This past week has been a roller coaster for our Global Stock Investor portfolio, with the market selling off sharply on Friday and rallying yesterday. One stock that stood out was my personal and perennial favorite, emerging markets cell phone play Millicom International Cellular (MICC), which soared 21.32% yesterday on the back of blowout earnings. India’s ICICI Bank (IBN) also recovered strongly from last week’s sell off, jumping 14.21% since last Tuesday’s close. Most of our holdings are just off their recent record highs.
As I have noted before, Q4 traditionally has been the strongest time of the year for global stocks as far back as I can remember in my investing career. I’ve called it "The Last Free Lunch in Global Investing."
PORTFOLIO UPDATE
Anglo American (AAUK) Chief Executive Cynthia Carroll recently crisscrossed Alaska in her pitch to transform lands in western Alaska into one of world’s largest mines. She also recently was in Chile as part of an ongoing effort to expand the Las Bronces mine there. Our global commodities supercycle play remains a BUY.
ABB Ltd. (ABB) announced yesterday that it won orders worth about $127 million last week to help Indian industrial group JSW increase capacity at its steel mills. That deal brings new ABB orders received in the past two weeks to $237 million. The installations were expected to be operational by 2009 and help JSW lift its steel-making capacity from 3.8-million tons a year to 10-million tons a year by 2010. The global infrastructure boom continues. ABB is a BUY.
America Movil (AMX) posted an unexpected 2% drop in third-quarter profit on Thursday due to higher taxes, spending and depreciation costs. But analysts said they were not worried. Revenue jumped 30% to 77.8 billion pesos and earnings before interest, taxes, depreciation and amortization rose 44.6% to 31.9 billion pesos. America Movil added more than six million extra subscribers during the quarter. The company announced on Friday that it will launch third-generation (3G) services in Mexico early next year and that it also expects to offer 3G in Brazil. America Movil reiterated it plans to tap debt markets to pay part of a previously announced extraordinary dividend of $3.2 billion. America Movil is a BUY.
iShares MSCI Swedish Index ETF (EWD) has shown a disappointing performance thus far, largely due to ETF components Ericson and Electrolux incurring poor operating performance. Since other markets are powering ahead, and Sweden is treading water even during the normally robust Q4, I’m now moving Sweden to a HOLD.
iShares MSCI Brazil Index ETF (EWZ) was flat for the week. I expect this ETF — heavily laden with some of my favorite natural resource and banking plays — to regain its composure and power ahead during the next few weeks. BUY Brazil.
Currency Shares Japanese Yen Trust (FXY) gained in last week’s market turmoil. Our "better than cash" hedge remains a defensive BUY.
ICICI Bank (IBN) rose this week as net profit for the fiscal second quarter jumped 33% to 10.03 billion rupees ($253.8 million), up from a year-earlier 7.55 billion rupees. This beat analysts’ profit forecasts of 9.40 billion rupees. Profit growth was mainly due to increases of 34% in net interest income and 25% in fee income. Net interest income, the difference between interest earned and interest paid, increased to 17.86 billion rupees from 13.34 billion rupees a year earlier — driven by total asset growth of 29%. The entire Indian market also soared last week after regulators eased plans for a ban on overseas brokers trading on the Indian exchange. Finally, the U.S. Federal Reserve Board on Friday said it approved an application by India’s ICICI Bank to open a federal branch in New York that would allow it to engage in wholesale banking activities. In 10 years time, ICICI Bank will be a household name. You heard it here first. "India’s Citibank" is a BUY.
Millicom International (MICC) was the big story of the week. The stock soared more than 21% on yesterday’s earnings news. Millicom said Q3 core earnings rose 60% to $296 million on revenue growth of 77% to $686 million. Subscribers soared 77% to 20 million, including two million in the latest quarter. Millicom’s future lies in growth of average revenue per user in Latin America and robust subscriber growth in Africa. This growth story has a way to go. Millicom is a BUY.
ArcelorMittal (MT) and Turkish giant Borusan said they will invest $500 million to construct a new hot strip mill in Gemlik, Turkey. Investment bank HSBC Securities also upgraded ArcelorMittal to a BUY. We agree.
Potash Corp. (POT) was flat for the week — though it did recover sharply from the sell off last week and it will be announcing earnings tomorrow. The latest addition to our Global Stock Investor portfolio is a BUY.
Tesco’s (TSCDY) entry into the United States finally was picked up by the mainstream U.S. business press — with an article in Business Week that you can read here. That’s about seven months after I first recommended Tesco’s stock. Stay ahead of the curve and BUY Tesco.
Sincerely,
Nicholas A. Vardy
P.S. Interested in discovering the next sector set to blast off? How about learning the specific shares the experts see as the most profitable in 2008? Attend The World Money Show London and hear from 50+ investment experts as they reveal their profitable strategies and provide their specific stock-picks. The World Money Show London is being held Nov. 30 – Dec. 1 at The Queen Elizabeth II Conference Centre and will feature 14 panel presentations, leading investment products and service providers. As a bonus, I will be moderating a panel discussion about investment opportunities in India. Call today to register for The World Money Show London at 00 800 1414 8888 (phone number for free international calls) between 10:30 a.m. – 10:30 p.m. (EXCEPT from Oct. 28 – Nov. 4 when hours will be 9:30 am – 9:30 pm because of daylight saving). Don’t forget to mention priority code #009516. Or visit the Web site.
