wall street

We still think that the surest way to profit from Chinese growth is through well-established multinational companies like those we recommend in our newsletters. For example, a long-time favourite of ours, Yum Brands, $33.32, symbol YUM on New York (Shares outstanding: 461.6 million; Market cap: $15.4 billion), was the first fast-food company to enter China (in 1987). It is now the largest in the country, with nearly 3,600 restaurants. Its established brands and size give it a big advantage over its rivals. Yum continues to aggressively expand in China, particularly its KFC fried-chicken restaurants. The company is also building on its success in China by launching a new restaurant chain there. These restaurants, called “East Dawning,” will serve traditional Chinese food. Yum’s China division, which includes Taiwan and Thailand, accounts for 30% of its sales and earnings....

Lately, a number of readers have been asking me whether it’s worth holding onto their U.S.-stock holdings if the U.S. dollar keeps falling. Some wonder if they should follow their brokers’ suggestions and hedge against the risk of a drop in the U.S. dollar, using options, futures or other investment products. If you knew that the U.S. dollar would keep falling, the best portfolio management 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. The financial industry has a variety of products that can insulate your U.S. investments from a drop in the value of the U.S. dollar. These products obviously cost you money. In addition, they reduce the long-term value of your U.S. investments. After all, you invest in U.S. stocks for two key reasons. One is that the U.S. stock market offers certain types of investment opportunities that are rare or non-existent in Canada, such as giant multi-national consumer companies like Procter & Gamble or McDonalds. The other key reason for U.S. investment is that it gives you currency diversification. That’s crucial to a sound portfolio management strategy....

Eastman Kodak Company, $2.66, symbol EK on New York (Shares outstanding: 268.2 million; Market cap: $713.4 million) is the world’s largest seller of products related to photography and imaging. The company has three main divisions: 1) Graphic Communications, which accounts for 35% of Kodak’s sales, sells industrial printers and related services to newspaper and magazine publishers....

I am pleased to announce the launch of our new web site, TSI Network (www.tsinetwork.ca). Building on our four newsletters (Canadian Wealth Advisor, Stock Pickers Digest, The Successful Investor and Wall Street Stock Forecaster), the site contains archives of over 2,000 articles on individual investments. I’m the host of TSI Network. Every day, Monday to Friday, I post free updates on issues that matter to you — the individual investor. TSI Network lets you access your newsletters and reports from anywhere in the world. Its search function will make finding a particular company or topic easy....

You need to look at each conglomerate on a case-by-case basis. Here are some examples: Power Financial holds majority interests in Great-West Lifeco and Investors Group. We see both Great-West and Investors Group as buys. However, Power Financial also has a large stake in Pargesa Holding S.A. of Europe. Pargesa, in turn, has large interests in a group of major European media, energy, utilities and specialty minerals companies. We don’t have the same confidence in these holdings as we do in Great-West Lifeco and Investors Group. So we think investors should stick with Great-West and Investors Group — the highest-quality segments of Power Financial’s holdings. We don’t recommend Power Financial....

Desalination is the process of removing excess salt and other minerals from seawater. It’s also used where saltwater has entered underground fresh-water aquifers. Right now, there are more than 13,000 desalination plants operating in over 120 countries. About three-quarters of them are in the Middle East. That’s because it’s very expensive to build desalination plants, so they are only really cost-effective where there is no fresh water. When fresh water is available, it can be pumped up to 1,600 kilometres and still cost less per litre than water from a desalination plant. Desalination may become more cost competitive over the longer term, however. As the world’s population rises and becomes more prosperous, demand for water for drinking, irrigation and industrial uses will exceed the amount available from natural sources....

Bank of America, $12.93, symbol BAC on New York (Shares outstanding: 7.9 billion; Market cap: $102.5 billion), recently sold $13.5 billion worth of new common shares and raised an additional $7.3 billion by selling part of its stake in China Construction Bank, China’s second-largest lender. Together, these moves raised $20.8 billion, or 61% of the $33.9 billion in additional capital that Bank of America needs to satisfy U.S. government regulators. Bank of America will probably make up the shortfall by selling more businesses and contributing some cash flow from its operations over the next few months. This should let it avoid converting the U.S. government’s $45 billion worth of preferred shares into common shares, which would give the government more control over the bank....

I am pleased to announce the launch of our new web site, TSI Network (www.tsinetwork.ca). Building on our four newsletters (Canadian Wealth Advisor, Stock Pickers Digest, The Successful Investor and Wall Street Stock Forecaster), the site contains archives of over 2,000 articles on individual investments. I’m the host of TSI Network. Every day, Monday to Friday, I post free updates on issues that matter to you — the individual investor. Visitors may also participate in daily polls, get access to my ongoing Twitter updates, and much more. In addition, subscribers to the site get my latest report, “How to Trade Stocks and Make Good Investments in Canada” — free....

BHP BILLITON LTD., $60.29, New York symbol BHP, rose 6% on Friday after it agreed to merge its iron-ore mining operations in Western Australia with those of Rio Tinto Ltd. (New York symbol RTP) into a 50/50 joint venture. The partners will split the output equally, and each will sell it through their own marketing divisions. BHP is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, aluminum, manganese, diamonds and titanium. As part of the deal, BHP will pay Rio Tinto an additional $5.8 billion because its Australian iron-ore operations are not as valuable as Rio Tinto’s. To put this figure in context, BHP earned $6.1 billion, or $2.20 per ADR, in the six months ended December 31, 2008. (Each BHP American Depositary Receipt represents two BHP common shares). Australian competition regulators need to approve the merger, but it should close in mid-2010....

I am pleased to announce the launch of our new web site, TSI Network (www.tsinetwork.ca). Building on our four newsletters (Canadian Wealth Advisor, Stock Pickers Digest, The Successful Investor and Wall Street Stock Forecaster), the site will contain archives of over 2,000 articles on individual investments. I’ll be the host of TSI Network. Every day, Monday to Friday, I’ll post free updates on issues that matter to you — the individual investor. Visitors will also be able to participate in daily polls, get access to my ongoing Twitter updates, and much more. In addition, subscribers to the site will get my latest report, “How to Trade Stocks and Make Good Investments in Canada” — free....