Diversify with 3 global names
Searching the globe uncovers a trio of diverse stocks with lots of potential.
By Jack Adamo, Insiders Plus
Companhia de Bebidas das Americas (ABV), better known as Ambev, has pulled back a lot from its big gains a few months ago, but is still up 13% for us.
The beverage seller is having problems in Brazil, one of its main markets, where inflation is up and incomes are down. Total volumes sold were down 6.8%, but the company managed to grow organic revenues (that is, excluding acquisitions) by 2.4%, thanks to price increases and a larger proportion of sales in premium brands. Net EPS rose 0.8%.
I listened to the whole conference call, including some pointed questions from analysts, and was very satisfied with what I heard. The company is straightforward about its problems, not ignoring or sugar-coating them.
My takeaway from all the figures, remarks, questions, etc., is that sales in emerging markets will always be subject to periods of slow growth or even setbacks, but the big trend in this type of market is strong growth over the long term.
The stock is a little above our buy range, but I'd be a buyer on pullbacks in the next few weeks if the market doesn't crater.
Royal Dutch Shell, Class-B (RDS.B), like most oil companies, reported tepid earnings
this quarter. Total revenues came in 6.7% lower, pre-tax income was 13.6% lower, and EPS was down 1.2% to $2.38 per American Depository Share, helped by a lower tax rate.
The company increased its dividend 4.7% to 90 cents per ADS, representing a very conservative payout ratio of 37.8%. That leaves plenty of room for growth and dividend increases in the future.
CEO Peter Voser, will be retiring at the end of the year, so I don't know whether that will bring a change of strategy, but l like the job he was doing in turning the company around after its accounting scandal a few years back.
We have a small profit in Shell in the 14 months we've owned it. I continue to like it for the long term, as it consolidates its most profitable assets and sells the rest. It has two large projects for natural gas liquefaction in North America, one of which is a joint venture with Kinder Morgan (KMI). They look promising.
Canadian Imperial Bank of Commerce (CM) -- for the second consecutive year -- has been ranked as the strongest bank in Canada, strongest in North America, and third strongest in the world by Bloomberg Markets. I'm perfectly comfortable with you buying it right now, regardless of the time of year.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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