhia Siderurgica Nacional (SID) is Brazil-based integrated steel producer. The beta is 1.9 and the dividend yield is 3.56%. The average profit margin last year was about 32% from a revenue of $1.7B.

7.Gold Fields Ltd. of South Africa. It does not trade in the U.S. markets.

8.Gerdau (GGB) is a producer of long rolled steel of Brazil. It has 60 steel producing units worldwide. The beta is high at 2.2. Average annual earning growth over the past 5 years is about 31%.

9.Jindal Steel & Power Ltd. of India is not listed in the U.S.

10.Usinas Siderurgicas de Minas Gerais (USNZY) is an iron and steel maker in Brazil.

For some of the companies mentioned above, the index contains their preferred shares.I have used the common tickers since common is mostly traded by investors.