Cara 100

July 24, 2008

Today I removed Yahh (YHOO) and added Potash Corp of Saskatchewan (POT), one of the world's most successful fertilizer companies. Yahoo has disappointed traders in not accepting the Microsoft offer, and in the manner they have conducted negotiations with various parties, including Google and Carl Icahn as well as Steve Balmer. Besides, the Yahoo Finance product has slipped, in my view, to take second fiddle to that of Google Finance.

July 19, 2008 update

Today I removed Gold Fields (GFI) and added Tata Motors (TTM), an interesting auto manufacturer from India.

What I’m doing is some long-term planning, switching the troublesome infrastructure/divestment issues of the Republic of South Africa for the rapid growth and entrepreneurial brilliance of India. I am no longer interested in South Africa as a place to invest.

As you know, the Cara 100 is a list of companies that I monitor for possible trading purposes. I like the quality, ie, financial strength, superior operating metrics, sound management, macro-economic factors and the like, for these companies. Eventually, that lessens my risk and improves my upside.

Tata has been raising eyebrows among international investors recently with (i) the Landrover-Jaguar deal, (ii) then the world's cheapest car, and (iii) its latest plan to introduce a car that runs on compressed air. As Tata powers forward, the Big Three of Detroit are going in reverse.

Also, I decided to leave Brazil's GOL Airlines in the list as oil prices are now coming down, and I prefer to spend more time looking into the company when it's likely not to be under duress.

July 13, 2008 update

Today I replaced UBS (UBS) with IBM (IBM) in the Cara 100. I am also concerned about GOL, but I don't yet have a replacement.

June 2008 update

With the take-over of Trane (TT), I needed a replacement. Following up my commentary in the WIR of Week#23-08 (June 8), I selected McDonalds (MCD), a DJIA component and a sector 25 (Consumer Discretionary) leader.

Here are my comments about MCD in the WIR:

McDonalds [GICS 25, Dow 30] (MCD: Value Line Report Jun. 6: next one is due Sept. 5)
With regard to McDonalds, the Value Line analyst seems to be enamoured with the ramp up in earnings this year as he has forecasted growth from $2.91/share to $3.40/share, which is a +17% growth, more than double the normal growth range for this company.

Still, he says, "the shares offer below-average capital appreciation potential 3 to 5 years hence." The good news is that MCD is "a good pick for value-conscious investors" he says.

I can't argue either way. What I do feel is that the metrics are good enough now for inclusion of the company in the Cara 100, and I have been giving some thought to that.

As you know, there is a difference between a company and its share price. This company is well managed. But the stock has had a big run from $12 in 1Q03 to its present $56.95. I don't think we'll see that kind of performance again for a while.

These 100 companies were selected, not with regard to technical factors, but on the basis of fundamental, quantitative and economic factors. I judge them to be superior to their peers. Clearly, this is a subjective selection process. Like all people, however, I do have biases.

As to technical factors, there is a natural flow to price movement in equity markets, which I study. Periodically the share prices of these companies enter what I call an Accumulation Zone or a Distribution Zone. Depending on one's time horizon, whether it is long-term, intermediate-term or short-term, there will be a time to buy and a time to sell (Ecclesiastes 3).

Alpha list sorted by GICS Sector:

CVX Chevron Texaco Corp , [GICS 10, Cara 100]
CEO CNOOC [GICS 10, Cara 100]
ECA EnCana Corp [GICS 10, Cara 100]
XOM Exxon Mobil Corp [GICS 10, Cara 100]
IMO Imperial Oil Ltd [GICS 10, Cara 100]
PTR PetroChina Co [GICS 10, Cara 100]
PBR Petroleo Brasileiro SA [GICS 10, Cara 100]
STO Statoil ASA (ADR) [GICS 10, Cara 100]
SU Suncor Energy Inc [GICS 10, Cara 100]
TOT TOTAL SA (ADR) [GICS 10, Cara 100]

ABX Barrick Gold [GICS 15, Cara 100]
BHP BPH Billiton Ltd [GICS 15, Cara 100]
DOW Dow Chemical Co [GICS 15, Cara 100]
GGB Gerdau SA [GICS 15, Cara 100]
GG Goldcorp Inc [GICS 15, Cara 100]
NUE Nucor Corp [GICS 15, Cara 100]
POT Potash Cp of Saskatchewan [GICS 15, Cara 100]
SLW Silver Wheaton Corp [GICS 15, Cara 100]
SYT Syngenta AG ADS [GICS 15, Cara 100]
TCK Teck-Cominco Ltd [GICS 15, Cara 100]
TS Tenaris SA [GICS 15, Cara 100]
RIO Vale (Companhia Vale Do Rio) [GICS 15, Cara 100]
VCP Votorantim Celulose [GICS 15, Cara 100]

ABB ABB Ltd [GICS 20, Cara 100]
BA Boeing Co [GICS 20, Cara 100]
CHRW C.H.Robinson Worldwide [GICS 20, Cara 100]
ERJ Embraer-Empresa Brasil [GICS 20, Cara 100]
GE General Electric Co [GICS 20, Cara 100]
PAYX Paychex Inc [GICS 20, Cara 100]
SWK Stanley Works [GICS 20, Cara 100]
TGP Teekay LNG Partners L.P. [GICS 20, Cara 100]
UTX United Technologies, [GICS 20, Cara 100]

ATVI Activision Inc [GICS 25, Cara 100]
BBBY Bed Bath & Beyond [GICS 25, Cara 100]
BDK Black & Decker Corp [GICS 25, Cara 100]
BC Brunswick Corp [GICS 25, Cara 100]
CCL Carnival Corp [GICS 25, Cara 100]
COST Costco [GICS 25, Cara 100]
DIS Disney Co [GICS 25, Cara 100]
ERTS Electronic Arts Inc [GICS 25, Cara 100]
JCP J.C. Penney Company Inc [GICS 25, Cara 100]
KSS Kohl's Corp [GICS 25, Cara 100]
GOL Linhas Aereas Inteligent [GICS 25, Cara 100]
MCD McDonalds Corp [GICS 25, Cara 100]
NKE Nike Inc [GICS 25, Cara 100]
TGT Target Corp [GICS 25, Cara 100]
TTM Tata Motors [GICS 25, Cara 100]
TM Toyota Motor Corp [GICS 25, Cara 100]
WHR Whirlpool Corp [GICS 25, Cara 100]

ABV AmBev (Companhia de Bebidas) [GICS 30, Cara 100]
KO Coca-Cola [GICS 30, Cara 100]
DEO Diageo plc (ADR) [GICS 30, Cara 100]
PDA Perdigão SA [GICS 30, Cara 100]
PG Procter & Gamble Co [GICS 30, Cara 100]
SBUX Starbucks Corp [GICS 30, Cara 100]
WAG Walgreen Company [GICS 30, Cara 100]
WMT Wal-Mart Stores Inc , [GICS 30, Cara 100]
WFMI Whole Foods Market Inc [GICS 30, Cara 100]

AET Aetna Inc [GICS 35, Cara 100]
BMY Bristol Myers Squibb Co [GICS 35, Cara 100]
DNA Genentech Inc [GICS 35, Cara 100]
GSK GlaxoSmithKline plc (ADR) [GICS 35, Cara 100]
JNJ Johnson & Johnson [GICS 35, Cara 100]

BBD Banco Bradesco SA (ADR) [GICS 40, Cara 100]
DB Deutsche Bank AG (USA) [GICS 40, Cara 100]
GS Goldman Sachs Group Inc [GICS 40, Cara 100]
HDB HDFC Bank [GICS 40, Cara 100]
HBC HSBC Holdings plc (ADR) [GICS 40, Cara 100]
IBN ICICI Bank [GICS 40, Cara 100]
IBKR Interactive Brokers Group [GICS 40, Cara 100]
KB Kookmin Bank (ADR) [GICS 40, Cara 100]
MFC Manulife Financial Corp [GICS 40, Cara 100]
OXPS OptionsXpress Holdings Inc [GICS 40, Cara 100]
RY Royal Bank of Canada (USA) [GICS 40, Cara 100]
WBK Westpac Banking Corp [GICS 40, Cara 100]

ADBE Adobe Systems Inc [GICS 45, Cara 100]
AMAT Applied Materials Inc [GICS 45, Cara 100]
CSCO Cisco Systems Inc [GICS 45, Cara 100]
CTSH Cognizant Technology [GICS 45, Cara 100]
DELL Dell Inc [GICS 45, Cara 100]
GRMN Garmin Ltd [GICS 45, Cara 100]
GOOG Google [GICS 45, Cara 100]
IBM IBM [GICS 45, Cara 100]
INFY Infosys Technologies Ltd [GICS 45, Cara 100]
INTC Intel Corp [GICS 45, Cara 100]
LLTC Linear Technology Corp [GICS 45, Cara 100]
NTES NetEase.com (ADR), [GICS 45, Cara 100]
ORCL Oracle [GICS 45, Cara 100]
QCOM Qualcomm Inc [GICS 45, Cara 100]
RIMM Research In Motion Ltd [GICS 45, Cara 100]
SNDK SanDisk Corp [GICS 45, Cara 100]

CHL China Mobile (Hong Kong) [GICS 50, Cara 100]
CHA China Telecom Corp [GICS 50, Cara 100]
MICC Millicom International [GICS 50, Cara 100]
MBT Mobile TeleSystems (ADR) [GICS 50, Cara 100]
NOK Nokia Corp [GICS 50, Cara 100]
TEF Telefonica SA [GICS 50, Cara 100]
VIP Vimpel-Communications (ADR) [GICS 50, Cara 100]

CCJ Cameco Corp [GICS 55, Cara 100]
EXC Exelon Corp [GICS 55, Cara 100]

Technically speaking, Cameco is not a utility; it's a mining company. But its product is uranium, which is used by major utility companies, so I included it along with Exelon Corp, which is a major uranium-based utility service.

Also, you will see that there are items in the Consumer group that could be placed in the Discretionary Spending (GICS 25) sector or the Staples (GICS 30) sector depending on your viewpoint. or instance, a Starbucks (SBUX) or a McDonalds (MCD) could qualify as a 25 or a 30. The latter makes sense as many of their customers are daily customers who probably see the breakfasts and coffees as a staple.

As I say, my list may not match up with the conventional view in many regards.

List sorted by Ticker:

ABB ABB Ltd [GICS 20, Cara 100]
ABV AmBev (Companhia de Bebidas) [GICS 30, Cara 100]
ABX Barrick Gold [GICS 15, Cara 100]
ADBE Adobe Systems Inc [GICS 45, Cara 100]
AET Aetna Inc [GICS 35, Cara 100]
AMAT Applied Materials Inc [GICS 45, Cara 100]
ATVI Activision Inc [GICS 25, Cara 100]
BA Boeing Co [GICS 20, Cara 100]
BBBY Bed Bath & Beyond [GICS 25, Cara 100]
BBD Banco Bradesco SA (ADR) [GICS 40, Cara 100]
BC Brunswick Corp [GICS 25, Cara 100]
BDK Black & Decker Corp [GICS 25, Cara 100]
BHP BPH Billiton Ltd [GICS 15, Cara 100]
BMY Bristol Myers Squibb Co [GICS 35, Cara 100]
CCJ Cameco Corp [GICS 55, Cara 100]
CCL Carnival Corp [GICS 25, Cara 100]
CEO CNOOC [GICS 10, Cara 100]
CHA China Telecom Corp [GICS 50, Cara 100]
CHL China Mobile (Hong Kong) [GICS 50, Cara 100]
CHRW C.H.Robinson Worldwide [GICS 20, Cara 100]
COST Costco [GICS 25, Cara 100]
CSCO Cisco Systems Inc [GICS 45, Cara 100]
CTSH Cognizant Technology [GICS 45, Cara 100]
CVX Chevron Texaco Corp , [GICS 10, Cara 100]
DB Deutsche Bank AG (USA) [GICS 40, Cara 100]
DELL Dell Inc [GICS 45, Cara 100]
DEO Diageo plc (ADR) [GICS 30, Cara 100]
DIS Disney Co [GICS 25, Cara 100]
DNA Genentech Inc [GICS 35, Cara 100]
DOW Dow Chemical Co [GICS 15, Cara 100]
ECA EnCana Corp [GICS 10, Cara 100]
ERJ Embraer-Empresa Brasil [GICS 20, Cara 100]
ERTS Electronic Arts Inc [GICS 25, Cara 100]
EXC Exelon Corp [GICS 55, Cara 100]
GE General Electric Co [GICS 20, Cara 100]
GG Goldcorp Inc [GICS 15, Cara 100]
GGB Gerdau SA [GICS 15, Cara 100]
GOL Linhas Aereas Inteligent [GICS 25, Cara 100]
GOOG Google [GICS 45, Cara 100]
GRMN Garmin Ltd [GICS 45, Cara 100]
GS Goldman Sachs Group Inc [GICS 40, Cara 100]
GSK GlaxoSmithKline plc (ADR) [GICS 35, Cara 100]
HBC HSBC Holdings plc (ADR) [GICS 40, Cara 100]
HDB HDFC Bank [GICS 40, Cara 100]
IBKR Interactive Brokers Group [GICS 40, Cara 100]
IBN ICICI Bank [GICS 40, Cara 100]
IMO Imperial Oil Ltd [GICS 10, Cara 100]
INFY Infosys Technologies Ltd [GICS 45, Cara 100]
INTC Intel Corp [GICS 45, Cara 100]
JCP J.C. Penney Company Inc [GICS 25, Cara 100]
JNJ Johnson & Johnson [GICS 35, Cara 100]
KB Kookmin Bank (ADR) [GICS 40, Cara 100]
KO Coca-Cola [GICS 30, Cara 100]
KSS Kohl's Corp [GICS 25, Cara 100]
LLTC Linear Technology Corp [GICS 45, Cara 100]
MBT Mobile TeleSystems (ADR) [GICS 50, Cara 100]
MCD McDonalds Corp [GICS 25, Cara 100]
MFC Manulife Financial Corp [GICS 40, Cara 100]
MICC Millicom International [GICS 50, Cara 100]
NKE Nike Inc [GICS 25, Cara 100]
NOK Nokia Corp [GICS 50, Cara 100]
NTES NetEase.com (ADR), [GICS 45, Cara 100]
NUE Nucor Corp [GICS 15, Cara 100]
ORCL Oracle ] [GICS 45, Cara 100]
OXPS OptionsXpress Holdings Inc [GICS 40, Cara 100]
PAYX Paychex Inc [GICS 20, Cara 100]
PBR Petroleo Brasileiro SA [GICS 10, Cara 100]
PDA Perdigão SA [GICS 30, Cara 100]
PG Procter & Gamble Co [GICS 30, Cara 100]
POT Potash Cp of Saskatchewan [GICS 15, Cara 100]
PTR PetroChina Co [GICS 10, Cara 100]
QCOM Qualcomm Inc [GICS 45, Cara 100]
RIMM Research In Motion Ltd [GICS 45, Cara 100]
RIO Vale (Companhia Vale Do Rio) [GICS 15, Cara 100]
RY Royal Bank of Canada (USA) [GICS 40, Cara 100]
SBUX Starbucks Corp [GICS 30, Cara 100]
SLW Silver Wheaton Corp [GICS 15, Cara 100]
SNDK SanDisk Corp [GICS 45, Cara 100]
STO Statoil ASA (ADR) [GICS 10, Cara 100]
SU Suncor Energy Inc [GICS 10, Cara 100]
SWK Stanley Works [GICS 20, Cara 100]
SYT Syngenta AG ADS [GICS 15, Cara 100]
TCK Teck-Cominco Ltd [GICS 15, Cara 100]
TEF Telefonica SA [GICS 50, Cara 100]
TGP Teekay LNG Partners L.P. [GICS 20, Cara 100]
TGT Target Corp [GICS 25, Cara 100]
TM Toyota Motor Corp [GICS 25, Cara 100]
TOT TOTAL SA (ADR) [GICS 10, Cara 100]
TS Tenaris SA [GICS 15, Cara 100]
TTM Tata Motors [GICS 25, Cara 100]
UBS UBS [GICS 40, Cara 100]
UTX United Technologies, [GICS 20, Cara 100]
VCP Votorantim Celulose [GICS 15, Cara 100]
VIP Vimpel-Communications (ADR) [GICS 50, Cara 100]
WAG Walgreen Company [GICS 30, Cara 100]
WBK Westpac Banking Corp [GICS 40, Cara 100]
WFMI Whole Foods Market Inc [GICS 30, Cara 100]
WHR Whirlpool Corp [GICS 25, Cara 100]
WMT Wal-Mart Stores Inc , [GICS 30, Cara 100]
XOM Exxon Mobil Corp [GICS 10, Cara 100]

Cara 100 Companies explanation:

Quality + Timing is my Holy Grail… Quality of the Company and Timing in regard to the trading of its share prices.

Quality is primarily the record of a corporation’s financial strength, its profitability and growth, and its prospects for continuing a comparable record in the future. Like values and charisma in people, the quality of corporations sets them apart from their peers.

I look for a strong balance sheet and an A- (Above Average), or higher, credit rating in a corporation.

I like to see steadily increasing revenues, cash flow, earnings and (if possible) dividends, with compound annual growth rates (CAGR) of each that exceed that of their peer group.

For profitability and stability, I look for relatively high operating margins and consistent 18 pct or higher Return On Equity (ROE).

I look for leadership in management that I characterize as having strong personal values.

While headquarters of the Corporation may be domiciled in any jurisdiction of the world, the common shares must be listed for trading on a major US stock exchange, which requires a certain standard of financial accounting and reporting, and which provides in return a high visibility to the trading public.

Overall, my objective is to spread the list of 100 companies across the globe and all ten industry sectors.

Because there are many corporations that do not list their shares in the US, the country weighting of the Cara 100 is higher for US corporations, about 55 pct versus the 47 pct weighting of the S&P 1200 or the 45 pct (or less) I personally recommend.

Within sector weightings, the Cara 100 is under-weighted in Healthcare (GICS sector 35) and Utilities (GICS sector 55), mostly because it is my experience and belief that management and comparative performance in these sectors is not as solid as elsewhere. Another factor, of course, is that the public has a higher recognition of the names of the other consumer-oriented sector companies, as well as those in energy, financial, industrial, and technology industries.

Finally, I added some names like NetEase.com (NTES) and Silver Wheaton (SLW) that are relatively smaller, but more specialty companies, than the Exxons and Citigroups.

Overall, there is no question that the list is a subjective assessment, based on many biases I have, that we all have. So I make no claim that this list is perfect by any means.

The market is us. We come from different countries, different cultures and so forth, and so we are going to have different perspectives on values, charisma, quality and the like. But at the end of the day, we all trade the same markets, and my Cara Global Best 100 Companies list represents good quality and a good watchlist to follow in the equity market.

There will be times when I think it is appropriate to be selling some of the stocks of these companies and buying the stocks of some others. There will be times when I think it is appropriate to be 100 pct invested in equities and other times when I think a high weighting in cash, precious metals and/or bonds represents the best position relative to risk and opportunity.

So when I recommend selling shares of an Exxon, for example, that is no negative reflection on the Company unless I remove it at that point from the Cara 100 for reasons I would give. Traders must recognize that every company will go through cycles of thick and thin, like we all do. In our case that doesn’t mean we are bad people – if we know we are not. Sometimes, “stuff” just happens, and we have to deal with it.

It was unfortunate that I had to remove Maxim Integrated Products (MXIM.PK) because the stock had lost its Nasdaq listing and index status for its failure to submit timely financial summaries. Other companies like Fannie Mae and Freddie Mac have also failed to file but, politics being what it is, retained their exchange listing. In any event, Maxim is presently held in high regard by 17 analysts of major broker-dealer firms. In fact the consensus is a Buy-rated 2.1 on a scale of 5. Other companies in the Cara 100 should be so fortunate.

One company, Research In Motion (NDQ: RIMM; TSX: RIM), I removed from the Cara 100 early in 2007 for reasons that I became disenchanted with the values of what I consider to be arrogant management. Those financially powerful individuals believed themselves above the law in that they, without public knowledge, altered corporate records in order to option common stock to insiders at favorable prices. Then denied it.

If breaking the law is becoming an acceptable practice, then society is doomed. Capital markets cannot take the stress of the loss of the public’s confidence, and I, for one, will not support fraud against the shareholders who are already putting their capital at risk. Deceit against shareholders who have put their trust and faith in a corporation’s management and Board is a pretty sleazy thing in my books.

But on Friday Oct. 5, 2007, in a courtroom, Research In Motion Ltd came clean about their underhanded options grants to insiders, and also acknowledged changing their corporate governance practices so that kind of thing would not happen again, so I put the Company back into the Cara 100.

As a trader and writer, I have no interest in holding grudges. We all live in glass houses, or ought to.

When I say “the market is us”, I could add the words, “and the way we need it to be”. We the people do not ever need to support the self-serving miscreants in our society. Otherwise we would have no right to expect social equity.

Ticker list by sector, with additional links:

CNOOC [GICS 10, Cara 100]
(CEO: Yahoo Finance file)
(CEO: Google Finance file)
(CEO: StockChart chart)
(CEO: BillCara2 chart)
(CEO: ADVFN Financial Data)
(CEO: ADVFN Financial Data)

Chevron Texaco Corp [GICS 10, Cara 100]
(CVX: Yahoo Finance file)
(CVX: Google Finance file)
(CVX: StockChart chart)
(CVX: BillCara2 chart)
(CVX: ADVFN Financial Data)
(CVX: ADVFN Financial Data)

EnCana Corp [GICS 10, Cara 100]
(ECA: Yahoo Finance file)
(ECA: Google Finance file)
(ECA: StockChart chart)
(ECA: BillCara2 chart)
(ECA: ADVFN Financial Data)
(ECA: ADVFN Financial Data)

Imperial Oil Ltd [GICS 10, Cara 100]
(IMO: Yahoo Finance file)
(IMO: Google Finance file)
(IMO: StockChart chart)
(IMO: BillCara2 chart)
(IMO: ADVFN Financial Data)
(IMO: ADVFN Financial Data)

Petroleo Brasileiro S.A. [GICS 10, Cara 100]
(PBR: Yahoo Finance file)
(PBR: Google Finance file)
(PBR: StockChart chart)
(PBR: BillCara2 chart)
(PBR: ADVFN Financial Data)
(PBR: ADVFN Financial Data)

PetroChina Co [GICS 10, Cara 100]
(PTR: Yahoo Finance file)
(PTR: Google Finance file)
(PTR: StockChart chart)
(PTR: BillCara2 chart)
(PTR: ADVFN Financial Data)
(PTR: ADVFN Financial Data)

Statoil ASA (ADR) [GICS 10, Cara 100]
(STO: Yahoo Finance file)
(STO: Google Finance file)
(STO: StockChart chart)
(STO: BillCara2 chart)
(STO: ADVFN Financial Data)
(STO: ADVFN Financial Data)

Suncor Energy Inc [GICS 10, Cara 100]
(SU: Yahoo Finance file)
(SU: Google Finance file)
(SU: StockChart chart)
(SU: BillCara2 chart)
(SU: ADVFN Financial Data)
(SU: ADVFN Financial Data)

TOTAL S.A. (ADR) [GICS 10, Cara 100]
(TOT: Yahoo Finance file)
(TOT: Google Finance file)
(TOT: StockChart chart)
(TOT: BillCara2 chart)
(TOT: ADVFN Financial Data)
(TOT: ADVFN Financial Data)

Exxon Mobil Corp [GICS 10, Cara 100]
(XOM: Yahoo Finance file)
(XOM: Google Finance file)
(XOM: StockChart chart)
(XOM: BillCara2 chart)
(XOM: ADVFN Financial Data)
(XOM: ADVFN Financial Data)

Barrick Gold [GICS 15, Cara 100]
(ABX: Yahoo Finance file)
(ABX: Google Finance file)
(ABX: StockChart chart)
(ABX: BillCara2 chart)
(ABX: ADVFN Financial Data)
(ABX: ADVFN Financial Data)