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Kevin Grewal
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Kevin Grewal is the founder, editor and publisher of ETF Tutor as well as serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent... More
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  • 5 Reasons Brazil Is Likely To Grow

    A steadily growing economy, stable financial market and liberal investment climate has enabled Brazil to prosper and build a foundation of continuous growth in the future.

    Currently, Brazil is the 10th largest economy in the world and due to its abundance of natural resources is likely to move up the list.  Brazil is one of the few countries in the world that is self-sufficient in oil as well as a leader in alternative energy sources.  Demand for crude oil will likely increase as the global economy continues to improve, and being self-sufficient in the commodity puts Brazil ahead of many of its competitors.  To further support its strength in the oil markets, the nation just uncovered large new oil beds which are expected to increase output in the future.

    On the alternative energy front, Brazil is a global leader in the production and utilization of ethanol.  In fact, the Latin American nation produces more ethanol than Asia and Europe combined.  Brazil’s success in alternative energy is likely to further bolster its strength as other nations, like the United States, continue to place an emphasis on carbon reduction and the use of cleaner sources of energy.

    Brazil is also rich in resources other than energy related commodities.  The Portuguese-speaking nation is the world’s second largest producer of iron ore and is a leading exporter of steel, coffee, soybeans, sugar and beef; all natural resources that are likely to increase in demand as economies around the world grow.

    Another factor working in Brazil’s favor is its tight control over its monetary instruments.  The country’s fiscal policies and prudent decisions have left it with large cash reserves which have enabled the nation’s credit markets to lend, when need be, and lead the nation’s financial system to be somewhat shielded from the global financial catastrophe.   

    Lastly, Brazil is set to host the 2014 Olympics and the 2016 World Cup, two major sporting events which require massive infrastructure building and restructuring, likely to boost construction and building sectors of the nation.  Additionally, once these two events take off, tourist spending and publicity are likely to further add to an already expanding GDP.

    In a nutshell, Brazil’s abundance in natural resources and its fiscal discipline and stability have enabled it to be a positive candidate for stellar growth over the next few years.

    Some ways to play Brazil include:

    • iShares MSCI Brazil Index (EWZ: 68.23 -3.57 -4.97%), which focuses on Brazil’s largest companies with nearly 75% of its exposure to materials, energy and financial services.  EWZ closed at $72.76 on Friday.
    • Market Vectors Brazil Small Cap (BRF: 45.31 -2.15 -4.53%), which invests in companies deriving at least half of their income by selling products to Brazilians.  BRF closed at $46.42 on Friday.
    • WisdomTree Dreyfus Brazilian Real (BZF: 26.95 -0.35 -1.28%), which gives one exposure to Brazil’s currency.  BZF closed at $27.17 on Friday.

    Although numerous forces point towards growth in Brazil, it is equally important to consider some risks that the nation may face such as widespread corruption, restrictive business labor laws and increasing government spending. 

    A good way to protect against these threats is through the implementation of an exit strategy which identifies price points at which an upward trend could come to an end.



    Disclosure: No positions
    May 04 11:34 AM | Link | Comment!
  • Four Reasons Google Is Attractive
    By Kevin Grewal
    Despite the continued hype behind its competitor’s innovative products, and its withdrawal from China, Google (NASDAQ:GOOG) may be worthy and for good reason.
    The search engine giant’s emergence into the mobile device world through its Nexus One and Android software stack which includes an operating system has been a hit. Recently, Google announced that 60,000 cell phones equipped with Android are shipping on a daily basis. Additionally, advertising on the Android continues to increase. According to advertising firm AdMob, U.S. ad impressions on Android devices have increased from 27% in November to 42% in February and worldwide ad impressions have increased by 2%. What makes Google even more appealing on this front, is that it appears to be taking advertising share from Apple’s iPhone, which has seen declines of ad impressions from 55% to 44% during the same time frame. Furthermore, Google’s mobile phone can be found on Verizon (NYSE:VZ), Sprint (NYSE:S), AT&T (NYSE:T) and T-Mobile’s platforms.  
    A second factor that is likely to support Google’s strength is its upgrade to its online package of word processing and spreadsheet programs, Google Docs. The changes, which were introduced on Monday, include several editing tools for word processing and quicker ways to fill cells in spreadsheets, which will enable it to directly compete with Microsoft (NASDAQ:MSFT) Office. The beauty behind Google Docs is that all of its applications are hosted over the Internet, whereas Microsoft’s software is typically installed on individual’s computers or workspaces.
    Another factor likely to bolster Google’s attractiveness is the recent talks about developing a tablet device based on its Android operating system software. The New York Times recently reported that Google has been working with numerous hardware makers to construct the perfect tablet device to compete against Apple’s iPad and the Amazon (NASDAQ:AMZN) kindle.
    Lastly, from a fundamental perspective, Google is highly attractive. The technology giant is trading at 18x forward earnings, a far cry from the average PE of 29 seen in 2008. From an earnings yield perspective, Google’s forward earnings yield is 5.5%, an attractive yield. To further bolster its appeal, the Mountain View California based firm has a hoard of cash on its balance sheet. 
    A combination of the aforementioned enabled the stock to close at $572.73 on Monday. Some other ways to play Google include the following:
    ·         First Trust Dow Jones Internet Index (NYSEARCA:FDN), which boasts Google as its top holding. FDN closed at $27.51 on Monday.
    ·         iShares Dow Jones US Technology (NYSEARCA:IYW), which allocates nearly 7% of its assets to Google. IYW closed at $59.84 on Monday.
    When investing in technology equities it is important to keep in mind the volatility and inherent risks involved. To help mitigate these risks, the use of an exit strategy which identifies price points at which an upward trend could come to an end is important.
    According to the latest data at www.SmartStops.net, an upward trend in Google could come to an end at $553.44. As for FDN and IYW, there price points are $26.38 and $57.69, respectively. These price points change on a daily basis and are reflective of market conditions. Updated data can be found at www.SmartStops.net.
    Apr 12 11:25 PM | Link | Comment!
  • Defense & Aerospace For Diversification

    As investors continue to seek diversification, the aerospace and defense sector may be the answer to adding diversification and for good reason.
    Recently, the Obama administration stated that spending on defense will not be drastically reduced in the coming years. In fact, President Obama’s budget includes more money going to the Pentagon in the next eight years than any other administration since World War II.
    One major reason for this surge in defense spending is that the United States needs to upgrade military equipment abroad in order to sustain its global military presence and strength. A second reason supporting this increased budget is the fact that the majority of military goods are made in the United States and increased spending in this sector could result in job creation and eventually a spark to a battered economy. Thirdly, the wars that the United States are engaged in around the world are not likely to end anytime soon, a notion further supported by the Obama administration decision to send an additional 30,000 troops to Afghanistan.
    In addition to support from the Obama administration, the defense sector is known for its relative stability, which further bolsters its attractiveness to certain investors. 
    As for the aerospace industry, industry insiders have indicated that production is escalating predicting 30,000 new aircraft to hit the market over the next 20 years. This production increase is being driven by outdated fleets, the desire of aircraft carriers to include more fuel efficient airplanes and an uptick in business, freight and leisure travel, which will all bode well for companies like Boeing (NYSE:BA) and Airbus. In fact, Boeing is up nearly 25% year-to-date and closed at $72.42 on Friday.
    Some diversified ways to play aerospace and defense include the following:
    ·         PowerShares Aerospace and Defense (NYSEARCA:PPA), which boast defense contractors like Lockheed Martin (LKM) and L-3 Communication (NYSE:LLL). PPA also boasts aerospace giants Honeywell (NYSE:HON) and Rockwell Collins (NYSE:COL). PPA closed at $18.84 on Friday.
    ·         iShares Dow Jones US Aerospace & Defense (NYSEARCA:ITA), which includes holdings like General Dynamics (NYSE:GD) and United Technologies (NYSE:UTX). ITA closed at $58.10 on Friday.
    Although an opportunity seems to exist in the aerospace and defense industry, it is equally important to keep in mind the inherent risks involved with investing in equities. To help protect against these risks, the use of an exit strategy which identifies a price point at which an upward trend in these equities could come to an end is of utmost importance. 
    According to the latest data at www.SmartStops.net, an upward trend in Boeing could come to an end at $69.56. As for the other mentioned equities, an upward trend could come to an end at the following price points: PPA at $18.51 and ITA at $56.73. These price points fluctuate on a daily basis and are reflective of market volatility. Updated data can be found at www.SmartStops.net.
     
    Apr 11 11:17 PM | Link | Comment!
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