Un-Sung Champion Stocks

13-Aug-2010 | Reggie | Agriculture Asia Commodities Stocks

When you ask a person what determines how much a stock is worth you’ll get a range of answers from earnings, growth, valuation, or a novel technology or service.  All of these are of course extremely vital to the long term success and viability of a business.  That said, there is 1 very important criterion that can have a larger impact than all of the previous combined.  That criterion is popularity.  It’s like that old saying “if a tree falls in a forest and no one is around to hear it, does it make a sound?”

 

Today a company called Asia Bio Chem (ABC on the Venture) released their 2nd Quarter results.  ABC is in the business of processing corn starch, corn germ, gluten, and fibre for the Chinese domestic market.  Here are a few highlights from those results.

  • 144% increase in revenues
  • 170% increase in gross profit
  • 279% increase in EBITDA
  • The announcement of an upgrade to improve cost efficiency in the plant along with continued expansion in capacity
  • 2nd Quarter revenues increased over the first quarter revenues by 43%

 

Based on results and announcements like this, one would expect the stock to have soared throughout the day.  Instead ABC was down about 5% throughout the day before coming back to close flat.  For anybody holding the stock, the markets reaction was quite the disappointment.  It goes to show how important the hype or marketing surrounding the stock itself is to its overall success.  In order for people to know when a company is doing phenomenally well, they have to know about the company itself.  That means you’ll usually need a plethora of analysts and institutions covering the stock.  The flip side of that argument is if a company is doing that well, its probably only a matter of time before analysts pick up coverage, and if you can buy it before that you could find yourself ahead of the game.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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Investing in Exchanges – TMX posts its 2Q Results

28-Jul-2010 | Reggie | Canadian Investing Economy International Investing Investment Ideas

A great indicator as to the health of an economy as a whole is how well it’s stock exchange is doing.  The revenue the exchange receives is based on a few factors like the number of shares being traded, new companies listing themselves, and companies issuing additional shares.  Today the TMX reported their second quarter earnings.  Revenue was up 3% from the year prior.  The increase came from an increase in shares traded on the Venture exchange, and Montreal exchange.  For the TSX itself, the number of shares traded was down from periods prior.

 

The TSX has been facing increasing competition as rivals try to take a bite out of their business.  The rivalry has been great for traders though as the exchanges keep trying to out do each other with newer, faster technologies and trading platforms designed to cater to the needs of advanced computer trading programs that execute a huge number of trades every minute.

 

One company trying to capitalize on the exchanges themselves is called Urbana corp.  Urbana trades on the TSX under “URB.”  Their main business is investing in the exchanges themselves.  While exchanges like the New York Stock Exchange and Toronto Stock Exchange have been public for many years, other exchanges around the world are in the process of “demutualization,” or in simpler terms becoming public.  As these companies go public, its Urbana’s hope that these exchanges will become worth more.  Exchanges that Urbana holds that are still privately held include: The Bombay Stock Exchange, Budapest Stock Exchange, Minneapolis Grain Exchange, and Kansas City Board of Trade.  It’s two biggest holdings are in the Chicago Board of Options and NYSE.  Owning the exchanges can be a great way to invest in markets you think will do well and grow in the future.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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Currency Trader Are Watching Canada

03-Mar-2010 | kate | Canadian Investing Currency Economy Market Outlook

Exchange traders are taking an interest in Canada, as they are identifying our country as the likely early rate hikers in the upcoming months.

For FX traders, an interest rate changes represent “carry trade” opportunities, where trader can borrow in one currency and invest in a second in order to profit off of the difference in interest rate paid. Carry traders are one of the key drivers of the fx markets.

Carry traders are looking at Canada since we are leveraged to the strongest area of the global recovery (commodities and exports) and expect us to move to the forefront as ourselves, and most likely Australia raise our interest rates.  Most carry traders who view Australia as leading the pack since they have been raising rates slowly since October, believe Canada isn’t far behind even though our central bank decided to hold our rates in the near future.

Other countries FX traders are closely watching:

Mexico:  Changing their image from a serial defaulter, Mexico has grown into a healthy budgetary leader and has good trade exposure to the United States.  The county has strong fundamentals, including a better than expected fourth quarter GDP leading to the conclusion rate hikes are in the near future.

The Scandies- The Two Scandinavian currencies- the Norwegian Krone and Swedish Krona- are primed to be two countries that would benefit from being early rate hikers. So far, Norway has confirmed this by raising their key policy rate by a quarter point to 1.75% in December. Sweden has held steadfast on their rate so far, but has indicated that the summer may bring changes.  Underlying the FX traders beliefs are strong growth rates and export levels.

Brazil- The country has big exposure to commodities making them a major play in the emerging markets. While Brazil used to be an investment risk, credit agencies have recently upgraded Brazil to investment grade.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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Trouble Ahead

08-Feb-2010 | kate | Commodities International Investing Market Outlook Market Strategies Market Theories Stocks

In 1996 copper was being hoarder which led to a price collapse, and predicts that we are going to see this on a much larger scale once again. President of Resolved Inc, a metal trader, believes that a catastrophe is on the way and that copper prices are set to dissolve on rising stockpiles and the unwinding of positions by speculators.

So why does David Threlkeld believe copper prices are going to fall? David says that part of the problem is because of tricky word usage by analyst, so let’s start here.  Demand simply means buying a product while consumption means that the demanded product is being used and is no longer available for use. So instead of looking at market demand, which can meet stockpiling of metal we should be looking at world usage.

In two thirds of the world consumption of copper went down by 20%, but consumption in 1/3 of the world which is China went up 10% as well as copper production in China also went up 10% There is also a theory that so the theory that China is reliant outside copper is incorrect. The country produces 4 million tonnes of copper and uses roughly 5 million tonnes, meaning that they import roughly 1 million tonnes a year.

Anything in excess of that is unsold inventory which remains available to the market and creates a stockpile of inventory which will eventually lead to the market is going to collapsing since the demand will slow down.  Unsold inventory is usually around 5 million tonnes, this year it is going to be a couple extra tonnes a year, meaning that supply is outpacing consumption.  We will find that we need consumption to start outpacing supply so that we can remove the excess capacity on the market in order to stop a collapse in the price of copper, something that Threlkeld sees as unlike and rather is preparing for a slowdown in copper price for the next few years.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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Santa Claus Rally Coming to Town

21-Dec-2009 | Reggie | Investment Ideas Market Outlook Market Strategies Market Theories

Also known as the December effect, it is a fairly common trend that often occurs near the end of the year after investors are finished their tax loss selling.  With most investors doing the majority of their tax loss selling in November and early December, stocks that were already doing poorly do worse as they face additional selling pressure.  Eventually, selling pressure expires as investors finish their tax loss selling, or run out of time to do so.  The last day for tax-loss selling for 2009 is December 24th.  Once the selling is finished, its likely stocks will rally because of the lack of sellers left in the market and capital being redeployed.

This year is shaping up to be a particularly good Santa Claus Rally thanks to how absolutely terrible the stock market was over the past year.  Unfortunately, many people are still left with losing positions that are likely worth more as tax losses than potential money makers down the road.

Market Historian Jim Stack has crunched the numbers over the years to give us a clear idea of just how effective the Santa Claus Rally has been:

The Santa Claus Rally is a widely recognized truism on Wall Street and it’s actually supported by statistics. Prior to 1970 this rally was a 2-week event, commonly occurring during the last week of December and the first week of January.

Over the last 40 years the pattern has changed. These year-end rallies have been stronger and they’ve started earlier.

Perhaps it was a revision in the tax laws that enhanced this yearly occurrence, or maybe the proliferation of mutual funds with their year-end portfolio shuffling, or it might simply be broader anticipation of the event.

Whatever the stimulus, over the last four decades the average gain from November 20 through the end of January has been +4.2%, which would be an extraordinary +23%, annualized. There are several factors that likely contribute to this seasonal strength.

Whatever the reason, in the last 40 years Santa has rarely missed a beat. By looking at  the performance of the S&P 500 from November 20 through January 31 each year, we note:

  • * Excluding bear markets, only four years resulted in a loss for the period. The biggest decline was in 2002-2003, when a retest of the major bear market bottom caused the Index to drop 6.4%.
  • * Considering the entire 80 years of S&P 500 data, only two years saw a decline of greater than 10%. That occurred in the middle of major bear markets in 1931 and 1969.
  • * Conversely, a number of years have seen exceptional gains. Ten Santa Claus Rallies out of the past 80 years have produced gains in excess of 10%. Five of those hefty rallies occurred during the dismal stock market decade of the the 1970s.

This is definitely a year where we should all be very thankful towards the guy in the big red suit and cross our fingers that history holds true.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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