Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Zacks.com
GSH's Current Price is Fair
Monday February 4, 2:02 pm ET
By Paul Cheung, CFA
Guangshen Railway Company Limited (NYSE: GSH - News) announced strong growth of revenue for the first three quarters of 2007 due to acquisition of the railway transportation assets of the Guangping Line. The company is well-positioned to leverage the railway growth opportunity in China especially in Guangdong province. However, the government's price regulation for railway transportation would negatively affect the company's earnings when its costs increase. Overall, we think its current price fairly reflects its prospects.
On October 25, Guangshen Railway announced the unaudited operating results of the company for the nine months ended September 30, 2007. During the Period, under the China Accounting Standards for Business Enterprises, the company realized a consolidated revenue from operation of RMB7,442 million and a net profit of RMB1,136 million. Earnings per share were RMB0.16 ($1.06 per ADS).
The railway tariff is regulated by Chinese government. This would negatively affect the company's earnings when its costs increase. Second, with respect to passenger transportation, the company faces competition from bus services. Bus fares are lower than the fares for its high-speed passenger train services. Furthermore, buses can offer added convenience to passengers by departing from or arriving at locations outside their central terminals, such as hotels. Third, with respect to freight transportation, the company faces increasing competition from truck transportation in the medium- and short-distance freight transportation market as the expressway and highway networks in our service region and neighboring areas have increasingly improved.
Based on our estimate for fiscal year 2008 earnings per ADR, the stock is trading at 18.3x, which is higher than the industry average. Using a P/E multiple of 19.3x our fiscal year 2008 earnings per ADR estimate yields a target price of $34.75, which we believe reflects the company's prospects. Thus, we are maintaining Hold rating on the stock.
By todays action...... Coulda been.....
Just temporary though.........
I hope this isn't one of GSH's stations.
Over half million expected stranded at China station
Over half a million passengers could be left stranded at a railway station in south China on Monday ahead of the biggest holiday of the year after snow cut power to more than 136 trains, state media said.
Heavy snow and sleet in recent days have hit central, eastern and southern China, areas used to milder winters. Dozens of people have died and many highways, railways and airports have been paralyzed, especially in the east.
Chinese Premier Wen Jiabao said the weather was threatening lives and disrupting supplies of fresh food, coal, oil and electricity ahead of celebrations marking the Lunar New Year, which starts on February 7. He warned of worse to come.
More than 150,000 people were stranded at the main railway station in Guangzhou, the capital of the booming southern province of Guangdong, on Sunday.
"A Guangzhou railway official warned that the number of stranded passengers could hit 600,000 today," the China Daily said.
"Last night, 100,000 passengers packed the square in front of the railway station; another 50,000 found shelter inside the building or under nearby flyovers," an official in Guangzhou, which enjoys a relatively warm winter, was quoted as saying.
The Lunar New Year holiday sees one of the biggest movements of mankind as Chinese, many of them migrant workers, make their way to their home provinces to reunite with family.
The Ministry of Railways has dispatched about 100 diesel locomotives to move the electric trains and ordered 63 trains to bypass the non-operational section of the Beijing-Guangzhou line.
Road traffic between Guangdong and neighboring Hunan had also ground to a halt. Hunan's Huanghua airport has been closed since Friday in the worst cold snap in a decade.
Snow hit the eastern financial hub of Shanghai for the third day on Monday, bringing traffic to a crawl and many flights had been delayed.
China on Sunday ordered urgent steps to fight the transport chaos.
"Urgently mobilize and work as one to wage this tough battle against disaster," Wen told officials, according to a transcript on the government Web site (http://www.gov.cn). "Ensure that the people enjoy a joyful and auspicious Spring Festival."
He and other top officials announced steps aimed at softening the economic blow from the bad weather and energy shortages when inflation is already a dominant worry.
Provinces were ordered not hoard their own coal and electricity, and officials said they would waive some transport charges for farm goods and monitor price hikes. Trains must not only cope with tens of millions of passengers surging home for the holidays, but also with coal being shipped to power plants.
The national forecasting authority said the freezing weather would continue to hit provinces from west to east over the next week.
(Writing by Nick Macfie; Editing by David Fox)
Lots of Chinese guys still riding that railroad. Not too exciting as businesses go but a steady cash cow.
I was expecting GSH to be hammered for 5-10 bucks. Not doing too bad....
Only 30? That is surprising. A very rich 30 I bet.Including the receptionist and janitor. lol!
Buffet does have the advantage of being able to get one on one meetings and answers from people who know the industries he is looking at.
You might find it interesting that the total number of employess of Berkshire Hathaway including the receptionist and Buffet is 30.
He and Munger don't rely much on employees to do their research for them. They are better than anyone else at doing what they do which can't be duplicated by a team or formula.
Unlike your average Joe Blow investor...... I read somewhere that Buffets "big due diligence team" kinda gets the inside track when investing billions into any given company.
Not necessarily inside info, but, VIP status, a personal walk through, access to the books, one on one meetings with the powers that be, etc...
Just in case you had any doubt that Buffett knew what he was doing when he bailed out of PetroChina a few months ago......
PetroChina's Shanghai shares fall 7.7 percent early Tuesday; market cap below US$1 trillion
By ELAINE KURTENBACH
AP Business Writer
The Associated Press
updated 9:16 p.m. MT, Mon., Nov. 5, 2007
SHANGHAI, China - Chinese oil and gas giant PetroChina remains the world's largest business by market capitalization. But its status as the first US$1 trillion ??690 billion) company was short-lived.
A day after its debut in Shanghai, PetroChina Co.'s shares fell 7.7 percent in early trading to 40.58 yuan (US$5.53; ??3.82) apiece.
PetroChina became the first company with a US$1 trillion market capitalization when its 4 billion shares nearly tripled in value Monday over their initial public offering price. The IPO raised 66.8 billion yuan ($8.94 billion; ??6.2 billion) _ a record for a mainland exchange.
The buying frenzy was brief, though, and limited to Shanghai.
Overnight on Wall Street, PetroChina's New York-listed shares fell US$32.96, or 13 percent, to close at US$222.10. In Hong Kong, where the company is also traded, share values at HK$17.54 are down 11 percent since Friday's close.
Based on those values, and Tuesday's share price in Shanghai of 40.58 yuan, the company's market capitalization would be about US$930 billion (??641 billion).
That's still by far the world's largest: No. 2 Exxon Mobil Corp. is valued at US$488 billion (??337 billion).
However, even that reduced figure may not represent the true value of PetroChina, some analysts warn.
The Shanghai shares, which represent only 2.18 percent of the company's total outstanding shares, are meant for domestic investors and are generally off-limits to would-be foreign buyers. Chinese investors likewise have limited access to overseas-traded shares, crimping the leeway for arbitrage between the markets.
$1 US = 7.455 RMB
So we are looking at a net of $151 million.
Yeah, got a long way to go to lose half my investment so far this year.
If you could do 3% every day you might beat the return on HRCT - lol.
Portfolio rocked today! +3%
Ah! Yes! I think I dun did dat before..... lol!
You are misunderstanding their terminology.
RMB1,136 million is 1 billion 136 million RMB. They netted a bit over $100 million for 9 months.
US $'s are roughly about 10% of RMB, I think. So, they only netted just over 100k for 9 months?
Guangshen Railway Announces Results for the First Three Quarters of 2007
Thursday October 25, 9:03 am ET
Net Profit Reaches RMB1,136 Million
HONG KONG, Oct. 25 /Xinhua-PRNewswire-FirstCall/ -- Guangshen Railway Company Limited ("Guangshen Railway" or the "Company") (HKEx: 525; SSE: 601333; ADS: GSH) today announced the unaudited operating results of the Company and its subsidiaries (collectively, the "Group") for the nine months ended September 30, 2007 (the "Period").
During the Period, under the PRC Accounting Standards for Business Enterprises, the Group realized a consolidated revenue from operation of RMB7,442 million and a net profit of RMB1,136 million. Earnings per share was RMB0.16. The board of directors is satisfied with the Group's results for the first three quarters.
Mr. He Yuhua, Chairman of the Company said, "Following the Company's completion of the acquisition of the railway transportation assets of the Guangping Line during the beginning of the year, the entire asset scale, revenues from operation and service territory of the Group during the Period have been significantly expanded. Moreover, with the completion and opening on April 18, 2007 of the Fourth Rail Line between Guangzhou and Shenzhen, which the Company invested in and constructed, the Guangzhou-Shenzhen railway has become the PRC's first wholly-fenced railway with four parallel lines. Accordingly, passenger and freight transportations between Guangzhou and Shenzhen are allowed to run on separate lines, thereby effectively enhancing the integral transportation capacity of the Group's Guangzhou-Shenzhen line. As a result, the Group's operational capacity has been improved significantly."
Looking forward, Mr. He said, "With China's economy maintaining stable and rapid growth, as well as deepening reforms and development of the railway sector, the Group will benefit from excellent opportunities for its business development. Looking ahead, the Group will take full advantage of the opportunities arising from the acquisition of the Guangping railway transportation business, optimizing and consolidating the Group's railway transportation resources, and making the most out of the resulted economies of scale, thereby further enhancing the Company's integral competitiveness and overall operating results."
Nope, no HRCT at the moment.
I'm going to have to hope and pray that the rest of my stocks that are growing, making money, and paying dividends will make me rich.
Chances are slim to none compared to owning HRCT, but, I still like my chances. :~)
Never mind..... You have HRCT and Tin says that will make you rich........ sometime.
I'm not complaining. :~) Wish I would have grabbed a few PTR about $200.00 ago when you brought it up. And LUK.... And... lol!
There's a Wall Street Journal article under GSH posted about an hour ago. You need a subscription to read it though. And this from the Fools a couple of weeks ago........
The Top-Rated Asian Stocks
By Todd Wenning October 4, 2007
5 Recommendations
On the back of a 110% gain in 2006, China's Shanghai Exchange has risen another 174% this year! Similarly, India's Bombay Exchange has had a nice run this year -- it's up 37%.
Investors the world over have wondered whether this type of outsized growth is sustainable. Nowhere, perhaps, is the debate more lively than on Motley Fool CAPS, the Fool's investing community, where more than 65,000 investors rate their favorite -- and least favorite -- stocks.
Despite the red-hot growth on the other side of the Pacific, only one Asian company ranked among the top 50 stocks that CAPS investors rated this month. Back in December, Aluminum Corp. of China held the No. 1 spot and has since surged 254%. Aluminum Corp. still retains its five-star CAPS rating, but a few brave bears have recently reared their heads and helped to drop the stock a bit in the overall rankings.
Moving westward?
While Asian stocks are still generally favored among CAPS investors, stocks from other regions, including Europe and South America, have become more common in the top 50. Investor sentiment may be shifting westward for now, but the growth potential in Asia is still too great to ignore.
Without further ado, here are the top five Asian stocks, according to CAPS.
Company
Country
China Netcom Group (NYSE: CN)
China
Mahanagar Telephone Nigam (NYSE: MTE)
India
Silicon Motion Technology (Nasdaq: SIMO)
Taiwan
Guangshen Railway (NYSE: GSH)
China
Korea Electric Power (NYSE: KEP)
South Korea
Please bear in mind that these are not formal recommendations but rather jumping-off points for further research.
All aboard in Shenzhen
A Chinese railroad company providing passenger and freight transportation in the booming Hong Kong region sounds like a pretty obvious growth story. And Guangshen Railway doesn't disappoint: Revenue nearly doubled between June 2006 and June 2007, while net income grew more than 60%.
But investors have already taken notice of Guangshen's growth potential and have bid up the shares by 95% over the past year. Its current price-to-earnings ratio of 31 is nearly twice that of stateside competitors Union Pacific (NYSE: UNP) and Burlington Northern Santa Fe (NYSE: BNI), so expectations are already high for Guangshen, to say the least.
What do you think? Can Guangshen grow into its valuation? The thousands of investors participating in Motley Fool CAPS are waiting to hear what you have to say about the stocks you follow.
To make your voice heard, register for CAPS. It's 100% free, and don't let the lofty positions of the top players intimidate you. There's room for everyone.
GSH is up over $5 today. What's going on?
You mean HRCT is going to have income?
Not too shabby. Hartcourt's hot on their trail! lol!
Guangshen Railway Announces 2007 Interim Results
Tuesday August 28, 9:01 am ET
Net Profit Rose 97.5% to RMB745.8 Million
HONG KONG, Aug. 28 /Xinhua-PRNewswire-FirstCall/ --
-- Total revenue from operations increased 165.1% year-on-year to RMB4,612.8 million.
-- Profit from operations increased 87.3% year-on-year to RMB856.6 million.
-- Profit attributable to equity holders increased 97.5% year-on-year to RMB745.8 million.
Guangshen Railway Company Limited ("Guangshen Railway" or the "Company") (HKEx Share Code: 525; SSE Share Code: 601333; American Depositary Shares ("ADS") Ticket Symbol: GSH) today announced the unaudited interim results of the Company and its subsidiaries (the "Group") for the period ended June 30, 2007 (the "Period").
Following the Group's acquisition of the operating asset and business of railways between Guangzhou and Pingshi, total revenue from operations and net profit of the Group recorded significant increases. During the Period, the Group's total revenue from operations was RMB4,612.8 million, an increase of approximately 165.1% when compared to the same period last year. Profit from operations was RMB 856.6 million, an increase of approximately 87.3% year-on- year. Profit attributable to equity holders was RMB745.8 million, an increase of 97.5% year-on-year. The board of directors has decided not to declare any interim dividend for the six months ended 30 June 2007.
Mr. He Yuhua, chairman of the Company said, "Following the Company's completion of the acquisition of the railway transportation businesses between Guangzhou and Pinshi, the assets scale, revenue from operation and service territory of the Group during the Period have been significantly expanded. The Fourth Rail Line between Guangzhou and Shenzhen, which the Company invested in and constructed, was opened in April 2007, leading to a notable increase in the transportation capacity of the Guangzhou-Shenzhen Railway. Meanwhile, with the Group seizing the opportunities from the sixth large-scale speed-up, together with the introduction of the domestically manufactured high-speed electric train sets "Concord", a further improvement of the "as- frequent-as-buses" operation scheme of Guangzhou-Shenzhen intercity passenger trains and the IC Card Ticketing System, the operating results of the Company in the first half of 2007 improved significantly."
Passenger transportation business is the most important business of the Company, representing approximately 84.6% of the Company's total revenue during the first half of 2007. During the Period, the Company's total volume of passengers dispatched was 35.008 million, an increase of approximately 92.2% year-on-year. Revenues from passenger transportation business amounted to RMB3,903.5 million, an increase of 171.8% year-on-year. Total volumes of passengers dispatched of the Guangzhou-Shenzhen trains, Hong Kong through- trains and long-distance trains amounted to 10.129 million, 1.505 million and 23.374 million respectively, realising revenues of RMB596.9 million, RMB207.1 million and RMB3,099.5 million respectively.
Total volume of passengers dispatched of long-distance passenger trains increased significantly by 323.7%, thereby becoming the driving force of total passenger revenue growth and passenger volume growth. This was attributable to the incorporation of the long-distance passenger transportation business of the Guangzhou-Pingshi Railway after the acquisition of the relevant railway transportation business. Shenzhen-to-Shanghai trains have also been designated as express trains instead of temporary trains since the sixth large-scale speed-up, and first-class air-conditioning fares were reapplied to the trains, thereby leading to a substantial increase of 464.0% on revenues of passenger transportation from long-distance trains.
For the freight transportation business, the incorporation of the freight transportation business of the Guangzhou-Pingshi Railway after the acquisition of the relevant railway transportation business has led to a significant increase in revenues generated from freight transportation and in freight tonnage. During the Period, the total freight tonnage transported amounted to 31.740 million tonnes, an increase of 125.6% year-on-year; and revenues of the freight transportation amounted to RMB650.6 million, an increase of 174.8% year-on-year.
Looking forward to the Company's development in the second half of 2007, Mr. He said, "With China's economy keeping stable growth, as well as the deepening of China's railway reform and development, it is expected that the transportation business will maintain its growth momentum in the second half of 2007. The Company will take full advantage of the opportunities arising from the acquisition of the Guangzhou-Pingshi Railway transportation business, optimising and consolidating the railway transportation resources and making the most out of the resulted economies of scale. In addition, following the commencement of operation of the Fourth Rail Line, the Company's transportation capacity will be significantly enhanced and the pressure upon the railway transportation between Guangzhou and Shenzhen will be greatly alleviated. Meanwhile, the Group will study and operate more long-distance passenger trains at the right time to expand the Group's income base."
Guangshen Railway Company Limited was established in 1996. The H shares and ADS issued by the Company were listed on The Stock Exchange of Hong Kong Limited and the New York Stock Exchange respectively in May 1996. The Company is currently the only PRC railway enterprise with its shares listed overseas. In December 2006, the Company returned to the A share market and successfully listed its shares on the Shanghai Stock Exchange. The Company holds the sole operating rights of the Guangshen Railway, one of the most modern railways in the PRC. The Company is mainly engaged in railway passenger and freight transportation businesses between Guangzhou and Shenzhen, long-distance passenger transportation services, as well as the Hong Kong Through Train passenger service in cooperation with Kowloon-Canton Railway Corporation ("KCRC") of Hong Kong. As at June 30, 2007, the Company operated 196 pairs of passenger trains in accordance with its daily train schedule, included 80 pairs of high-speed trains between Guangzhou and Shenzhen, 99 pairs of long- distance trains, 4 pairs of regular-speed trains between Guangzhou and Shenzhen and 13 pairs of Guangzhou-Hong Kong through-trains.
I got it from MSN Money. GSH doesn't often release a PR.
If HRCT made as much money as GSH, its share price would act accordingly.
Musta pulled that out of a filing.... Because I can never find any news.
Too bad HRCT's shareprice doesn't react the same on company silence....
GSH Net Profit Margin 18.69%
Not bad for a railroad!
The Company believes that, with further development of economic cooperation between Hong Kong and the Guangdong Province and the continuous improvement of the Company's transportation facilities , the Company will have promising development prospects.
As of December 31, 2005, the Company operated 122 pairs of passenger trains in accordance with its daily train schedule, including 67 pairs of high-speed passenger trains between Guangzhou and Shenzhen, 13 pairs of Hong Kong Through Trains , two pairs of regular-speed passenger trains between Guangzhou and Shenzhen , and 40 pairs of long-distance passenger trains. With the Company's effort to promote the development of high-speed passenger trains, one pair of high-speed trains between Guangzhou and Shenzhen are dispatched every 15 minutes on average during peak hours, and the "Asfrequent-as-buses" inter-city operation has basically taken shape.
There are ! Make the run from Guilin to Nanning once a year. Last run earlier this month. 20 cars, not an empty seat. 4 1/2 hours, about 200 miles. cost $12. On holidays in China hard to get a seat on a train. Cheap efficient transportation.
Up another $2.28 today! I don't know what is going on but I like it!
There must be a lot of Chinese guys riding the train. These are pretty big gains.
Very nice. And another kick azz day......
Current dividend is $0.52 a share. Since my cost basis is $6.18 a share, the dividend yield on my original investment is about 8% annually in addition to the share price growth.
I am pretty happy with this one.
Don't forget the dividend - lol
With only 87 million shares outstanding..... I see future forward splits a coming with this one also.
LOL!
BAM up big time today also.
This sux..... I'm only up about 200%. lol!
http://china.seekingalpha.com/article/32703
SeekingAlpha
Guangshen Railway Company: Profit From Chinas Railroad Expansion
Wednesday April 18, 9:29 am ET
Michael K. Dawson submits: Many thought that Warren Buffet had lost his touch when he continued buying old boring companies in the late nineties when clearly technology stocks were the key to riches. Today, how many wished that they had bought McDonald’s (NYSE: MCD - News) instead of Microsoft (NasdaqGS: MSFT) in 1999? Last week, news surfaced that he was buying into another industry that doesn’t have much appeal to modern investors. The smirks have long since faded.
Now Buffet creates a buzz.
According to a filing with regulators, Warren Buffet’s Berkshire Hathaway, Inc. had amassed a 10.9% stake, worth more than $3 billion, in railroad operator Burlington Northern Santa Fe Corp (NYSE: BNI - News). A Berkshire Hathaway spokeswoman also confirmed to Reuters that the company was investing nearly $1.4bn in two other unnamed railroad groups as well. Once again Buffet is doing what no one does better – investing in long term growth opportunities.
Railroads are so heavily tied to fixed capital – how can it be a growth play? Two factors make rail the preferred the shipping method: economic growth and rising energy costs. If you really want to get excited – think about that in the context of emerging markets. Right now there is a shortage of freight trains to carry raw materials from China’s western provinces to the manufacturing centers along the coast. Huang Min, chief economist with China’s Railways Ministry, said “Our railroad service can only satisfy 35% of cargo demand.”
For the past three years, leveraging the emerging markets has been my primary investment theme. Initially, my thesis was simply to “buy what China wants.” Eventually, it expanded to include the BRIC economies (Brazil, Russia, India and China) as well. About 3 months ago, I did some rudimentary research on china railroads. My conclusions were – it is a must own sector, but implementation is difficult for U.S. based investors.
Buffet’s moves caused me to revisit this thesis. I found two recent articles that got the juices following again: Business Week, March 20, “China Great Rail Spree Continues” and Forbes, March 26, “Fast Train to China.” If the following quote doesn’t cause you see dollar signs I don’t know what will. Simon Charlesworth, Vice-President of Business Development for Alstom Transport, at the Asia-Pacific Rail 2007 conference said:
China has by far the biggest needs in the region. And as crazy as this may seem, its economy would probably be growing at even a faster rate than the current 10%-plus a year pace if its rail infrastructure were truly up to snuff.
Cha-Ching!
I often say that knowledge is not power, but acting on knowledge is power. It is interesting to know that Beijing is spending $190 billion on its railroad build-out through 2010, but profiting on that knowledge is much more meaningful. To date I have leveraged the China theme by buying global companies that supply to China. It is the old pick and shovel play. During a gold rush a few miners get rich, but many of the suppliers of mining equipment get rich. Extrapolating that to China’s massive industrialization would imply investing in companies that supply items such as raw materials and machinery to China. Take a look at any Copper minng company’s chart and you will understand what I am saying.
Since this indirect approach has worked so well, ideally I would like to extend it to the railroad build-out. However, that has proved to be a challenge. Bombardier Transportation (Canada), Mitsui (Japan), Kawasaki Heavy Industries (Japan), Alstom Transportation (France) and Siemens (Germany) are the largest rail equipment companies. General Electrical is also a significant player. All are conglomerates with exception of Bombardier and only GE and Siemens trade on U.S. Stock exchanges. Kawasaki Heavy Industries trades on the pink sheets.
Since trading Canadian stocks is fairly easy for US investors, Bombardier would be an interesting choice. However, I would prefer a basket approach (multiple stocks) as opposed to hitching my wagon to one star.
LOL ~~~~ and, be more quiet !!!!!!!!
Funny, the best one of us trash talkers placed was 7th. lol!
We'll have to work on a bigger turnout for the next one.
OT: same thing here....got emotionally involved with Empire's partner from Ottawa ie. glooner ~~~~ ended up losing way too
much in a grudge hand w/ him and it was "life support" from there ! I was hoping w/ could get moved to same table...but, I did not last long enough for it to happen.
Lot of fun.....good group of people there too !
GSH looks like a good one to hold ~~~ G/L !!
I don't mind holding. Seems to have worked very well so far.
And thanks, I was in defense mode from the beginning. Good hands were far and few between last night.
Could have lasted longer if that party crasher empire hadn't stole a huge pot from me.
It was fun! And fast! Looking forward to the next one.
FYI ~~ just stumbled across this on new site.
http://www.newratings.com/analyst_news/article_1457749.html
good game last night ~~~ you did very well !!
Between home improvement costs and selling most, if not all of my losers, I can cover my capital gains and end up with 15-30k to reinvest.
I'm going to have to get an extra bottle of advil to get me through my records search. Schit is everywhere!
Maybe I'll be forced to enact last years resolution. lol!
Hope you had a Merry Christmas!
Here's another list to consider and argue about...... That's what lists are for - lol. Everybody has one and some are better than others.
10 stocks to hold forever -- almost
These companies, some with international scope and others mostly domestic, have one thing in common: Plenty of room to grow. Their stocks should be good for five to 10 years.
By Harry Domash
Many of us are too busy with work and family to perpetually baby-sit our stock portfolios, endlessly trying to divine when it's time to buy or sell.
For those among us with real lives, I've come up with a list of 10 stocks to buy and hold forever. What's forever? In this day and age when everything can turn upside down in an instant, we're probably talking five years. Or 10, if we're really lucky.
Admittedly, coming up with such a list is a presumptuous endeavor, since none of us has a clue what the world will be like even five years down the road.
Nevertheless, I think my 10-stock portfolio does have the potential to provide strong returns for several years out.
Four are well-established giants that own brands known and respected worldwide. These companies were selected because their growth will accelerate as more consumers enter the middle and upper classes in emerging countries such as China and India.
Five stocks in the portfolio, because of the nature of their business, will always be primarily U.S. operations. Nevertheless, despite the inevitable short-term bumps along the road, each has several years of growth ahead before running out of expansion opportunities.
Finally, my 10th pick, although very small compared with the others, is a major player in a market niche likely to enjoy substantial growth, both in the United States and abroad, for several years.
An added bonus: Many of these stocks pay substantial dividends that, if maintained, will help reduce volatility.
Without further ado, here are my selections.
Capitalizing on the emerging economies
Procter & Gamble (PG, news, msgs)
Expected dividend yield: 1.9%.
As economies around the world grow, so will the demand for consumer products. P&G, with annual sales of more than $70 billion, is the biggest player in that sector. Its 300 brands include Clairol, Charmin, Crest, Duracell, Folgers, Gillette, Pampers, Tampax, Tide and Vicks. P&G's products usually have the biggest share of their market niche.
P&G grows two ways. It has been an active acquirer in recent years, gobbling up Gillette in 2005 and flashlight and electric lantern maker Garrity Industries in 2006. But even more significant, only a small portion of P&G's current sales come from Asia and other developing areas, so it has ample expansion opportunities abroad.
McDonald's (MCD, news, msgs)
Expected dividend yield: 2.3%.
With more than 30,000 restaurants in more than 100 countries, you might think that most of McDonald's growth has already happened.
But that's not necessarily so. For years, while consumer tastes evolved, McDonald's was stuck in neutral, offering, in essence, the same menu it started with in 1955. But that's no longer the case. McDonald's now gets it. New menu items have spurred sales growth, and more are on the way. Look for continued domestic sales growth for the next few years as McDonald's learns to upscale its menu.
Looking abroad, only 3% of McDonald's sales come from Latin America, and only 16% from Asia and other developing areas. So there are plenty of expansion opportunities outside the United States.
Chevron (CVX, news, msgs)
Expected dividend yield: 2.8%.
While there's plenty of discussion about which way oil prices are headed, most would agree that, propelled by surging demand from the emerging economies, world energy consumption will continue to head higher for the foreseeable future. So, even if oil prices stay put, increasing production levels will drive oil company profits up.
Chevron, the world's second largest player behind ExxonMobil (XOM, news, msgs), engages in every aspect of the energy industry from exploration and production to retail marketing. Thus, either Chevron or ExxonMobil would be a good proxy for the entire industry.
I picked Chevron over ExxonMobil because Chevron has a 50% stake in a huge deep-water petroleum pool under the Gulf of Mexico. The existence of that pool, potentially the biggest U.S. oil discovery since Alaska's Prudhoe Bay, was only recently confirmed. Chevron also holds interests in several other recent major oil and natural gas discoveries.
Starbucks (SBUX, news, msgs)
Expected dividend yield: none
Starbucks operates or licenses more than 8,800 retail coffee shops in the United States and plans to grow that number to around 15,000. The company recently announced its goal to have 40,000 stores worldwide. Starbucks also plans to increase sales by adding new food or gift items to its store mix, as well as developing new products such as ice creams and liquors that would be sold in other venues.
Starbucks has been successful at exporting its concept overseas. Its coffee has even caught on in Britain, where tea is the national beverage. It already has more than 500 outlets there. Starbucks has opened a couple of hundred outlets in China. If the concept catches on with China's emerging middle class, the possibilities are huge.
Home grown
Vornado Realty Trust (VNO, news, msgs)
Expected dividend yield: 2.8%.
An old cliché advises that, since they're not making any more of it, real estate will only go up in price. In my view, that sound advice is likely to hold true for the foreseeable future.
Vornado is a real estate investment trust (REIT), a type of corporation limited to owning real estate properties. REITs don't pay income taxes if they pay at least 90% of their earnings to shareholders in the form of dividends.
REIT share prices generally move up for one of two reasons. Higher rents contribute to increased income, which fuels dividend increases. Rising underlying property values, even if rents are flat, also drive REIT share prices higher.
Vornado owns commercial real estate such as office buildings, retail properties and warehouses. The demand for commercial real estate, partly driven by foreign investors, seems insatiable. Property values rose even during the 2002-2003 downturn, when office vacancy rates soared and rents dropped.
Many REITs own commercial real estate, but Vornado stands out. It's a master at acquiring and rehabilitating rundown or underutilized properties.
Macquarie Infrastructure Company Trust (MIC, news, msgs)
Expected yield: 6.4%.
Macquarie, a relatively recent (Dec. 4) IPO, owns and operates infrastructure properties such as aviation services, airport parking lots, toll roads and utilities, all within the United States. Macquarie's businesses are relatively insensitive to swings in the economy, have little competition and generate stable and predictable cash flows.
Macquarie is structured as a trust, similar to a REIT. Macquarie is externally managed by Macquarie Group, an Australian investment bank that controls infrastructure assets in more than 20 countries. A Macquarie unit was part of the investment group that made headlines recently when it announced a deal to acquire Qantas Airways.
Although not required by law, as is the case for REITs, Macquarie intends to pay out substantially all of its cash flow available for distribution to shareholders.
Crosstex Energy (XTXI, news, msgs)
Expected dividend yield: 2.6%.
Crosstex Energy owns partnership interests in Crosstex Energy LP, a limited partnership. Its holdings in Crosstex Energy LP are the corporation's only significant assets, and dividends received from the partnership are its only income.
Crosstex Energy LP is one of several master limited partnerships (MLPs) that own and operate natural gas pipelines. Pipeline operators enjoy a profitable and stable business. Their income depends mostly on the volume of natural gas transported and is not usually affected by natural gas price fluctuations.
Crosstex Energy LP operates more than 5,000 miles of gas pipelines and associated processing plants and other facilities in the Gulf Coast region, from Florida to Texas. It grows by expanding the capacity of existing pipelines and by building or acquiring pipelines.
You can buy Crosstex Energy LP shares directly. However, owning MLP shares requires filing special forms at income tax time. Also, tax regulations often preclude MLPs from being held in tax-sheltered accounts such as IRAs or 401(k) plans.
Since Crosstex Energy is a regular corporation, holding its stock gives you a way to participate in pipeline profits without the tax complications.
U.S. Bancorp (USB, news, msgs)
Expected dividend yield: 4.5%.
With slightly more than 2,400 branches, compared with more than 5,800 for Bank of America, U.S. Bancorp is a well-managed bank that still has plenty of room to grow without having to look abroad.
USB offers all of the usual consumer and commercial banking services, along with mortgage banking, title and business insurance, investment banking and wealth management services. USB's Nova Information Systems unit is a major credit-card-transaction processor for merchants in the United States and in Europe.
Walt Disney (DIS, news, msgs)
Expected dividend yield: 0.9%.
While new technologies might change the way we access music, videos, movies and other forms of entertainment, they will likely only increase the demand for entertainment content.
Disney is a media powerhouse. Its movie studios produce films under the Disney Pictures, Touchstone, Pixar and Miramax labels. Its Walt Disney World and Disneyland are among the most popular resorts in the United States, and Disney also has interests in theme parks in China, France and Japan. Disney owns the ABC television network, a majority interest in ESPN, and TV and radio stations.
Disney has stumbled in recent years, but it has a new CEO taking steps to revitalize its creative processes and has been a pioneer in exploiting new distribution technologies. While Disney derives substantial business from overseas, I put it in this category because it's not clear that the emerging economies will add much.
One small addition
Daktronics (DAKT, news, msgs)
Expected dividend yield: 0.2%.
Daktronics makes programmable sports scoreboards, digital billboards and large outdoor programmable displays. Its displays, implemented mostly using LEDs (light emitting diodes), look like giant high-definition TV screens.
Daktronics, with a market capitalization (amount required to buy all of a firm's shares) of only $1.5 billion, is the smallest company on the list. With expected annual sales growth in the high 20% range, it's also the fastest growing. Those factors add up to higher-than-average long-term growth prospects, but you can also expect more volatility (price swings) along the way.
I selected these stocks with the idea that equal dollar amounts of all 10 would be purchased together. At any given time, some will be doing better than others. But barring a major change in fundamental outlook, continue to hold them through short-term setbacks, such as when their quarterly results fall short of expectations.
Both the one and five year charts show a nice overall trend but I am VERY suprised at the recent 100% gain. Just goes to show you can't predict everything.
Nice Find.. this one looks good
Followers
|
3
|
Posters
|
|
Posts (Today)
|
0
|
Posts (Total)
|
103
|
Created
|
12/14/06
|
Type
|
Free
|
Moderators |
Volume | |
Day Range: | |
Bid Price | |
Ask Price | |
Last Trade Time: |