While a majority of companies are languishing in this economy, a select few are adapting and using the situation to their advantage, which has translated nicely to the shareholders of these company’s stocks and eventually could lift related exchange traded funds (ETFs).
The recession has provided a forum for companies playing out a Darwinistic-styled scenario of the most fit. Companies have the chance to obtain greater efficiency and to take away market share from the incompetent, reports Jim Jubak for MSN Money.
Investors can see the early indications of efficiencies that some companies have implemented so as to come out of this recession better of than competitors.
- Dividends. While most companies are cutting dividends, a few are ignoring the trend. The board of directors at Monsanto (MON) have voted to increase its company’s dividends by 10%. It has also reported earnings higher than forecasts and has raised its forecast for the rest of the year. The ETF Market Vectors Agribusiness (MOO) is up 3.1% in the last month with holdings of 9.4% in MON.
- Hiring. As more companys are laying off workers, Teva Pharmaceuticals (TEVA) has been hiring an additional 100 workers for its Jerusalem facility. The ETF iShares MSCI Israel Index (EIS) is up 4.4% in the last month with holdings of 24.4% in TEVA.
- Stable capital investments. Savvy companies are looking at the long-term by investing during a recession. Intel (INTC) is investing in personal computers for every slowdown and now is no different. The ETF Technology Select Sector SPDR (XLK) is up 0.9% in the last month with holdings of 4.8% in INTC. BNSF Railway (BNI) has announced that it would spend $2.7 billion to upgrade tracks, signal systems and freight cars, and to buy 350 more locomotives. The ETF iShares Dow Jones Transportation Index (IYT) is down 12.1% in the last month with holdings of 12.1% in BNI.
- Acquiring. US Bancorp (USB) was busy buying up Downey Savings and Loans, and PFF Bank and Trust back in November. The ETF iShares Dow Jones U.S. Regional Banks (IAT) is down 29.5% in the last month with holdings of 20.1% in USB.
- Fewer future competitors. Ericsson (ERICY) CEO Carl-Henric Svanberg plans on picking up share from Nortel and Motorola. Because its competitors would be weakened, Ericsson could add to its 40% share in the sector. The ETF iShares MSCI Sweden (EWD) down 7.3% with holdings of 14.3% in ERICY.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.