Chevron Corp.
New York symbol CVX, is the second-largest integrated oil company in the United States after ExxonMobil. Production accounts for about 80% of its earnings. The remaining 20% comes from refineries and retail gas stations.
In next week’s Wall Street Stock Forecaster Hotline, we’ll reveal our #1 U.S. pick for 2010. ALCOA INC., $15.63, New York symbol AA, slumped 6% this week after it reported earnings that fell short of analysts’ expectations. In 2009, the aluminum maker lost $924 million, or $1.06 a share. That was much higher than the loss of $0.75 a share that analysts were expecting. In the prior year, Alcoa earned $450 million, or $0.27 a share....
H&R BLOCK INC., $20.62, New York symbol HRB, lost $126.5 million, or $0.38 a share, in its second quarter, which ended October 31, 2009. That’s 5.0% less than the $133.2 million, or $0.40 a share, that it lost a year earlier. The current figure also beat the $0.40-a-share loss that analysts were expecting. Revenue fell 7.2%, to $326.1 million from $351.5 million. H&R Block gets about 75% of its revenue from its tax-preparation business. As a result, it earns most of its money during its fourth quarter, which includes the April 15 income-tax-filing deadline. The company typically loses money in its first and second quarters....
TD RESOURCE FUND $27.63 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario, M5W 1P9. Tel: 1-800-386-3757; Web site:www.tdcanadatrust.ca. No load: deal directly with the bank) invests in companies that its managers see as having strong asset bases, proven management and the ability to internally finance growth. The $195.0-million TD Resource Fund’s top stock holdings mostly have Successful Investor Ratings of “Average” or higher. They include EnCana, Suncor Energy, Talisman Energy, Goldcorp, Yamana Gold, TransCanada Corp., BHP Billiton, Barrick Gold, Husky Energy, Chevron, Marathon Oil and Nexen. TD Resource Fund holds 57.1% of its portfolio in Energy and 38.3% in Metals & Minerals....
Although they are still below their 2007/2008 peaks (with the exception of gold, which is now at record highs), resource prices have steadily risen since the start of this year. Most resource companies still need a continued economic recovery to show further growth. But we think the long-term outlook for global resource demand is bright. Meanwhile, we think you should cut your risk in this volatile sector by sticking with profitable, well-established companies that have asset bases they acquired when asset prices were low. Or, invest in mutual funds that hold those stocks. Here are two resource funds that we rate as Aggressive. They expose investors to two different levels of risk, measured by the stocks they hold. We think both have long-term gains ahead....
The U.S. dollar is down 22% against the Canadian dollar so far this year. Many investors fear it will keep falling. If you knew the U.S. dollar would keep falling, the best strategy would be to sell all of your U.S. stocks and buy them back when the dollar stabilizes. However, you don’t know where the U.S./Canada exchange rate is going next — you never do.
Wall Street stocks give you opportunities that just aren’t available in Canada
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DIAMONDS TRUST SHARES $98.27 (New York Exchange symbol DIA; buy or sell through brokers) hold the 30 stocks that make up the Dow Jones Industrial Average. The fund’s top 10 holdings are IBM, Exxon Mobil, Chevron Corp., 3M, Procter & Gamble, McDonald’s Corp., Johnson & Johnson, Caterpillar Inc., United Technologies and Coca-Cola. The fund’s expenses are about 0.18% of its assets. Diamonds Trust Shares are a buy.
S&P DEPOSITORY RECEIPTS $104.92 (New York symbol SPY; buy or sell through brokers) are commonly called “Spiders.” The fund holds the stocks in the S&P 500 Index, which consists of 500 major U.S. stocks that are chosen based on their market share, liquidity and industry group. The index’s 10 highest-weighted stocks are Exxon Mobil, Microsoft, Procter & Gamble, Apple, JP Morgan Chase & Co., Johnson & Johnson, IBM, Chevron, General Electric and AT&T. The fund’s expenses are just 0.10% of its assets. If you want exposure to the S&P 500 Index, S&P Depository Receipts are a buy.
While ETFs won’t protect you from the three costliest mistakes an investor can make, they may have a worthwhile place in your portfolio. Unlike many other innovations, ETFs don’t load you up with heavy management fees, or tie you down with heavy redemption charges if you decide to get out of them. Instead, they give you a lower-cost and more flexible and convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell them, but you will quickly make these back because of the low management fees....
FIDELITY TRUE NORTH FUND $24.80 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) invests in companies that the managers see as undervalued. They base their judgments on fundamentals, such as earnings, dividend yield, book value, cash flow and debt level. Fidelity True North Fund holds 77 stocks. Its top holdings consist of the following high-quality companies: Toronto-Dominion Bank, Manulife Financial, Rogers Communications, EnCana Corporation, Research in Motion, Canadian Natural Resources, Goldcorp Inc., Potash Corporation of Saskatchewan, Suncor Energy and Royal Bank of Canada. Fidelity True North Fund’s breakdown by economic segment is: Financials, 27.0%; Energy, 24.0%; Metals & Minerals, 22.6%; Industrials, 6.6%; Telecommunication Services, 6.3%; Information Technologies, 5.8%; Consumer Discretionary, 3.3%; and Consumer Staples, 2.0%....
CHEVRON CORP. $76 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.0 billion; Market cap: $152.0 billion; Price-to-sales ratio: 0.8; WSSF Rating: Above Average) is the second-largest integrated oil company in the U.S. by market cap, after Exxon-Mobil. Chevron gets about 85% of its earnings from producing oil. The remaining 15% comes from its refineries, its petrochemicals business and its 22,000 gasoline stations, which operate under the Chevron, Texaco and Caltex banners. Chevron has increased its oil and natural-gas reserves by roughly 1 billion barrels a year for the past seven years. At the end of 2008, it directly controlled 7.9 billion barrels, plus an additional 3.3 billion through joint ventures and affiliated businesses. The company produces about 920 million barrels a year.