It was a strong week for your Global Stock Investor portfolio, as global markets continue to stabilize. The iShares MSCI Brazil Index ETF (EWZ) soared 12.47% as it became the last BRIC country to receive an upgrade to “investment grade” status. Millicom International (MICC), and ArcelorMittal (MT) also jumped 11.27% and 7.98%, respectively. Potash (POT) recovered almost 10% from last week’s sharp drop. Expect oil rig giant Transocean (RIG) to move up today on the back of announcing better than expected earnings.
Overall, your stock positions are performing strongly as risk appetite returns to the markets, even as defensive positions in the CurrencyShares Japanese Yen Trust (FXY), commodities PowerShares DB Agriculture (DBA) and Elements Rogers International Commodity ETN (RJI) are lagging. That is exactly as expected, and reflects the diversified nature of your Global Stock Investor portfolio. Overall, your portfolio is performing strongly, with five out of your 10 positions showing double-digit percentage gains.
The current weakness in Coca-Cola Hellenic Bottling SA (CCH) makes it a particularly good time to add to your position at these levels. Also, make sure you move your stops up, as I explain below, for both iShares MSCI Brazil Index ETF (EWZ) and ArcelorMittal (MT). Because of some possible negative tax implications of holding the ETF, I am moving PowerShares DB Agriculture (DBA) to a HOLD. All of your other positions remain BUYS.
Barrick Gold (ABX) announced earnings this week. Barrick’s adjusted income rose 29% year over year and net profit climbed to $514 million, or 59 cents a share, roughly in line with estimates. Sales in the quarter jumped to $1.96 billion from $1.1 billion. With costs per ounce at $393 per ounce, operating margins in the quarter were nearly double the margins from 2007. The strong operating performance allowed Barrick to raise its six-month dividend by 33% to 20 cents a share. Because of the pullback in gold price, I’m keeping the stock at a HOLD.
Coca-Cola Hellenic Bottling’s (CCH) Serbian subsidiary made a profit of EUR 17.7 million last year — up 33% from 2006 on a 29% increase in 2007 revenues. The recent weakness in the stock is an opportunity to BUY.
PowerShares DB Agriculture (DBA) was flat this week once again. It is surprising, since shortages in agricultural wheat, corn and soybeans across the globe dominate the headlines. In addition, tax issues exist in holding DBA and I am actively exploring alternatives to this ETF. I shall keep you posted. I am moving DBA to a HOLD until then.
iShares MSCI Brazil Index ETF (EWZ) soared 12.47% this week as Standard & Poor’s upgraded Brazil to “investment grade.” This is a watershed in Brazil’s financial history and confirms that the Brazilian ETF remains a strong BUY. Move your stop to $71.00.
CurrencyShares Japanese Yen Trust (FXY) continues to be technically oversold as markets strengthen. This hedge against market downturns remains a defensive BUY.
Millicom International (MICC) soared 11.27% this week, back near highs not seen since December. This is a stock that does well as risk appetite returns to the markets. Millicom also is becoming the target of takeover rumors once again as its African properties attract larger suitors. Use any pullback as an opportunity to BUY.
ArcelorMittal (MT) jumped almost 8% this week to hit record highs. ArcelorMittal’s Chief Executive Officer Lakshmi Mittal is said to have proposed buying 25% of China’s largest state-controlled steel firm at a private meeting between Mittal and Angang Steel’s Chairman Zhang Xiaogang two months ago. ArcelorMittal has been long eyeing its chance to expand into China’s steel market. The stock is a BUY. Move your stop to $70.50.
Potash (POT) recovered after last week’s big sell off, jumping 9.48%. Standard & Poor’s Ratings Services upgraded its outlook on the fertilizer company to positive from stable. The upgrade reflects expectations of strong cash flow generation in the near term, given the tight market conditions for potash. S&P said that Potash Corp is in a “great” position to capitalize on the current “strong” pricing environment. Potash remains a top BUY.
Transocean (RIG) today reported net income for the three months ended March 31, 2008, of $1,189 million, or $3.71 per diluted share, compared to net income of $553 million, or $2.62 per diluted share, for the three months ended March 31, 2007. That performance beat consensus estimates of $3.34 per share. Revenues for the first quarter of 2008 soared 134% from $1,328 million to $3,110 million, compared to the first quarter of 2007. The stock is a BUY.
Elements Rogers International Commodity ETN (RJI) rose slightly this week. As long as the commodities boom is intact, this diversified commodity play is a safe and steady bet. It remains a BUY.
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