Wall Street pulled back sharply yesterday as the Dow Jones industrials fell more than 200 points. The market’s choppiness also meant that some of our very best picks — Millicom International (MICC), America Movil (AMX) and India’s ICICI Bank (IBN) — went "on sale" after announcing earnings, offering our newer subscribers another (cheaper) bite at the apple of some of my favorite global growth stories.
PORTFOLIO UPDATE
ABB Ltd. (ABB) announced yet another set of two power contracts this week, worth $188m to strengthen power supplies in Al Reem, United Arab Emirates, and to supply the complete process control system for a new high-efficiency power plant for the German utility company, E.ON-Kraftwerke. In addition, ABB will provide Petrom SA with fully integrated Terminal Automation Systems and related design, engineering and installation services at four of its pilot terminal sites in Romania. ABB will also be announcing earnings on Thursday. Yesterday’s pullback is a perfect time to BUY.
America Movil (AMX) announced its second-quarter 2007 earnings after the market close yesterday. America Movil, the largest cell phone company in Latin America, posted a 31% leap in second quarter net profit, boosted by six million more subscribers, bringing its total to 137.2 million. Acquisitions in Puerto Rico and the Dominican Republic also bolstered sales. Its April-June net profit was 14.7 billion pesos ($1.36 billion). Revenue jumped 29% to 75.4 billion pesos ($6.98 billion). About 58% of consumers in Latin America now have a mobile phone, up from 49% at this time last year, he said. The stock sold off almost 3.5% in Tuesday’s trading, so it is a good time to add to your positions. The stock remains a STRONG-BUY.
Mining group Anglo American (AAUK) closed at another record high on Monday, but a Tuesday correction hit mining stocks particularly hard. This is all mere noise, and it is a good time to add to your positions in Anglo American. It remains a STRONG-BUY.
Home Inns (HMIN) is again drifting as it failed to follow through on last week’s technical strength. It remains a HOLD.
Indian banking play ICICI Bank Ltd. (IBN) announced that it posted a 25% increase in its fiscal first quarter earnings, driven mainly by growth in fee-based income and continued demand for credit. Net profit for the three-month period ended June 30. It rose to 7.75 billion rupees ($192.8 million) from 6.2 billion rupees a year earlier. Total income rose 53% to 92.81 billion rupees.
Chief Financial Officer Vishakha Mulye attributed growth mainly to a 16% increase in net interest income — the difference between interest earned and interest paid — to 17.14 billion rupees, driven by total asset growth of more than 34% and a 35% rise in fee income.
ICICI Bank has benefited from India’s booming economy, which is expected to expand close to 9% this year. With ICICI Bank holding more than 30% of the retail-loan market in India and demand for credit growing at around 30% over the past three years, the long-term growth story at ICICI Bank remains intact. The correction over the past few days makes it a perfect time to add to your positions and the stock is a BUY.
Global cell phone operator Millicom International (MICC) announced that second-quarter earnings before interest, tax, depreciation and amortization (EBITDA) totaled $263 million, up from $160 million a year earlier. That was just shy of forecasts. Millicom said pretax profit for continuing operations jumped to $134 million from $75 million a year earlier as the firm’s rapid expansion in emerging markets boosted its subscriber base by 84% to 18 million. Revenues in the quarter rose to $613 million from $341 million a year earlier. Despite missing numbers slightly, Chief Executive Marc Beuls said that he did not see any impact on margins yet from increased competition.
The fact that Millicom shares fell more than 12% on the news is an absolute gift! Add to your positions here and you will be richly rewarded. My verdict? Back up the truck and BUY, BUY, BUY!
Global steel giant Arcelor Mittal (MT) confirmed the acquisition of two steel tube businesses belonging to French company Vallourec. The Mittals continue their incessant consolidation of the global steel sector. The stock is a BUY
Tesco (TSCDY) has signed a lease to open one of the company’s first locations of its newest chain of grocery stores, Fresh & Easy Neighborhood Market, in Los Angeles at 7120 Hollywood Boulevard. The 16,600 square-foot Fresh & Easy Neighborhood Market grocery store is expected to open at the 149,000 square foot urban neighborhood shopping center in the fall of 2008. BUY Warren Buffet’s favorite.
The Swedish ETF (EWD) consolidated after hitting record highs last week. Sweden is a perfect hedge against increasing global volatility and choppiness at the market. It remains a BUY.
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