Country PEG Ratios

by Bespoke Investment Group

Yesterday we highlighted the stocks in the Russell 1,000 with the lowest PEG ratios.  Today we take a look at a different PEG ratio analysis.  A few years ago we decided to use the PEG ratio to analyze country valuations.  To do this, we use the P/E ratio of the country's most widely followed equity market index and the country's estimated GDP growth for the current year.  Just like with stocks, the lower the better for country PEG ratios. 

Below is a list of PEG ratios for 22 countries.  As shown, China tops the list with the best country PEG ratio at 1.94.  It is followed very closely by India at 1.95.  Both China and India have higher than average P/E ratios, but their GDP growth more than makes up for it at 9.50% and 8.50%, respectively.  Singapore and Russia, which rank 3rd and 4th, get to their low PEGs by having much lower than average P/E ratios and slightly better than averaged estimated GDP growth.  Spain, on the other hand, has a P/E ratio similar to Singapore and Russia, but its expected GDP growth is so low at 0.60% that it has the highest PEG ratio of all the countries shown.  Someone looking at just the P/E ratios for Spain, Singapore, and Russia would see a similar valuation, so this is a good example of where the country PEG ratio can help identify the more attractive country/countries.

For those wondering where the US stands in terms of PEG ratio, it's closer to the bottom of the list than the top.  However, the US does have the most attractive PEG ratio of the G-7 countries.  If you're looking to invest in developed nations, the US is the best place to be at least based on this valuation measure.   

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Recent Trades Of Ninja Trading Systems

Dopo gli ottimi risultati dei giorni scorsi il nostro Ninja Trading Systems ieri ha chiuso con una piccola perdita i trades su eMini Russell e T-Bond e sostanzialmente in pareggio su eMini S&P. Qui sotto i relativi screenshot. I risultati storici di Ninja System sono disponibili ai seguenti link: http://www.box.net/shared/static/oam4a02b4m.xls, http://www.box.net/shared/c22rgem896. I risultati di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

After the excellent results of recent days our Ninja Trading Systems yesterday closed with small loss the trades on eMini Russell and T-Bond and substantially in balance on the eMini S&P. Below the screenshots. Historical results of Ninja System are available at the following links: http://www.box.net/shared/static/oam4a02b4m.xls, http://www.box.net/shared/c22rgem896. Historical results of our some other trading systems are available at the following link: http://www.box.net/shared/5vajnzc4cp


Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

Survivor Trading System - Trades of 3 March

I trades di Survivor System del 3 Marzo. I risultati storici di Survivor System small version sono disponibili ai seguenti link: http://www.box.net/shared/static/giq7mp90fq.xls, http://www.box.net/shared/6koqmtmnsb I risultati storici e MTM di alcuni altri nostri trading systems e portfolio systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Trades of Survivor System on 3 March. Historical results of Survivor System small version are available at the following links: http://www.box.net/shared/static/giq7mp90fq.xls,, http://www.box.net/shared/6koqmtmnsb. Historical and MTM results of our some other trading systems and portfolio systems are available at the following link: http://www.box.net/shared/5vajnzc4cp


Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

US rain extremes to stay, querying hopes for better harvests

by Agrimoney.com

The US is set for more of the weather extremes which have left southern parts too dry and northern areas too wet - raising worries over the revival in crop production needed to replenish thin inventories.

The La Nina weather system, which official forecasters say has a 50% chance of lasting until June, will "reinforce" the pattern which has brought the US a string of rain belts – only for them to dump over the same more northerly areas, veteran meteorologist David Tolleris said.

"Areas that have not had rains and not going to get rain and areas that have had excess moisture, it is not stopping," Mr Tolleris, at WxRisk.com, told Agrimoney.com, in forecast for the April-to-May period.

"If the La Nina collapsed, the story might see some change. But that's not happening. The weather pattern is just reinforcing itself."

Flood warning 

The picture tallies with outlooks from some other private meteorological groups, such as AccuWeather.com, besides forecasts from America's official forecaster, the National Oceanic and Atmospheric Administration (NOAA).

The NOAA in an initial spring weather forecast, to be updated on March 17, warned that "a large swathe of the country is at risk of moderate-to-major flooding this spring", as fresh rainfall adds to water produced from the thaw of heavy snowpack in areas such as the upper Midwest.

The Red River valley was set for a third successive year of flooding, threatening spring sowings in a major spring wheat area in northern US states such as North Dakota, and southern areas of Canada's Prairies.

The Canadian Wheat Board warned last week that the Prairies needed"ideal conditions" to avoid losses of up to 5m acres in sowings.

Cotton threat

Meanwhile, the NOAA forecast hotter and drier than normal conditions for the US South for the next three months – threatening cotton sowings besides adding further misery to the drought-tested hard red winter wheat crop already in the ground.

Between 21-25% of the US cotton area is classified as "in a severe drought", while more than 53% has some sort of moisture deficiency, Rabobank said.

"Soil moisture deficiencies could be an issue [for cotton]," the bank said.

"Because the US is the number one cotton exporter in the world, the reaction to delayed or constrained plantings would likely be significant."

April holds the key

For corn, further wet weather for areas such as the Midwest would be likely to favour sowings of soybeans over the grain, Michael Cordonnier at Soybean and Corn Advisor said, highlighting the oilseed's later planting window.

"Even though it appears that corn is winning the battle for acres compared with soybeans, the weather during April will the deciding factor," he said.

"Generally, it is assumed that warmer and drier conditions during April favours corn acres, and cooler and wetter conditions during April favours soybean acres."

'Risks underestimated' 

Indeed, separately, academics at the University of Illinois at Urbana-Champaign warned that investors were underestimating the risks that weather posed to US corn crops.

"Many attribute the lack of a major shortfall in the US average yield since 1995 to the adoption of improved seed genetics," Darrel Good and Scott Irwin said.

However, their own research suggested that yield improvements reflected "an extended period of generally better-than-average weather".

"The risk of weather-induced shortfalls in corn production may be greater than generally perceived.

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Currency Revaluation Won’t Fix America’s Trade Mess

By: Ian_Fletcher

 

It is sometimes suggested that our trade problems (job losses, international indebtedness) will go away on their own once currency values adjust. Bottom line? A declining dollar will eventually solve everything.
 

In the short and medium term, of course, foreign currency manipulation will prevent currency values from adjusting. But even if we assume currencies will eventually adjust, there are still serious problems with just letting the dollar slide until our trade balances.

For one thing, our trade might balance only after the dollar has declined so much that America's per capita GDP is lower, at prevailing exchange rates, than Portugal's. A 50 percent decline in the dollar from early-2011 levels would bring us to this level. And how big a decline would be needed to balance our trade nobody really knows, especially as we cannot predict how aggressively our trading partners will try to employ subsidies, tariffs, and nontariff barriers to protect their trade surpluses.

Dollar decline will write down the value of wealth that Americans have toiled for decades to acquire. Ordinary Americans may not care about the internationally denominated value of their money per se, but they will experience dollar decline as a wave of inflation in the price of imported goods. Everything from blue jeans to home heating oil will go up, with a ripple effect on the prices of domestically produced goods.

A declining dollar may even worsen our trade deficit in the short run, as it will increase the dollar price of many articles we no longer have any choice but to import, foreign competition having wiped out all domestic suppliers of items as prosaic as fabric suitcases and as sophisticated as the epoxy cresol novolac resins used in computer chips. (Of the billion or so cellular phones made worldwide in 2008, not one was made in the U.S.) Ominously, the specialized skills base in the U.S. has been so depleted in some industries that even when corporations do want to move production back, they cannot do so at feasible cost.

Another problem with relying on dollar decline to square our books is that this won't just make American exports more attractive. It will also make foreign purchases of American assets--everything from Miami apartments to corporate takeovers--more attractive, too. As a result, it may just stimulate asset purchases if not combined with policies designed to promote the export of actual goods.

A spate of corporate acquisitions by Japanese companies was, in fact, one of the major unintended consequences of a previous currency-rebalancing effort: the 1985 Plaza Accord to increase the value of the Japanese Yen, which carries important lessons for today. Combined with some stimulation of Japan's then-recessionary economy, it was supposed to produce a surge in Japanese demand for American exports and rectify our deficit with Japan, then the crux of our trade problems. For a few years, it appeared to work: the dollar fell by half against the yen by 1988 and after a lag, our deficit with Japan fell by roughly half, too, bottoming out in the recession year of 1991. This was enough for political agitation against Japan to go off the boil, and Congress and the public seemed to lose interest in the Japanese threat. But only a few years later, things returned to business as usual, and Japan's trade surpluses reattained their former size. Japan's surplus against the U.S. in 1985 was $46.2 billion, but by 1993 it had reached $59.4 billion. (It was $74.1 billion in 2008 before dipping with recession.)

Relying on currency revaluation to rebalance our trade also assumes that the economies of foreign nations are not rigged to reject our exports regardless of their price in local currency. Many nations play this game to some extent: the most sophisticated player is probably still Japan, about which the distinguished former trade diplomat Clyde Prestowitz has written:

If the administration listed the structural barriers of Japan--such as keiretsu [conglomerates], tied distribution, relationship-based business dealings, and industrial policy--it had described in its earlier report, it would, in effect, be taking on the essence of Japanese economic organization.

We cannot expect foreign nations to redesign their entire economies just to pull in more imports from the U.S.

In any case, the killer argument against balancing our trade by just letting the dollar fall comes down to a single word: oil. If the dollar has to fall by half to do this, this means that the price of oil must double in dollar terms. Even if oil remains denominated in dollars (it is already de facto partly priced in euros) a declining dollar will drive its price up. The U.S., with its entrenched suburban land use patterns and two generations of underinvestment in mass transit, is exceptionally ill-equipped to adapt, compared to our competitors.

Fundamentally, allowing the dollar to crumble is a way of restoring our trade balance and international competitiveness by becoming poorer. That's not what Americans want, or should want. A tariff is a much better solution.

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How Investors Can Clean Up with Waste Management Stocks

By: Money_Morning

Larry D. Spears writes: Money Morning on Feb. 9 described the profit potential of companies that are dealing with the world's water crisis, noting that 1.15 billion people around the globe currently lack access to clean water supplies. 

However, even more people - 2.6 billion, according to the World Water Council - live in areas without adequate sanitation, making waste management an equally pressing global concern. 

In fact, any hope that we have of resolving the mounting global water shortage will depend heavily on both cleaning up existing water sources and recycling the wastewater we currently produce - two jobs that will translate into big opportunity for investors in companies that focus on pollution control.

Of course, the bulk of global waste-management activity involves not water, but trash - with the clean-up of toxic materials thrown in for good measure. 

What Is Waste Management?

To be precise, the industry usually referred to as "waste management" is defined as the "monitoring of, collection, transport, processing, recycling or disposal of waste materials." The waste itself can include "solid, liquid, gaseous or radioactive substances," and the primary purpose of the clean-up is to reduce the effect of that waste on human health, animal species, the natural environment or aesthetics ­- i.e., the general quality of civilized life.

In pursuing those goals, waste management efforts are divided into seven primary sectors:

1.Integrated waste management - This is a broad approach to dealing with municipal trash, also known as Municipal Solid Waste (MSW). It involves the collection and separation of refuse so that non-organic materials can be recycled or reused and organic materials can be composted or processed to produce fuel for energy generation.

2.Landfill operations - This is the world's most common means of waste disposal, with methods ranging from sophisticated layering and coverage techniques in more advanced Western nations to merely dumping trash in holes or natural ravines in rural or developing regions.

3.Incineration - The second most common means of waste disposal, this can range from simple open burning in less-developed regions to large and highly engineered facilities in advanced areas that practice "thermal treatment," a process for converting incinerated waste into reusable heat, steam, gas and ash. Incineration is most actively used in densely populated nations like Japan, where the limited amount of land makes landfills impractical.

4.Water purification and treatment - This practice focuses on the purifying, recycling and reclaiming of water, as well as the treatment of sewage and other liquid wastes and pollutants that pose threats to a region's water supplies.

5.Recycling programs - Typically operating in tandem with advanced landfill or incineration systems, these programs collect, separate and process various metals - e.g., copper, aluminum, tin, steel cans - and plastics for reuse. A recent addition to this segment is the recycling of so-called "e-waste" - metals, chemicals and other elements retrieved from discarded computers, TVs and other electronics.

6.Biological reprocessing - This industry sector deals with biological wastes - plant material, yard wastes, food scraps, paper products, etc. - using composting and natural digestion processes that speed up their decomposition so they can be recycled as mulch or fertilizer for agricultural or urban landscaping work.

7.Energy recovery - This segment uses many of the same techniques employed in landfills, incineration and biological reprocessing, but the end goal is the capture and utilization of heat or waste gas (methane) to generate electricity or provide residential or industrial heating. Some facilities also process trash into products that can be directly used as fuel. One example is a new technology that can convert waste plastics back into a synthetic oil that can be used as fuel for trucks or jet engines. Another can be found in Haiti, which has lost 97% of its forests and has few natural fuel resources. Plants there are converting trash into cooking briquettes that can be used instead of charcoal.

An eighth segment of the industry, usually referred to as "sustainability," involves working with cities and corporations to reduce the amount of waste they generate by rethinking both operating processes and the types and amounts of material used in manufacturing, product containers and packaging.

Although separate from mainstream waste management, dealing with hazardous wastes - everything from chemical spills and petroleum products to medical and nuclear wastes - is also a possible target for investors in this sector.

The Pros and Cons of Waste Management

Waste management is big business. 

The Environmental Protection Agency (EPA) estimates that disposing of MSW costs roughly $100 per ton, which would equate an annual cost of around $23.8 billion in the United States alone. 

Of course, the bulk of that expenditure is internal since most municipalities have their own trash services and disposal sites. However, a large number do contract with private companies, some publicly traded, for services, and they all have to pay for equipment and technologies, virtually all of which come from the private sector. 

Most of the specialized waste disposal activity - whether it involves chemicals, radioactive wastes or toxic emergencies - is also handled privately.

Waste management isn't a cyclical industry, either. 

Every day, people the world over consume resources and generate trash that must be collected and processed. Thus, trash companies make good long-term holdings for your portfolio, resistant to swings in the economy that might impact stocks in other sectors.

However, a less attractive attribute of the industry is that growth potential is limited.

The vast majority of waste-management companies have government entities, typically municipalities, as their primary customers. Those firms typically have monopolies in a given area, but their contracts often have to be negotiated against a backdrop of tight local budgets. 

As a result, there are few means for increasing profit margins, and growth prospects are typically limited to increasing populations or the annexation of additional land into the cities. Opportunity for expansion into new markets is also limited as most communities already have trash services, not to mention the fact that expanding requires considerable new investment in equipment, people and added facilities for processing the waste.

For larger companies that deal with multiple cities or private customers, there's also the problem of inconsistent regulations. While the U.S. government sets general environmental policy, there are really no uniform national standards for waste disposal or processing infrastructure. 

The environmental group Zero Waste America describes waste-handling policy in the United States - and most other nations - as "the free market at its worst, with the focus on making money, not sense" in terms of effective federal laws to minimize waste, maximize recycling and protect the environment and public health. Larger waste companies may have to follow as many different sets of working standards as they have municipal clients.

Logistics can also be a problem - one with increased costs attached. Since most citizens don't want landfills, incinerators, recycling yards or other trash facilities right next door - the "Not in my back yard," or NIMBY, sentiment - waste companies often have to site landfills a long distance from the areas they serve, which can translate into sharply higher fuel costs when oil prices rise as they have lately. Some communities even refuse to allow waste companies to build landfills, meaning they have to haul their trash to landfills owned by other cities or companies and pay so-called "tipping fees" to dump there.

Seven Waste Management Profit Plays

Overall, then, the probability of hitting a home run with an investment in the waste-management sector is small - but if you're looking for stocks that can provide a consistent string of singles and doubles, there are several possibilities you may want to consider. 

Two companies at the top of the industry food chain are:

•Waste Management Inc. (NYSE: WM), recent price $36.90 - Founded in 1894, WM is North America's largest waste handler, serving industrial, commercial, municipal and residential markets. It collects 115 million tons of waste per year and owns 268 landfills around the country. It's also the country's largest provider of recycling services, generating more than 20% of its revenue from that sector. The stock has been a steady performer, generally trading between $30 and $40 in recent years, though it did slump to $23.60 in the 2008-2009 market sell-off. More importantly, the company has a steady record of earnings growth (to $1.98 per share in 2010) and has raised its dividend in each of the past four years. It currently pays out $1.26 a share, or 3.42%.

•Republic Services Inc. (NYSE: RSG), recent price $28.97 - Republic provides a bit more diversification than WM, handling non-hazardous solid wastes for commercial, industrial, municipal and residential customers in 40 states and Puerto Rico. The company owns or operates 223 transfer stations, 192 solid-waste landfills and 78 recycling facilities. It also operates 74 landfill gas and renewable-energy projects. The stock has recovered nicely from a March 2009 low of $16.47, but still has a long way to go to reach its 2008 high near $35. The company had diluted earnings per share of $1.32 in 2010 and raised its dividend to 78 cents, up from 55 cents in 2007, providing a yield of 2.68%.

For investors who want a slightly better shot at hitting a home run while still enjoying the stability of the waste sector, the best approach is to look at some of the more specialized companies. 

Two good prospects are:

•Covanta Holding Corp. (NYSE: CVA), recent price $16.78 - CVA develops and operates infrastructure for the conversion of waste to energy (WtE) and also operates other waste disposal and renewable energy businesses in North America, South America, Europe and Asia. The company has seen earnings fall as a result of the recession, but still remains profitable, netting 20 cents a share in 2010, and the stock is well off its 2008 high of $29.96. CVA doesn't pay a dividend.

•U.S. Ecology Inc. (Nasdaq: ECOL), recent price $16.32 - Formerly known as American Ecology Corp., ECOL and its subsidiaries provide industrial waste-management services to government and commercial clients such as refineries, chemical plants, manufacturers, electric utilities, steel mills, medical and academic institutions, dealing with disposal of radioactive, hazardous, polychlorinated biphenyls (PCBs) and non-hazardous industrial waste materials. Earnings for 2009 came in at 75 cents per share, down from $1.18 in 2008, which explains why the stock remains well off its pre-recession high of $32.82. However, earnings rose in each of the first three quarters of 2010 and are expected to show a modest increase for the full year. The dividend, which has been raised in each of the past three years, stands at 72 cents, good for a yield of 4.30%.

If you're looking for a little more international exposure and want to go where the waste problem may be the greatest in the present global economy, check out China.

•China Industrial Waste Management Inc. (PINK: CIWT), recent price $1.68 - CIWT, through its subsidiaries, engages in the collection, treatment, disposal and recycling of industrial wastes, municipal sludge and sewage treatment, and environmental protection engineering services for 770 customers in Dalian, China, and surrounding areas in Liaoning Province. The company's per-share earnings dropped from 35 cents in 2008 to 12 cents in 2009, but are expected to rebound to 24 or 25 cents for 2010. The company pays no dividend and the stock, which traded above $5.00 in 2008, is very thinly traded on the U.S. markets, so be sure to use a strict limit order when buying.

When it comes to pure plays, fund investors looking for access to the waste-management sector are generally out of luck, though there are a few exchange-traded funds that invest around the periphery of the industry. 

Two worth looking at are:

•Market Vectors Environmental Services ETF (NYSE: EVX), recent price $51.47 - EVX tracks the NYSE Environmental Services Index, a modified equal dollar-weighted index consisting of publicly traded companies that are involved in the management, removal and storage of consumer waste and industrial byproducts and related environmental services. This passively managed fund in 2010 boasted strong earnings, a comparatively low expense ratio (0.30%) and paid a 38-cent dividend, but the shares are thinly traded, so use limit orders.

•iShares S&P Global Nuclear Energy (NYSE: NUCL), recent price $45.61 - This fund tracks the S&P Global Nuclear Energy Index, which follows approximately 24 publicly traded companies in nuclear energy-related businesses, including nuclear waste and clean-up, from developed markets around the world. The fund shares bottomed around $35 in July 2010 and have risen steadily since, though they did pull back with the market in late February. The fund has no regular dividend but declared one-time payments of 50 and 87 cents during the past year. 

As noted, opportunities for major wins in this sector are limited - but with a little patience, you could wind up fairly effortlessly converting the world's trash into your growing personal treasure.

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