general electric

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, 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 ETFs, but you will quickly make these back because of the low management fees. Shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

A-Power Energy Generation Ltd., $19.11, symbol APWR on Nasdaq (Shares outstanding: 33.7 million; Market cap: $644.1 million) mainly designs and builds distributed-generation power systems and micro-grid networks. These supply electricity and heat to factories and rural towns in China. China’s electrical-distribution grid has had trouble keeping up with the country’s economic growth. Blackouts have increased as a result. This helps A-Power sell its systems, because they’re more dependable than China’s power grid. To date, the company has installed 17 of its systems. It is currently building 17 more. A-Power is also expanding into wind power. In January 2009, it opened a new plant in Shenyang that is China’s largest wind-turbine producer. A-Power licenses its turbine technology from two well-established wind-power companies: Germany’s Fuhrlander AG, and Denmark-based Norwin A/S. That keeps its research costs down....

GENERAL ELECTRIC CO., $16.20, New York symbol GE, will pay Vivendi SA of France $5.8 billion for the 20% of NBC Universal that it doesn’t already own. The company will then merge NBC Universal with cable stations and regional sports networks owned by cable operator Comcast Corp. (Nasdaq symbol CMCSA). GE will retain 49% of the joint venture, and receive about $8 billion. To put these figures in context, GE earned $2.5 billion, or $0.22 a share, in the three months ended September 30, 2009. The deal should close by September 2010. Selling control of NBC Universal will let GE focus on its main industrial businesses. These include manufacturing aircraft engines and power-station equipment. The move also lowers GE’s exposure to falling television advertising revenue. However, the company’s financial division, which accounts for a third of its revenue, continues to struggle....

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

...

KRAFT FOODS INC., $26.91, New York symbol KFT, has made a formal offer to buy U.K.-based Cadbury plc (New York symbol CBY). Cadbury is a leading maker of confectioneries, including chocolate, candy and gum. Kraft is offering roughly $16.5 billion in cash and stock. That’s equal to 42% of its $39.7-billion market cap. Cadbury has rejected the takeover, and its shares are trading slightly above the value of Kraft’s offer. That suggests investors are expecting a higher bid from Kraft or another company....

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%....

In spite of the weak economy, governments around the world continue to invest heavily in wind projects and electrical-power grids. On Monday, for example, the Ontario government committed $2.3 billion over the next three years to expand and strengthen the province’s grid.

Antiquated power grids can hold back wind power stocks

Upgrades to power grids are important to wind power stocks because, while most power plants are located near big cities to keep transmission costs down, wind farms tend to be in more remote areas with steady winds. As well, low transmission capacity, or none at all, has hurt the ability of wind power stocks to build new projects.

...

General Electric, $15.71, symbol GE on New York (Shares outstanding: 10.6 billion; Market cap: $166.9 billion), has $339.4 million in long-term debt. That’s a high 181.7% of its $120.5 million in shareholders’ equity. However, debt-to-equity ratio is just one way to assess a company’s financial condition. The conventional idea used to be that a debt-to-equity ratio should be less than 1.0; that is, debt should be less than equity. But the conventional definition of equity only includes capital invested in a company, plus earnings that were retained in the business rather than paid out. This is not a particularly accurate way to look at many of today’s companies. That’s because the main value of many is in assets that they have built from a tiny base. In cases like this, it may make more sense to compare a company’s debt to its market capitalization, or “market cap” — the value of all of its outstanding shares. Market cap tells you what the market thinks a company is worth. It often makes a lot more sense than the equity value that appears on the company’s books....