Monthly Archives: September 2011

Unilever Consumer Products Are Ubiquitous

Unilever NV (UN) produces and sells consumer goods throughout the world. It markets personal care, home care and food products. The company was started in 1927 and has a long history of producing dependable, reasonable quality products. Also, because the products are everyday staples as opposed to luxury items, these products remain in family budgets while others are cut to save money. One of Unilever’s newest products is water filters. These are being sold in Mexico and Brazil so that people can drink filtered water from the tap.

Unilever also has a mentoring program to support upper level management in their professional development.

Unilever’s income has gone up over the last two years and it has also increased during the first half of 2011. The company is expanding rapidly and its stock is fairly inexpensive, selling at $31 per share. In addition, over the last year the stock price has fluctuated between $29 and $34. Additionally, this limited range also makes Unilever a good stock for day trading. In addition, the company pays quarterly dividends.

Among the top management of Unilever are the CEO, Paul Polman, the CFO, Jean-Marc Huet and the new COO Harish Manwani.

You Can Also Pick From the Dollar Tree

Dollar Tree Inc. (DLTR), is just what the doctor ordered for an ailing economy. Most people are cutting their budgets and Dollar tree is helping them. The company operates 4,176 variety discount stores in the United States and Canada. The chain offers everyday goods such as beauty care, health, food, and candy, plastic and paper goods, etc. These goods are generally priced at One Dollar. Dollar Tree sells through its chain stores: Dollar Bills, Dollar Tree Deal$, Deal$, Dollar Tree and Dollar Giant.

The stock has been doing tremendously in that it has risen from 35 to 70 in the last 2 years, with all of the economic volatility. Not only has the stock risen but it has risen in a fairly stable pattern, which is comforting in this recessionary time. Actually, recession gives customers the incentive to by at dollar tree stores, saving them money and creating profits for the company. The stock price is not cheap. Its price is 75.92 dollars per share today. However, you will most probably make a profit on it and you’ll be able to sleep at nights for two reasons. First it is a stock that’s going up and that always makes me feel good. Also it is a company who is helping the poor so I feel good about that.

Some interesting management personalities are Carl P. Zeithaml who is the Dean at the University of Virginia McIntire School of Commerce. He specializes in strategic management and adds his specialty to help Dollar Tree to fine-tune its strategic focus. Robert H. Rudman is the Chief Merchandising officer and has spent the majority of his 35 year career in retailing and management. He helps to manage the companies 4,176 stores which is an amazing feat.

Clorox Has Defeated the Takeover Bid and Is Going Strong

Corporate raider, Carl Icahn has given up an attempted takeover of the Clorox board of Directors. Icahn wanted to get himself, his son and nine other people elected to the board, but realized that he did not have enough investor support for this move.

Interestingly, the Director of Growth Equities at GAMCO Investors Inc., Howard Ward, said that consumer stocks such as Clorox, General Mills, Proctor and Gambles and Colgate are solid investments right now and pay dividends. We see that Clorox’s stock has held gone up a little and is paying dividends regularly.

The company is well run. In the words of Michael Costello, the General Manager of the International Division, he uses “feed-forward” instead of feed-back to manage the company. He explained that the managers are responsible for accomplishing strategic goals, even though they don’t make all of the decisions. This is an impressive perspective and for Micheal Costello it works well.

A Solid Silver Opportunity

There is a silver trading company whose stock has been steadily rising for the last two years and continues to rise. The company is Endeavor Silver Corp. (EXK). It has agreements to buy silver at low prices from silver mines in Mexico and Chile. EXK was renamed in 2004 from the original company, Endeavour Gold Corp which was started in 1981 and is located in Toronto Canada. In other words, Endeavor has 30 years of experience in the precious metal business.

One of the advantages that silver has over gold is that in addition to maintaining value in economically distressed times it is widely used in industrial and electronic applications. This makes silver volatile but also ensures that even in good times there will be a need for it.

Since Endeavor Silver works with mines in Mexico and Latin America it has a director, Mario D. Szotlender, who is an expert in Latin American Affairs and speaks several languages. He holds a degree in international relations and has managed Latin American relations for several public and private companies during the last twenty years. He has worked in exploring for and developing precious metals and diamonds and in establishing investment relationships. It takes a company that thinks big to make a directorship for a man with Mario Szotlender’s talents. That really impresses me. The financial statements are solid and it is worth examining this stock for your portfolio.

High End Retailing Continues To Prosper

The markets are volatile, American and European debt are out of control, and unemployment and underemployment are rising. Under these conditions we might assume that everyone is cutting back on their spending. We see that the low cost retail chains and products are doing better and the mid-priced products are losing customers.

However, as Jon Najarian from pointed out on Yahoo’s Breakout program, luxury businesses are maintaining their markets. For example, Tiffany & Co. has been a high-end jewelry business for 170 years and has now incorporated other luxury items into its product line. It operates worldwide and has been doing very well. Michael Kowalski, Tiffany’s Chairman and CEO said in a Yahoo Finance interview that the rich still have money and are still spending. Caroline D. Naggiar, Tiffany’s Chief Marketing Officer and a Senior VP has been with the company for thirteen years and has done a good job.

An interesting study of Proctor and Gamble show that both their high-end soap products and low end soap products are doing well. The mid-price range is selling less. So here is an opportunity to sell to the rich. You can also make money by buying Tiffany stock which has been steadily rising over the past two years.

ARC Investment Partners Leads New Investment in Guanya Education Group

One of China’s major growth industries today is English language education. The rapid growth of this industry is due to the generally fast expansion of China’s economy, including rising disposable income and a fast-paced trend towards urbanization throughout the country.

Guanya Education Group is one of the leaders in China’s English Education sector, with a focus on children. Guanya is headquartered in Shenyang, the capital of the northeastern province of Liaoning, where they administer twenty-seven schools in six cities under the Guanya brand.

Utilizing the latest in high-tech, cutting edge teaching tools and methods Guanya’s English education product focuses its efforts on children ages three to fifteen.

Due to the success of Guanya, ARC China, an investment management group and a subsidiary of ARC Investment Partners, led a first investment round of more than $4 million into Guanya last October.

“Guanya has demonstrated strong growth and brand recognition in the region,” said Barry Freeman, Managing Director of ARC China and affiliate of ARC Investment Partners. “We are very excited to partner with such a strong management team and believe that the Guanya brand will become a leading brand in China for children’s English education.”

Diamonds Are Still Worth A Lot Of Money

Harry Winston Diamond Corporation has a double niche in the diamond market. The company mines and sells rough diamonds as one business. The retail demand for diamonds especially in emerging economies like India and China is strong and results in good prices for rough diamonds. In the second quarter of 2011, Harry Winston producded .72 million carats of diamonds.

The other niche is selling luxury jewelry and timepieces. This segment is strong, especially in wedding rings, watches and designed jewelry. Japan, China and the Middle East have a strong demand and the United States currently has a lowered than usual demand for this kind of Jewelry. The luxury brand division had sales of $132.8 million. In the second quarter, this division generated an operating profit of approximately $6.8 million.

What I love about this business is that after mining diamonds from the earth, they are sold for sums that are artificially inflated because they are beautiful and desired. Mining metals probably has similar costs but yields less profit per ton.

The Harry Winston Diamond stock has been climbing slowly since 2009. Although it is down from 17 to 13 over the last 2 months, I believe that it will continue to rise, especially because overseas demand is strong, as described above. Also, according the charts, stock prices seem to go down a little during July and August.

The company is managed by Mr. Robert A. Gannicott who is chairman of the Board and CEO. Gannicott is a geologist who has worker in the mining industry for 35 years and has been with Harry Winston since it was founded in 1992. Frederic De Narp is also a CEO who brings experience in the jewlery-watch business having worked for Cartier for 18 years. He was the CEO of the North American division. Cyrille Baudet is Harry Winston’s CFO and has rich experience in auditing mining companies and also as a controller at Cartier.

Right On Target

Target Corp (TGT) started this year with its stock tumbling from $60.77 and hitting bottom in June at 46.46. It now seems to be on its way back up, currently at 52.66.

Target is a general merchandiser covering a wide range of products at low prices. This is especially advantageous today when people are worrying about their financial futures and want to make every penny count. Even though Walmart has traditionally been the lowest price retailer, Target is closing in. They have been lowering prices and today can compete with Walmart in some product categories. Target has improved service, merchandise choice and shopping experience. It has outperformed Walmart in these areas according to consumer surveys.

Target’s financial management is lead by CFO Douglas A. Scovanner. Scovanner has been Target’s Executive Vice President and CFO since the year 2000. Apparently the company considers Douglas Scovanner a great asset because in 2009 he received over 8 million dollars of salary and other compensation according to Forbes.

Even if Walmart still has better prices than Target you can make money on target’s stock.

Concretize Your Profits

Smith Midland Corp (SMID.OB) is a company that develops, sells, licenses and rents precast concrete products for construction, and highway and noise barriers. The business was started in 1960 by Rodney I. Smith and his father David Smith. Today, Rodney’s son, Ashley B. smith, who has a BA in Business Administration, serves as the COO. The company works mainly in the northern United States and also licenses their precast concrete products in six countries. they also have several subsidiary companies.

Smith Midland has an excellent balance sheet, income statement and cash flow. It is a solid company and is run by professionals. William A Kenter has been the CEO since 2008 and has managed the company finances well through those tough financial years. Mr. Kenter previously served as a controller for the Mount Vernon Printing division of Consolidated Graphics, Inc. and before that was a CEO and president of another printing company.

Recently, the stock has been fluctuating between $1.30 and $2.40. One could profit by buying low and selling high in that range. It is currently on the upswing selling at $1.90. I expect it to climb back to 2.40, where it was before the recent market problems started back in May.

Avis Budget Backs Out Of Bidding Battle With Hertz

For the last 17 months, Avis Budget Group (CAR) and Hertz Global Holdings (HTZ) have been bidding to acquire the Dollar Thrifty Automotive Group (DTG), a car rental company. Yesterday, Avis withdrew from the competition when they closed a deal to purchase Avis Europe. Avis Europe has 4,050 outlets in 112 countries throughout Europe, the Middle East, Africa, and Asia.  Ron Nelson, Avis Budget’s CEO, said that “The transaction re-unites the global operation of the Avis and Budget brands under one corporate umbrella, and is both financially and strategically compelling.”

Avis Budget will have to pay cash, sell stock and probably take loans to complete the deal with Avis Europe. This cash requirement rules out purchasing Dollar Thrifty.  Avis is a solid company and with the new consolidation it should become even stronger.

Among Avis’ management  are Patric Siniscalchi the Executive VP of International Operations. He has worked with Avis International since 1980 in various international asignments.

Thomas M. Gartland is the Executive VP of Sales, Marketing and Customer Service. He contributes 28 years of leadership experience to Avis.

Gerard Insall is a Senior VP and the CIO. He has been managing information technology for the last 20 years.

The stock was rising until the economic problems of May and has fallen 6 points (about a third) since then. Probably less people are traveling and renting cars due the economic uncertainty and downturn. When the economy hits bottom and starts to rise, I believe that Avis Budget will be a good acquisition.