24/7 Investor

Rino (RINO): China building bet

2009-11-09T07:00:00-05:00

A four-pack of income-oriented fund favorites

2009-11-09T07:00:00-05:00

I like high-yield bond funds, even though there is concern that interest rates will rise in 2010. Most bonds don't do well in the kind of rising interest-rate environment that we are likely to experience sooner than later, given that the U.S. government has been printing money like crazy and commodity prices have been going through the roof. Surely price inflation can't be far behind. When that happens, rates will begin to rise and bonds generally will fall in price. However, high-yield bonds should become more valuable since rising interest rates will also signal a recovering economy and high-yield companies will be seen as less vulnerable to credit, economic, and business risk and therefore more desirable. So locking in high-yield income now makes a lot of sense. As for real estate funds, often they produce decent income and this is still an area that remains beaten-down when compared to other sectors. These securities have already moved up quite a bit but not as much as the financials and commodities, for instance. Real estate funds are more volatile and risky than some of the bond funds that I'm going to suggest but I think it's worth having a sprinkling of...

Peabody (BTU): Energy expert looks to coal

2009-11-09T07:00:00-05:00

Peabody reported its third quarter results and share prices have reacted positively. The weakness in US coal markets remains a challenge, but Peabody has taken steps to shore up profitability in the US, cutting back planned production and locking in contracts for 2010 at fixed prices. Peabody now has no unsold volumes of coal for next year: It's 100% sold out under contracts, so the firm has no exposure to any shifts in US coal prices. Because the firm is now producing coal from its lowest-cost US mines, it’s in a position to make money in a weak market while waiting for the inventories to normalize. Peabody’s management also expects the US to become an important supplier of coal to strong Asian markets and noted that its mines in the US Powder River Basin could export thermal (power plant) coal to Asia out of West Coast ports. Peabody noted that Indian industrial production figures are up more than 10%, and India and China are two of the only major steel producers in the world to actually increase production this year. Neither country has enough metallurgical coal to meet demand and will need to step...

Gambling in Cambodia

2009-11-06T07:00:00-05:00

Quanta Services (PWR): Infrastructure power play

2009-11-06T07:00:00-05:00

Its customers are in the electric power, gas, telecommunications, and cable television industries. These are stimulus spending customers, i.e. big government organizations and utilities companies. Quanta's industry is highly regulated and very cyclical. The industry is pulling out of the cyclical trough with a renewed focus on projects that will improve energy conservation, utilize renewable resources, and improve air quality. Federal stimulus spending is also helping by spurring demand. Quanta Services will benefit from U.S. efforts to increase energy independence while meeting clean energy goals. It can build the infrastructure and electricity distribution networks to harness energy from diverse sources like wind, solar, and natural gas. In fact, many coal fired power plants are considering making the switch to natural gas as a cleaner, more cost-efficient alternative fuel. While challenging market conditions won't evaporate overnight, and the future of natural gas is not set in stone, Quanta is in an very strong position to capitalize on increasing demand for clean energy initiatives. Quanta has been growing both organically as well as through acquisitions. From 2006 to 2008 revenues increased from $2.1 billion to $3.8 billion. Over the same period, the company reduced its total debt...

Insiders eye Novatel (NVTL)

2009-11-06T07:00:00-05:00

Breakout at HMS Holdings (HSMY)

2009-11-05T07:00:00-05:00

China Yuchai (CYD): Asia expert eyes diesels

2009-11-05T07:00:00-05:00

And as China’s economy continues to grow, China’s demand for commercial vehicles from taxis to buses, light duty delivery trucks and heavy duty construction vehicles will grow as well. Automobiles don’t go very far if they don’t have engines, enter China Yuchai, a Singapore-based small cap ($368 million), founded in 1951. The company manufactures a wide ranging array of light duty, medium sized, and heavy duty diesel engines for use in everything from construction equipment, to buses, trucks, and cars. In 2008, CYD’s main operating subsidiary, Guangxi Yuchai Machinery, sold 372,000 diesel engines and was consistently ranked no.1 in units sold by the Chinese Association of Automobile Manufacturers. Net revenues increased by 17.9% from the first quarter of 2009 to the second quarter of 2009. The company is on pace to produce and sell over 510,000 units by year’s end, which would represent an increase of roughly 37% over 2008. That should further solidify them as the leading producer in diesel engines - again as ranked by the Chinese Association of Automobile manufacturers. In September, CYD announced phase one of their new 120,000 sq meter diesel engine assembly factory in Xiamen is complete and ready for commercial...

Say shalom to Israel’s Cellcom (CEL)

2009-11-05T07:00:00-05:00

Cellcom's policy is to distribute at least 75% of net income in quarterly dividends. As such, dividends vary with earnings. Gross (before withholding tax) distributions of $0.62 in December 2008, $0.53 in March 2009, $0.68 in June, and $0.64 in August total The last four payments have totaled $2.47, for a trailing yield of 8% ($2.47/$30.47). Bloomberg estimates call for a final distribution of $0.84 in late November, which would spike the trailing yield to nearly 9% of today's purchase price ($2.69/$30.47). Dividends are paid in U.S. dollars after being converted from the Israeli shekel, so they are subject to currency fluctuations. According to Israeli tax law, the company must deduct 20% of the dividend amount payable to U.S. shareholders. Investors can claim a foreign tax credit for this amount against their federal income tax. The dividends should qualify for the reduced dividend tax rate of up to 15%, making the shares suitable for a taxable brokerage account. Earnings have grown an average 33% annually over the past five years as the company aggressively grew its share of the Israeli market with enhanced services and technological upgrades. Data services now account for about 15%...

National-Oilwell Varco (NOV): Value & growth

2009-11-04T07:00:00-05:00