One industry that has been riding on the back of the rising oil prices is the Oil&Gas; equipment and service industry.Companies in this sector provide equipments, technology, management consulting, equipment, maintenance etc. to the oil companies.

Big oil companies like Shell,BP,Total etc. usually contract out all the infrastructure and operations related work to contractors like Schlumberger,Halliburton,Baker Hughes International in the US.Or to their foreign peers like Acergy,Technip,CGV Veritas, etc.These companies do all kinds of activities such as building an off-shore platforms,pipelines,maintenance etc.

Many of the oil equipment and service stocks have jumped many fold in the past few years and their growth continues. P/E ratios have expanded and so is the market cap of all the players in this niche sector.An indirect way to gain exposure to the oil industry is to invest in the equipment and service providers since they are the backbone of the oil majors.

In this post let me list four such foreign ADR stocks.While Schlumberger and Halliburton are number 1 and 2 in terms of market caps, these four ADRs are worth looking into as well.

Oil and Gas Equipment and Service ADRs:

1.Name: Acergy SA
Ticker: ACGY
Country: Norway
Current PPS: $26.38

2.Name: Compagnie Generale De Geophysiqu-Veritas
Ticker: CGV
Country: France
Current PPS: $57.00

3.Name: Petroleum Geo-Services
Ticker: PGSVY
Country: Norway
Current PPS: $32.05

4.Name: Technip
Ticker: TKS
Country: France
Current PPS: $95.03

We had written an article titled “Invest (some) in International Real Estate !!!!” back in December, 2007. This post is a sequel to that.

With the collapse of the housing market in the US,UK and to some extent other European countries it sounds weird to talk about real estate investment.But some real estate stil needs to part of one’s diversified portfolio.It can be as small as 5 to 10% of the portfolio.

One easy way to get exposure to real estate in other countries is by picking up a fund. We will discuss one such global fund called the ING Clarion Global Real Estate Income Fund (IGR). This is a closed-end fund but shares are traded on a daily basis.
Fund Details:
Name: ING Clarion Global Real Estate Income Fund
Ticker: IGR
Current PPS: $16.68
Dividend Yield: 9.80%
Total Net Assets: $2.5 B
Premium/Discount: 5.9%

Why invest in IGR?

1. Gives international real estate exposure easily.
2. Well diversified geographically and by property type.
3. Has only 51% of the assets in the US. Rest of them are invested overseas.
4. Residential stocks make up only 9% of portfolio.
5. Has a little dab of fast growing economies like Brazil,Asia.
6. High Monthly dividends and long-term capital appreciation
7. With dividend reinvestment option, yield can easily exceed 10% per year
8. Net Assets of over $2B
9. Run by ING, a global leader in Financial Services

Note: All data as of March 31,2008.

Analysis:
IGR has been a great fund since its launch. From 2004 till November,2007, the market price of the fund more than doubled from $12 a pop.After that peak, the stock went down as low as $14 before moving up to $16.68 today. We would suggest that IGR is an excellent buy at any price below $15.

5-Year Chart

There are a total of 119 stocks in this fund which includes both common and preferreds.The top 10 holdings account for 29% of the portfolio.Some of the companies in this top 10 list includes Rio Can of Canada, Westfield Group of Australia,Land Securities of UK. Other notable companies in the portfolio are CapitalLand of Singapore, British Land of UK,Prologic of US,Brascan of Brazil.The fund has 0.4% in Unitech of India. India’s housing market bubble has burst and now prices are going down.

Anyone looking for a monthly cannot afford to miss this fund.With a yield of 9.8%, this fund easily beats the S&P; Index yields and Equity REITs. The fund has returned an average of 11.95% since inception – which is not bad.An investor may want to pick up IGR and a couple of other REIT funds like RWX,RWO,WPS,etc. IGR is a long-term value investment.While in the short term it will fluctuate, if held for a minimum of 5 years it may give great returns when compared to other investment options.

Tidbit:
Here is a posting by “nutodaboard” from Yahoo Message board on Feb 15,2008: “I invested $15,000 almost 4 years ago and now the total is $26,340. That means a profit of $11,340. Divide the $11,340 by 4 and that comes to an average return of $2,835. $2,835 divided by $15,000 comes to 18.9%, which is the average rate of return on my original investment the way I figure it.“

Important Note:
The above message may or may not be true.Do not depend on online messages to make investment decisions.Do your own DD before putting money into any investment.

Links:
http://www.ingclarion.com/INGClarion/Clarion+RE+Securities/ClosedEndFunds
http://www.ishares.com

The title of the post represents three chemical ADRs from Europe. In volatile and crazy times like this chemical stocks may offer an investor the peaceful shelter they are looking for.

Chemicals form an integral part of our everyday life. They are found in pretty much everything nowadays – from card boards, food boxes like cereals,cookies etc, drinks, drugs, carpets, cleaning products etc. There are chemicals even in our food to give flavor, color, texture, etc. All these support the argument for some chemical stocks in one’s diversified portfolio.

A brief overview of each of the 3 chemical ADRs is listed below:

1.Company – Altana AG
Country – Germany
Ticker – AAAGY
Sector – Specialty Chemicals
YTD: – 18.80 %

2.Company – Arkema
Country – France
Ticker – ARKAY
Sector – Chemicals
YTD: – 0.98 %

3.Company – CIBA Specialty Chemicals
Country – Switzerland
Ticker – CSBHY
Sector – Specialty Chemicals
YTD: – 28.10 %

CIBA has slow average growth rate over the past years.Arkema is a spinoff from French oil giant Total.

Altana is from the land of chemical powerhouses – Germany. The company has roots dating back to the 19th century.From the corporate site:

” The ALTANA share price rose by a total of 35%, an excellent performance in this environment, though the figure was adjusted to accommodate the dividend payment made to the shareholders. The German chemical industry index, Prime Chemicals of the Deutsche Börse AG, was up by almost 43% at the end of the year. The comparable European index, the Dow Jones STOXX 600 Chemicals, grew by 24% in 2007.”

There are other world-class chemical companies like BASF and Bayer from Germany. We will discuss those another time. Akzo Nobel from The Netherlands is also another growing chemical company.

The following utilities are down YTD over 20%.Some of them are very good companies based on fundamentals and long-term prospects. Check them out:

1. Company – Veolia Environnement
Ticker – VE
Yield – 1.99%
YTD Change: – 21.64%

2. Company – Korea Electric Power
Ticker – KEP
Yield – 3.25%
YTD Change: – 21.73%

3. Company – Empresa Dstrbdr Y Comercializador Nrt SA
Ticker – EDN Yield – N/A
YTD Change: – 23.82%