Posts tagged North American
Pepsi: Pull-Back Is Buy Opportunity
Jan 11th
Filed under: PepsiCo (PEP), Stocks to Buy
Pepsico Inc.’s (PEP) shares have pulled back recently, after shooting through $60 resistance. But I’m nevertheless reiterating my buy rating for the company’s shares, first recommended on March 13, 2009, at a price of $48.62. Here’s why:
Pepsi’s strong presence in international markets remains the key. True, North American revenue growth will be low-single-digits in 2010, after the recession’s flattish 2009, but investors should remain focused on the long-term and large pictures. Namely, Pepsi emerging market growth opportunities (it has a presence in more than 200 countries) and its rebrand in health and sports drinks.
Continue reading Pepsi: Pull-Back Is Buy Opportunity
Pepsi: Pull-Back Is Buy Opportunity originally appeared on BloggingStocks on Mon, 11 Jan 2010 11:20:00 EST. Please see our terms for use of feeds.
Book Review and Giveaway: Your Money Ratios
Jan 11th
Personal finance money ratios is something that you may have seen from reading other personal finance blogs. Basically, common stock ratios like current ratio (assets/liabilities), debt to equity ratio, income to debt, or cash flow are applied to personal finance instead of companies.
Although I haven’t calculated money ratios for my finances, I’ve always had a curiosity as to how effective they are in helping achieve financial goals. An indicator is one thing, but used in context of the bigger picture is another.
The book “Your Money Ratios” does just that, it basically shows you the ratios that you should have at certain age levels to achieve your financial goals. Although this book was written for an American audience (social security etc), the theme is relevant for everyone. I’ve written a money ratio’esque article in the past where I calculated how much you need to save for early retirement, but perhaps I’ll do more Canadian relevant stuff in the future.
About the Author:
According to the book:
Charles J. Farrrell is an investment adviser with Northstar Investment Advisors, in Denver. He writes the “Retirement Roadmap” column for the CBS Moneywatch site and contributes a monthly retirement column for advisers to InvestmentNews. His research is frequently cited in The Wall Street Journal, SmartMoney, the Chicago Tribune, and many other consumer and professional media outlets.
About the Book
As you can probably conclude from the book title, the content focuses around personal finance money ratios for different age groups. What I like about this book is that it shows the ratios that you should aim for to reach certain financial milestones. It’s one thing to say to save 10% of your income, but what does that really mean during retirement? Other questions that the book answers is how much mortgage debt is acceptable at certain age groups? How much capital should I have relative to my age (net worth)?
The 8 Money Ratios covered are:
- Capital to Income Ratio – How much capital do you have relative to your income? How much do you need to retire? The author does not include principal home equity as part of the calculation, but states that a 30 year old should have a ratio of 60% of income in capital. For example, if a 30 year old was making $100k per year, he should have at least $60k in capital not including his home equity.
- Savings Ratio – How much of your income are you saving to reach your desired capital to income ratio? The author recommends saving at least 12% of gross income starting at age 25, increasing to 15% at the age of 45. Of course, the higher your savings ratio, the earlier you can retire.
- Mortgage to Income Ratio – How big is your mortgage relative to your income? The author and I have the same beliefs about this one, the mortgage size should not be greater than 2 times family income.
- Education to Average Earnings Ratio - This ratio indicates how much student debt you should take on to obtain a degree.
- Investment Ratio – How to grow and protect the capital you have accumulated.
- Disability Insurance Ratio – As a big believer in disability insurance, I believe that enough disability should be obtained to cover expenses, and not to simply replace income. The book describes how much disability insurance you need at each age group.
- Life Insurance Ratio – As another pillar of personal finance, term life insurance is a must. The author explains how much life insurance you need at each age group. To me, it’s a factor of your dependents and how much assets you have already accumulated.
- Long Term Care Ratio – This helps determine if you need long term care insurance. Personally, I haven’t given much thought to this one.
Final Thoughts
I enjoyed this book as it provided hard numbers and facts that show the path to financial freedom. As well, the author had a part on retirement withdrawal rates. I’ve written about these before, but he explained that a 5% retirement portfolio withdrawal rate is perhaps a bit aggressive, but a 4% withdrawal rate should work 95% of the time.
Although all the ratios may not be completely accurate to Canadians, most of them are pretty close as Canadians have CPP and OAS instead of Social Security.
Want a Free Copy?
The book publisher was generous in offering Million Dollar Journey readers the chance to win 3 copies of the book. The details are below:
- New and existing MDJ Money Tips Newsletter Subscribers get an entry. You can sign up here (it’s free).
- Tell me what your favorite book is in the comments for an additional entry. It doesn’t need to be finance related.
- Only those with a North American mailing address may enter (publisher rules, sorry).
- Contest will end Sat 5pm EST Jan 16, 2010 and the winner announced shortly after!
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Copyright 2010 MillionDollarJourney – All Rights Reserved
Related Blogs
- Related Blogs on Book Review and Giveaway: Your Money Ratios
J.P. Morgan Cautious On Staples
Jan 8th
J.P. Morgan thinks the next six months will be “difficult” for stocks in its beverages/household products coverage universe, and downgrades Coke, Colgate and Alberto-Culver to neutral from overweight. Firm looks for “sluggish top-line growth due to a weak consumer, and if the market continues to rise (which is consensus thinking), we see little enthusiasm for these stocks in the broader market.” JPM says “KO has to deal with weak North American and Japanese top-line growth,” while CL has “the best fundamentals in our large cap universe,” but that’s priced in. And ACV looks a bit pricey vs peers, firm adds.
Top Picks for 2010: Weatherford (WFT)
Jan 8th
Filed under: Newsletters, Stocks to Buy, best stocks for 2010
This post is part of a special report, Top Picks for 2010, the 27th annual survey in which TheStockAdvisors.com asks the nation’s leading advisors for their single favorite stock for the new year. See all 80 stocks listed here.
Energy sector expert Elliott Gue turns to Weatherford International (WFT) as his top pick for the coming year.
In his The Energy Strategist, he explains, “As with most oil services firms, Weatherford’s North American business has been hit hard and the stock now trades at a deeply discounted valuation.”
Continue reading Top Picks for 2010: Weatherford (WFT)
Top Picks for 2010: Weatherford (WFT) originally appeared on BloggingStocks on Fri, 08 Jan 2010 08:30:00 EST. Please see our terms for use of feeds.
Why Nestle Should Recruit the General (Mills)
Jan 6th
Sameer Bhatia, of Dow Jones Investment Banker, reports:
It has been an eventful week for Nestle. Monday, the Swiss food company sold its 52% stake in eye-care company Alcon to Novartis for $28.1 billion, and Tuesday it spent $3.7 billion to buy Kraft Foods’ North American frozen-pizza business.
- Bloomberg News
- Cans of General Mills’ Progresso Soup sit on a New York supermarket’s shelves in 2007.
Speculation has been building around what Nestle may do with the cash windfall–from using it to repay debt, to repurchasing shares, to making more bolt-on acquisitions like the Kraft deal. The sheer size of Nestle’s cash hoard gives the company flexibility to think more broadly than the tuck-in M&A strategy it has historically pursued. One appetizing (and rumored) target could be General Mills, which fits the Swiss company’s focus on healthful foods and could prove economically rewarding.
General Mills, with a $29 billion enterprise value (or market capitalization adjusted for debt and investments held on its balance sheet) is a mouthful for most acquirers but not for Nestle, which is six times bigger than the U.S. food company. General Mills also trades at a highly palatable valuation of 8.4 times enterprise value to last-12-months Ebitda–less than Nestle’s 10.4 times.
Add to that the fact that analysts expect General Mills to deliver superior long-term earnings growth of 8% vs. 5.6% for Nestle. In fact, an acquisition of General Mills could potentially be more attractive than a proposed share buyback. Financing the transaction with cash on hand would further boost the earnings accretion from such a deal.
Combined, the two companies would have sales of more than $40 billion in North America. The savings in procurement, supply-chain and G&A costs alone could be as high as $1.5 billion, or 10% of General Mills’ sales. Then there is the incremental bargaining muscle Nestle will gain over retailers that carry its products.
The acquisition would bring Nestle some powerful brands, such as Cheerios cereal in North America, Yoplait yogurt and Progresso soups. The companies have complementary portfolios, reducing risk of a prolonged scrutiny by antitrust authorities.
The two companies already have a successful history of cooperation. Together they operate Cereal Partners Worldwide, a joint venture that markets General Mills’ Cheerios cereal brand in 130 countries. Nestle also has exclusive license to use General Mills’ Haagen-Dazs brand within the U.S. and Canada.
One downside is that an acquisition this large would disproportionately expose Nestle to the mature U.S. market, as opposed to its current, more-balanced geographic mix. But while the overall U.S. market is mature, the categories in which General Mills competes, such as hot snacks and dessert mixes, have been increasing more than twice as fast as the overall food and beverage categories in total.
On top of that, General Mills is known for innovation. It has a track record of coming up with new brands that quickly become popular, such as Banana Nut Cheerios, the best selling new cereal in the U.S. for 2009.
Indeed, acquisitions of this size are tough to pull off; but for Nestle, buying General Mills could make a lot of sense. To that end, it would behoove Nestle’s management to take a broader look at its options now that it has the financial wherewithal to make such a move.
To visit the Dow Jones Investment Banker Web site, click here.
Celebrating 3 Years of Million Dollar Journey: Day 2
Jan 6th
As I mentioned yesterday, this anniversary giveaway is bigger than ever. So big, in fact, that I had to separate the prizes into 2 separate posts.
Lets continue with the giveaway madness!
Computer LCD Monitor (22″)
When I contacted Questrade to see if they were interested in sponsoring a prize, they were very generous in their response. They wanted to giveaway something that would improve trading, so what’s better than increasing LCD screen real estate.
What is Questrade? They are among Canada’s lowest cost discount brokerages. They offer $4.95 commissions per trade for up to 495 shares and $0.01/share after that up to a maximum commission of $9.95/trade. Not only do they offer low prices, they have a wide variety of account offerings. RRSP, USD RRSP, TFSA, Non-Registered, and RESP (among others). All of this with no annual fee or minimum balance.
If you are interested in opening an account with Questrade, make sure to use my coupon code for a $50 trading credit.
So what’s the prize? The lucky winner will receive a brand new 22″ LCD Monitor courtesy of Questrade. This may be used to replace your existing monitor, or perhaps as part of a dual monitor setup if your video card supports it.
Moonjar “Family” Package
Last year, I did a review and giveaway of the Moonjar. The Moonjar is a new age piggy bank that can help teach children about money by separating spending, saving, and sharing money. With the popularity of the previous Moonjar giveaway, the Canadian Moonjar distributor has offered the Moonjar Family Package to Million Dollar Journey readers.
What’s included in the Moonjar Family Package?
- Standard Moonjar (x2) – You can read more about it in my Moonjar Review.
- Conversation to Go Money game – Put the curious conversation about money on the table with these 100 open-ended questions. Share your dreams, lend your thoughts. An experience for the whole family.
- Noom & Raj Start a Business (Hardcover) – Meet Noom and Raj (that’s Moon and Jar backwards!). They want to start a business – a lemonade stand. Follow them through this fun adventure where they learn all about money words – Saving, Spending and Sharing with their Moonjar.
- The Leader Lesson Plan – This 45-minute lesson plan gives teachers, parents or community members the tools to teach kids about money and Moonjar. Fun and educational, this tool makes money management accessible and entertaining for everyone.
In addition to the generous gift, Moonjar Canada is offering Million Dollar Journey readers an exclusive discount for a limited time. You can save 15% up to Dec. 24, 2009 using code “SHARE15” on www.moonjar.ca.
How to Enter:
In this giveaway, you can increase your chances of winning by obtaining multiple entries.
- Tell me about your best personal finance or investing tip in the comments (doesn’t have to be original). (+1 Entry)
- Follow me on twitter. (+1 Entry)
The Rules
Lets go over some of the rules. All contestant entries will be shoved into an electronic hat and drawn at random. Since there are 2 prizes available, the odds of winning are relatively high.
- Only 1 comment entry / person (please enter a valid email address).
- Only twitter followers on the date of draw are eligible.
- To be fair to all contestants, each winner can only win once.
- Only those with a North American mailing address may enter.
- Contest will end Sat 5pm EST Dec 19, 2009 and the winners announced shortly after!
If you haven’t already, make sure to enter yesterdays PlayStation 3 giveaway!
Good luck!
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Copyright 2009 MillionDollarJourney – All Rights Reserved
Freddie HR Chief’s Big Payday
Jan 5th
- Freddie Mac
Freddie Mac’s Christmas Eve securities filing on executive compensation showed that the company’s human-resources chief, Paul George, is among the mortgage company’s five highest-paid officers, with annual pay of up to $2.7 million, depending on incentive payments. That makes Mr. George a rarity. Corporate Library says HR executives are among the five best compensated at just 186, or 6%, of the 3,200 corporations in the research firm’s North American database. And among those happy 186 HR honchos, Mr. George ranks in the top 15 in terms of pay.
Before the government took over the reins in 2008 amid soaring losses, Freddie was slow to find successors for its chief executive and chief operating officer, despite prodding from regulators. Mr. George, who worked at Wachovia Corp. before joining Freddie Mac in 2005, didn’t respond to requests for comment. A Freddie spokeswoman declined to comment.
