Stocks on Wall Street » global emerging markets

China Life Insurance (LFC)

James — Sat, 04 Apr 2009 20:21:03 +0000

China Life Insurance Co. Ltd. (LFC)

China Life Insurance is a leading provider of individual life insurance products in China.

What I Like

With LFC share price currently at $53.05 its shows the company is on an uptrend when valued against the 50-Day Moving Average, which is $45.72. With a 52-Week High of $69.25 (May 08) and a 52-Week Low $33.45 the stock has seen the share of volatility that the markets have experienced. I foresee LFC rapidly expanding much like China is and grasping a larger portion of the market share as more Chinese individuals begin to purchase Life Insurance. With the increase of China’s individual GDP the amount of individuals who will be in need of Life Insurance will double offering LFC a golden opportunity. One thing China has is money right now, which they are willing to spend and boost the Chinese economy. Look for LFC to be a player and take in large amounts of capital as they continue to expand. Daily Volume is above 100,000, which is the threshold in which I set. The thing I like about LFC is it is still quite unknown and sheltered which makes it a great time to buy. As China continues its economic dominance more and more investors will be pursuing Chinese stocks and LFC will be one to benefit. It is only 6% institutionally held. Wait until the Hedge Funds find out about this stock, the share price will soar.

What I Don’t Like

Return on Assets 1.76% and Return on Equity 15.88% are lacking yet as Individual Insurance Sales begin to normalize with the strengthening of the overall global economy I look for these numbers to rise.

Overview

Overall LFC is a strong Chinese company with mass potential. There still have a large untapped market among the Chinese population, which makes it a very dangerous stock. LFC gets my BUY rating all the way up to $55. I foresee the stock ending the year at around $62-$64. Make sure you don’t miss your chance to ride the Chinese markets.

G20 Roundup

James — Fri, 03 Apr 2009 23:43:31 +0000

Success. This is a word we can derive from the G20 meetings. Going in I had my concerns with whether or not anything would be initated as summits usually are not the place for Financial Regulations to be set. Times started off turbluent with the French President Nicolas Sarkozy threatening to walk out of the summit if his plan for tighter global regulations wasn’t adopted. For Sarkozy ultimatums are not the smartest way to go especially when he is going up against the heads of much larger nations. In the end, however Sarkozy left satisfied with the G20 taking a step in his direction. Going back on the idea of what was accomplished I think the big winners from the Summit where the smaller nations. The $1 trillion dollars will help credit flow and revive the economies of these small nations who are unable to create their own money supply by printing money. This contribution will help global liquidity and help the currency-crisis countries trade credit. As for the U.S., I believe there was much anger directed towards us, since we are the one who created this problem. The U.S. will not benefit as much from the money as we are such a large nation with so many needs yet every penny helps. I agree with tighter global regulations as long as it doesn’t come at the expense of a list of restrictions on the U.S. We need to regulate the economy and watch over it, but not control it and pave the path it shall follow. The worst thing that could have come would have been global restrictions on the economy especially for the U.S. Plus Foreign nations need to stop blaming the U.S. for this crisis. Yes we started it, however if you had an independednt economy that did not rely on the help of the U.S. it should have never affected you. A key note is the outlook from the general population after the summit. I feel a sense of optimism and positive attitude towards the strength of the economy, something that did not exist a short while ago. Times are still going to be tough with the unemployment rate at a 25 year high, major holes among the Financial and Auto Industries yet we have managed four straight weeks of Wall Street reporting positive gains. Never has Wall Street seen such success since 1938. Its crazy, idiocracy, the ups and downs we are seeing. So reffering back to the word success I wold classify the G20 as a success. The set of changes which are poised to happen will make a big impact on strengthing the global economy.

Below is a interactive chart breaking down how the G20 nations stack up.

Click Here

Chinese Market Plays

James — Wed, 01 Apr 2009 01:25:03 +0000

China was shocked this week by the 5% decline in the country’s Consumer Price Index. As a result, they are on a full fledged mission to bring that number back in 2009. The start was the investment of $2 trillion dollars. Now we know where the majority of that money will be going it is a better market indicator and we know how to play China now. First, the Chinese have managed to stabilize the commodity market. We have seen this in the increases of Freeport, BHP, Vale, Rio Tinto, and various other commodity firms. Other plays we have seen in China are the large infrastructure projects for telecom. This makes CHL, the world’s largest Telecom provider and the sole provider to China, a bullish play. They still have a large untapped market as many chinese people don’t use cell phones the same way we do in America. Other Chinese plays are Petro China (PTR) which is a large petroleum producer who is receiving much love from the Chinese investors. If you want a way to play all these then check out these two Chinese based ETF’s: PGJ & FXI. China is a bull market now so make sure you can ride the wave.

Barron’s Top 10 Picks

James — Wed, 01 Apr 2009 01:20:58 +0000

This week, Barron’s came out with the list of the Top 10 companies/stocks for the next decade. Topping the list was Google (GOOG), a company that has dropped half its value since 2007, who was liked because of their large Growth opportunity in Online Advertising and lack of Debt. I to love Google and am a shareholder as they have a strong upper management that has been making strategic acquisition and cuts to better position the company for the future. The company has also shown resilience after putting up strong revenue numbers and gross profit in 2008. Other companies topping the list included Microsoft (MSFT) and EBay (EBAY). These two companies I am not as wild about but are boosted by Long-Term Growth Opportunities and Large Cash Holding. Other companies on the list included: Cerner Corp (CERN) Database Builder, Wynn Resorts LTD (WYNN) the Las Vegas and Macau Resort Giant, CVS Caremark Corp (CVS) the rapidly growing Pharmaceutical Retailer, Ace LTD (ACE) the Insurance Company, and Fernsa Latin America’s largest Bottler and Brewer. The most intriguing company on the list and one that I have full confidence in for the future is the Security Company EMC (EMC). EMC currently has a great PEG, P/E, and EPS which is supported by strong Long-term outlook. The company has continued to put up great revenue numbers and the balance sheet is looking great especially in current harsh times. Its supported by a high analyst ranking and is a steal at current times. Let it fall to $9 and then grab it.

Mongolia’s IVN’s Outlook

James — Tue, 03 Mar 2009 19:31:55 +0000

An active reader recently emailed me asking what i thought of the stock IVN. His concerns where with the Long-Term/Short-Term Outlook along with what will happen with the current Buy-Out situation. Below is the abbreviated Analyst Report i wrote.

IVN Ivanhoe Mines Ltd. (USA)

What I like

With IVN’s share price currently at $4.42 it shows the company is on an uptrend when valued against the 50-Day Moving Average, which is $3.29. With a 52-Week High of $13.88 (Feb 08) and a 52-Week Low $1.55 (Oct 08) it has seen the same type of volatility in which most Mining Companies have felt. Although unlike some Miners, IVN bottomed out in October and has shown a steady increase since as it has gone up 185% in the past few months. IVN is 49.6% institutionally held which is strong numbers as generally the quota you look for is between 30-70% for a company. Daily volume levels are above 100,000 which is a threshold i usually set. The fact that the company has zero debt excited me as i stay away from companies with large amounts of debt especially now-a-days. Right now it seems to be undiscovered as it is followed by few analysts which gives it a large growth potential. The fact that it is in Mongolia and is located in an untapped emerging market is a bonus.

What I Don’t Like

IVN’s income statement scares me. Currently they are reporting a -27.49% Return on Assets and a 68.43% Return on Equity. Yes this is partly the result of weakened commodity prices yet compare to other competitors like (TGB, RTP) they are slightly below par. Concerns with inflation and weak global economy also have to be taken into consideration.

Overview

Overall IVN has mass amount of potential. Depending on which route the company takes will decide whether or not it will become a short-term investment or long-term investment. If the talks with Vale (RIO), Rio Tinto (RTP), Xtrada (XTA), and (BHP) heat yo then this could become an interesting bidding war with IVN ending up on top. With talks of Chinese, Russian, and Korean Companies also looking to acquire IVN the price could get steeply inflated and they might overpay for IVN which will be great news for Investors. As of right now the Prized Mongolian Coal Company is estimated to be worth $2 billion yet we could see that rise to $2.2 billion when the companies potential is considered along with an increase in the price of coal. The difficulty right now is with the Mongolian government who recently hired Deutsch Bank and JP Morgan to help handle the Merger. Complicated Mongolian Mining Laws have pushed back any set date or time table. Another route IVN could take is to borrow capital from the Government and Investors to grow the company to become a Large World Coal Producer. This is unlikely though as they have drawn a lot of interest and have had a struggling Revenue Stream in recent quarters. If the Buy-Out is successful expect a sharp incline in the stock price skyrocketing to high levels. If the deal falls through the stock will drop temporarily yet if structured right the long-term aspect will help investor confidence. Either way it looks good as they have the assets to grow long-term and the interest to be successful short-term. I rate this Stock as a BUY due to the high chance of a Buy-Out. If the deal unexpectedly fell through still stick with it as it has the potential to grow quite large.

PetroBras the Next Exxon Mobile

James — Tue, 03 Mar 2009 19:31:43 +0000

Looking for the next Exxon Mobile? Look no further than Brazil’s state-run oil giant PetroBras (PBR). This is a company waiting to take off and i might have caught another huge break. The company has been in advanced talks with China Development Bank for as much as $10 billion to explore recently discovered deep-water oil reserves. Take into consideration it was only a couple months ago when the Brazillian government loaned the company $30 billion to help with the companies $174 billion investing strategy aimed at finding the Americas’ largest discovery in three decades. While most oil companies are cutting costs PBR is increasing investments by 50%. Something big is soon to happen and when it does make sure to be an investor. The Chinese money will come from the $2 trillion reserve, in which they plan to secure commodities admist while the international commodity prices stay relatively low. PBR needs the money fast to help pay for the immense oil and gas discoveries they have found off Brazil’s coast, which could turn Brazil into the world’s major oil exporter pushing out the Middle East. These oil fields are abundant yet deep underwater needing many resources in order to exploit. Thats is where China’s help will come in. More good news for PBR who also recently signed a separate agreement to sell 60 to 100 thousand barrels of crude oil a day, 5% of total production, to a Chinese Petroleum and Chemical Company known as Sinopec. Another memorandum from China National Petroleum (CNPC) could add another 60,000 barrels a day. Latin America loves this company and governments across the continent are injecting capital in hope that it will suceed and become the enxt Exxon. With plans to increase production levels by 10 times the sky is the limit for PBR. I love this company because i am a believer that oil will only go up in time. To think that it will stay at the low levels it is hovering around right now is ignorant. With limited supply and exceeded demanded it is simple economics that it will rise. The reason that PBR is such a strong play is one it is international/emerging markets which allows it to drill offshore and do whatever it wants something U.S. companies are restricted at doing. Secondly the backing of Latin American governments will provide funding to make sure that it falters. Thirdly if these discoveries are true they will have an abundant amount of crude to supply the world when the Middle East dry up. PBR is lagging right now but look for it to skyrocket near the end of the year. Buy while its cheap.

Could China end the Global Recession?

James — Tue, 03 Mar 2009 19:31:22 +0000

You heard right, China the once poverty stricken, third-world nation could be the one to end the Global Recession. This could come as a shock to many who assumed that the United States would be the rightful one to complete the job. My belief in China comes after the announcement that the Chinese Government Reserves have over $2 trillion in which they are willing to invest into the Global Economy, especially among Natural Resources and Commodities. Who would have thought money like this existed after the constant chatter we here in back home about debt, bankruptcies, and company failures. China has accumulated this money slowly over time and most is invested in safe positions such as the U.S. Treasury. As of what to do with the money, China recently loaned $25 billion to Russia in exchange for Crude Oil. They have been in heated talks with Petrobrasilero (PBR) about venturing into deep sea discovery, Rio Tinto (RTP) and Vale (RIO) about the purchase of billions of dollars worth of Iron & Ore. Such investments would benefit everyone down the line from the commodity producer to the shipper who transports the items to the consumer who receives the cheap good. If we are ever going to return to normal economic levels we need to return to normal levels of production. Shutting down plants, stopping production helps no one in the long-term. A strategic move by China would be also to help stabilize the Global banking system as whenever the Banks can get back on track and begin lending money is when we will see true economic growth. This is a win, win for China. Gaining such assets will allow them to continue its massive infrastructure projects with the goal of becoming the Global power. Also investing large amounts of capital will not only make many countries fell obliged to owe China one, but if the Economy returns to normal levels China will be able to out produce everyone from services to manufacturing with the new levels of of infrastructure they are building. We are a long ways a way but this would be the next step forward to a true Global Economy vs the American driven Economy, if we were to see a Third-World country lead us out of this mess.

Rio’s Booming Comeback

James — Tue, 03 Mar 2009 19:29:35 +0000

The first and my most favorite Brazilian company is the Companhia Vale Do Rio Doce (RIO) the large Brazilian Iron Ore Producer. Heads of this company believe the end of the downturn is in sight and the Brazilian iron ore producer plans to go on a spending spree in 2009 to align output and shipments with expected increased demand from China. On Thursday CEO, Roger Agnelli told reporters thats China;s economy has stopped weakening and the global economy will stop weakening in the 2nd quarter. He followed up by stating that Vale plans to boost investments by 40% to $14 billion in 2009 up from $10 billion in 2008. After Vale slashed iron ore production in fourth quarter as demand weakened they have done the opposite in 2009. On Thursday Vale signed a contract to build 15 new tugboats, 32 barges, and two other vessels at a cost of $171.1 million to carry its iron ore to China. With such large investments any investor should not try to avoid such a big gain in 2009 and 2010 from Vale. With the industry as whole expecting to expand with growth in infrastructure in China and U.S. RIO should have its hands full with constant business. Expect to see similar results as the company produced from 2004 to 2007′ and then it will be too good to resist. Another group of stocks to go along with RIO are the shippers (TBSI, DRYS, GNK, NAT). With commodity prices increasing these companies to should have a constant flow of business and be able to rebound from the 94% dip the industry was hit with in 2008. With RIO trading at $14 right now it is so under valued it is ridiculous. This was a company trading in the $70 levels a couple years ago and i wouldn’t be surpassed if it was back there in a couple more.

Super Bowl Stocks

James — Tue, 03 Mar 2009 19:28:15 +0000

I must admit that was one of the great Super Bowls which we have seen in a long time. The ending was quite disappointing as the NFL allowed the fumble to stay whereas i would have liked to see Kurt Warner throw one more Hail Mary. However, relating to the Stock Market this is my current list of the 10 Super Bowl stocks:

1. Google (GOOG) – Love this stock as it continues to fight through adversity. I can only see Online Marketing growing from here on out so expect Google to rise to $450 by the end of the year.

2. El Paso (EP) – Natural gas is rising rapidly and after taking such a hit this stock should bounce back with solid 2009 gains.

3. Andarko (APC) – With the amount of Natural Gas they currently hold it is very unlikely that they will not benefit from the U.S. decision to stop using oil. If T. Boone Pickens plan ever came into action this stock would see unheard of numbers.

4. Proctor and Gamble (PG) – The name is unknown but the products are not. Currently Proctor and Gamble have over 300 branded products in 160 countries worldwide. The company has great revenue growth, great cash flow. and continues to increase net income.

5. PetroBras (PBR) – Latin America’s Largest Company should put up record numbers with their $175 billion dollar investments they are planning on funding for the next four years. The company see them finding the next greatest discovery in the America’s in the past three decades and i believe them.

6. Goldman Sachs (GS) – Safest bank out there period. They are not currently holding much debt and will not receive huge amounts of Federal Bailout so expect them be the first to return to the duties Banks use to perform before this “Recession” hit.

7. EMC (EMC) – Poor man’s RIMM did not do much in 2009 but with a rapid growth in the Technology industry they should have plenty room to improve this year.

8. Oracle (ORCL) – Larry Ellison was the highest paid CEO last year for a reason. The reason is that Oracle is booming and is being used by every top-tier company these days.

9. Diageo (DEO) - This company currently holds one of the most recession proof items: Alcohol. Being the number one producer and holding a portfolio of products such as Johnny Walker, Jose Curevo, Guiness, Crown Royal, and Smirnoff they should continue to put up strong income numbers whilst holding a decent amount of cash.

10. Yamana Gold (AUY) - Gold is one commodity which i see bouncing back with a bang. Gold is a prized commodity which will always be desired by the wealthy. Look for the price of Gold to increase along with AUY’s share price.

Brazil’s Golden Stocks

James — Tue, 03 Mar 2009 19:27:33 +0000

In recent years the Brazilian economy has accelerated to all-time levels. Brazil is the largest country in South America and dominates the market on the continent. It has grown to become the ninth-largest economy in the world which is impressive after all the years of economic hardship the country has faced. Brazil now is emerging into the international scene as its mining, agriculutral, service, and manufacturing sectors expand. After recording a record growth of 4.5% in 2007 experts expect similar numbers in 2009. Brazil did face a set back in 2008, but so did the rest of the world’s economies. Currently the economy has shown no signs that it will slow down as they are dumping billions of dollars into resources to expand the country’s economy. As a result the Brazilian econpmy offers great opportunities for investment and here are the Golden Stocks of Brazil.

1. Monsanto (MON) This Brazilian agricultural giant has slipped in recent times but has announced higher guidance for 2009 that suggest the company will go back to its rapid growth which was seen before the credit crunch. In January of 2008 this company reported earnings increases of 188%. Expect similar numbers in 2009 as fertilizer makers begin to surge due to the growth in Agricultural herbicides and Corn seeds sales in Brazil. Monsanto currently produces corn and other seeds while developing biotech traits to integrate into the seed. These traits will help farmers lower risk from potential famine and should be a hot commodity.

2. Petroleo Brasileiro SA (PBR) Brazil government-controlled oil company said just reported that loans of $30 billion will help the company’s spending plan this year aimed at developing the Americas’ largest discovery in three decades. This loan is part of a $175 billion strategy for 2009 through 2013 the company has proposed to increase production. Latin America’s biggest Public-Traded company is booming and increasing investments while rivals such as ConocoPhillips are downsizing. The company plans on increasing 10 times the production levels by 2020. With such support from Latin American Governments PetroBras could soar to the top oil company worldwide. As of right now it is a full on buy with the confidence it has shown in such times.

3. Companhia Vale Do Rio Doce (RIO) Read article below “RIO’s Booming Comeback”

4. Unibanco (UBB) Brazil’s largest bank, it does a great job at increasing employee productivity whilst keeping costs down and providing Financial services to individual and corporate customers. Like most emerging stocks expect volatile daily ranges especially within Brazilian financials.

5. Banco Bradesco (BBD) BBD is the second largest private bank in Brazil which offers financial services and banking both locally and internationally. It currently works with individuals, small to mid-sized companies, corporations, and institutions. BBD is less volatile than UBB.

6. IShares MSCI Brazil Index (EWZ) A strong Exchange Traded Fund based around Brazilian companies. If you are interested in all the Brazilian Gold stocks then this is the play for you. It currently holds all the companies mentioned above along with some other interesting Brazilian plays. Currently trading in the mid $30s it is a steal as it was trading in $100s back in May. As Brazil rebounds so will EWZ and it will be an opportunity you cannot miss.

Global Trade under Obama

James — Tue, 03 Mar 2009 19:25:39 +0000

With Barack Obama becoming the new Commander in Chief what effect will his policies have on the economy and more importantly your stock portfolio. The two days following the election Wall Street experienced its worst two day drop in history losing 929.49 points or 9.6%. Not a great start for the Obama Administration, though technically he was not inaugurated so blame still falls on Bush. However, is it possible for Obama to administer policies to stimulate the economy without always sending out a blank check out. As a result during this week I will write a series of seven articles each explaining what effect Obama will have on the following topics: Free Trade, Energy, Government Spending & Taxes, Technology, Health Care, Defense and the U.S. Economy in general. When it comes to Free Trade the U.S. needs to benefit from the Globalization of the World Economy. During Obama’s four years in office Foreign Trade will slow down due to several reasons. One Obama opposes CAFTA and it is very doubtful that he acts on his word to rewrite NAFTA. Overall his administration will not take any signifcant steps to change global trade. The more realisitc option is what Morgan Stanley reported which says the emphasis in this area will come from the enforcement of existing agreements. One measure that Obama could facet is elimaniting all tax breaks for companies that send jobs overseas. With a substantially high current Unemployment rate this could stimulate the interest in companies hiring workers back home instead of outsourcing. This measure would analyze certain companies especially the Financial Services and Informtion Technology industries that are highly active in outsourcing. Companies that would feel the impact are JPMorgan Chase (JPM), General Electric (GE), American Express (AXP), IBM (IBM), and Hewlett-Packard (HPQ). Currently companies such as Garmin (GRMN) and Marvell Technology (MRVL) are headquarter outside of the U.S. for tax purposes. This is something Obama frowns upon and is determined to change. The Patriot Employer Act of 2007, which was introduced by Obama, would make thee companies ineligible for a tax credit equal to 1% of taxable income, which would give “Patriot Employers” a boost in profit and cash-flow margins. That financial gain would put pressure on valuations of outsourcing companies and in return bring more jobs home. Overall trade itself won’t trade much during the Obama administration however we could see a decrease in outsourcing which in return could help the current unemployment epidemic.