High-Yield Health Care

In This Issue: High-Yield Health Care Yellen Soothes While Putin Seethes Japan: Nice gains to be had, but don't stay too long 74% Profit Upside I promise you this buying opportunity won't last long: The recent oil-price panic has offered up dream bargains. Quality energy stocks have been driven down to absurdly cheap prices – some plunging nearly 50%. That's just crazy – but crazy good for you. The best of these stocks will bounce back hard and strong. There's one I project will have a whopping 74% profit upside, and another 64%. I have 4 in all with an average profit upside of 52%. They could go higher. Want to know their stock symbols plus full details on how to play them? Go here. High-Yield Health Care 12/19/2014 By Benjamin Shepherd While we tend to think of the health care sector as being rather staid and defensive, the reality is that it holds a wide array of growth opportunities. Rapidly developing technologies, such as improvements in genetic sequencing, shifting consumption patterns and growing demand for all manner of health care services are expected drive annual compound growth rate (CAGR) of 6% in the sector over the next five years. That spells big opportunity for both cutting edge health care companies and stalwarts alike. Average life expectancy is projected to increase from about 72.6 years in 2012 to 73.7 years by 2017. While that might not sound like a huge gain, Deloitte Touche estimates that will bring the number of people over the age of 65 to about 560 million, or about 10% of the global population. At the same time, the number of high income households, which the consultancy defines as earning more than $25,000 a year, is expected to jump up by 10% to more than 500 million. More than half of that income growth is expected to come from Asia, where the health care market is expected to hit a CAGR of 12.8% between now and 2018. With the population aging even as standards of living are improving, chronic diseases are also becoming a much bigger problem. It's such a problem, instead of wondering about the price of tea in China, the question now is how many diabetics there are in the country. The country now has more than 110 million diabetics, or 11.6% of the population, with China's diabetes rate the highest in the world. Research published in the Journal of the American Medical Association shows that about 40% of Chinese between the ages of 18 and 29 are in the verge on developing the disease. Diabetes is hardly the only chronic disease becoming more common, with rates of heart disease, kidney disease, obesity and cancer all shooting up. Pharmaceutical companies that have or are developing drugs to address those issues are poised to grow over the next decade and on. GlaxoSmithKline (NYSE: GSK), a portfolio holding in Global Income Edge, is one such company. Well-known as one of the largest pharmaceutical companies in the world, GlaxoSmithKline is responsible for a wide array of next-generation medicines used to treat everything from heart disease and skin disorders to HIV and cancer. It also makes a wide range of consumer products ranging from toothpaste to over-the-counter pain relievers. You might have also recently heard about the company because of a bribery scandal in China last year, where company officials were accused of paying kickbacks to doctors and hospitals to use their products. The government there recently fined the company $500 million over the allegations, a small sum for a company with nearly $42 billion in annual revenues and $8.7 billion in cash on the balance sheet. That bad news aside, over the past three years the company has posted astounding earnings growth even as revenues have remained relatively flat. While 3-year annual revenue growth is -2.3%, operating income has surged 22.9% as earnings per share growth has averaged 51.3%. More than a quarter of its revenues come from the emerging market regions. While revenues have been challenged by both the bribery scandal and a key patent expiration, the company boasts a strong pipeline of dozens of new drugs in a number of treatment areas. Perhaps most interestingly given the recent Ebola scare, it is one of only a few companies working on a vaccine. It also has an incredibly strong HIV franchise, which brings in more than $2 billion in revenue annually. Perhaps most interesting for investors, and what brought it to the attention of Richard Stavros, GIE's Chief Investment Strategist, is the company's dividend. While its quarterly payout can vary, particularly because of exchange rate fluctuations, GlaxoSmithKline maintains an average payout ratio of 60% of earnings. As a result, its investors have received $1.59 in dividends over the trailing year for a yield of 6.1%. Those dividends are also backed by more than $5 billion in annual free cash flow, which came in at $3.70 per share last year and has grown by 6.5% over the past five years. That dividend should only continue growing, with GlaxoSmithKline recently agreeing to acquire Novartis' (NYSE: NVS) vaccine business. That will beef up Glaxo's already robust vaccine operations, while adding facilities in India and China to its operations and reducing supply costs. There is also talk that the company may spin out its HIV operations into a standalone company in the near future, unlocking substantial value for its shareholders. GlaxoSmithKline is just one of a number of high yielding, international opportunities that you'll find in GIE. The advisory's Aggressive portfolio, geared towards investors with a high risk tolerance, currently sports an average yield of 9.4% while its Conservative Portfolio yields 6.5%. For a look at Richard Stavros' other picks, check out Global Income Edge today. Australian Communications Wonder Is Still World's "Best Buy" In January of 2012, we told our subscribers to buy into a unique Australian company that had a perfectly positioned business in phone networks, Internet access, and mobile communications. Since then, our subscribers have earned over 70%. They also benefited from a giant dividend averaging 7%. It's still going strong in our portfolio. But this is just the beginning… I've just received news that this company has developed an advantage that no other competitor can touch – they'll even displace Microsoft, Google, and Amazon in one key, multi-billion-dollar area… The full story is all right here. Yellen Soothes While Putin Seethes 12/19/2014 By Jim Pearce It took just a few words from Fed Chairwoman Janet Yellen on Wednesday to get investors to understand what we have been trying to say for the last couple of weeks -- most of the recent major macroeconomic developments over the past few months should prove to be beneficial for the U.S. economy. Gradually rising interest rates are an inevitable, but manageable, side effect. Exactly how many months must pass to satisfy the "considerable time" pledge Yellen made earlier this year with respect to when the Fed will allow interest rates to rise is debatable The general consensus seems to be perhaps as soon as the March/April timeframe, pending a continuation of strong employment and growing GDP. That timeframe will probably sync well with oil prices, which historically tend to decline in winter and then gradually rise through spring into summer. Orchestrating those two traditional precursors of increasing inflation will be the tricky part; a spike in one may precipitate a jump in the other, which in turn may trigger a panicked exit from the stock market by jittery investors. But the important lesson here is the triumph of fundamental economic strength over the distracting noise of geopolitical tensions. Yes, there is good reason to be nervous about what Vladimir Putin may do in the face of a plummeting oil prices and the collapse of the Russian ruble. Putin has proven many times that his "fight or flight" reaction of choice is to come out swinging with brass knuckles, so it stands to reason that he will not let OPEC undermine his economy without doing some sort of damage in exchange. His problem is that the biggest future customer for Russian's vast oil reserves is China, which has become an indirect beneficiary of increased American oil-producing capability. As the United States becomes increasingly energy-independent, it imports less oil from its petroleum-rich neighbors, who in turn have more oil to sell overseas to large consumers such as China and Japan -- which also happen to be the same customers that OPEC will become increasingly dependent on in the decades to come. By driving down the price of oil OPEC is effectively disrupting that supply chain, temporarily reversing the flow of oil exports away from Asia. They can't keep it up forever, and they won't because they don't have to. Another 3-4 months of $60/barrel oil should sufficiently scale back production in North America and elsewhere to allow OPEC to assert its dominance in Asia for years to come. The big winner in all of this is the United States, which has proven that it can decouple its economic fate from that of the rest of the world through a combination of aggressive monetary policy, a diverse industrial base, and increased energy-producing capacity. It has also become apparent that the U.S. does not need to engage in protectionist policies to defend its economic strength against hostile nations; it only needs to ensure that it maintains a market leading position in those sectors that are vulnerable to outside manipulation. In other words, our dominance in technological innovation, energy production, and agriculture make it very difficult for the U.S. to become beholden to Russia, OPEC, or anyone else that might want to exert influence over our consumer behavior. Even the current artificial suppression of oil prices is actually good for the U.S. economy overall, and Yellen herself downplayed the degree of counterparty risk that may create in the banking sector. Any responsible financial institution knows it must limit its risk exposure in the energy sector via a hedging strategy that protects the value of its collateral. When oil was closer to $100/barrel earlier this year most banks rolled over their oil hedges near $80/barrel, so anything less than that becomes the problem of an overly speculative hedge fund or energy trader. Although someone will end up losing a lot of money over this, it shouldn't pose an existential threat to the recovering U.S. economy. The other big winner this week was Cuba, which is finally on the road to normalizing diplomatic relations with the United States. While of little consequence to the U.S. economy (other than for cruise ship operators and cigar smokers), even a small trickle of dollars into the Cuban economy will help it immensely. Dropping the embargo altogether will prove trickier, but conventional wisdom is that the eventual passing of Fidel Castro would provide the opportune moment to let this anachronistic relic of the Cold War fall by the wayside. Let's just hope Putin doesn't decide to put missiles in Cuba in the meantime. This article originally appeared in the Mind Over Markets column. Never miss an issue. Sign up to receive Mind Over Markets by email. Could this market collapse? If this market falls apart, it could trigger a financial bloodbath lasting 11 years. But we've found 6 obscure lifelines that could turn an economic collapse into the most lucrative investment stretch of your life. If things fall apart, so many desperate investors will be crowding into these rare financial lifeboats that all you need to do is get in now… and watch as a flood of buying pressure pushes them higher. I've moved a significant amount of my own money into these investments. I urge you to at least consider doing the same. Japan: Nice gains to be had, but don't stay too long 12/19/2014 By Martin Hutchinson Shinzo Abe's victory in Japan's election Sunday cements his policies in place and ensures political stability. In the short-term, Japan's market should do well, although the yen will likely be weak. U.S. income investors should take advantage of this, but in the longer-term, perhaps two years out, trouble looms. Abe's policies have come in three parts. First, he has persuaded the Bank of Japan to inject money into the economy by buying Japanese government and other bonds to the tune of about $700 billion annually. That's twice as much as the U.S. Federal Reserve spent in its biggest year. Second, he has postponed a second sales tax increase (from 8% to 10%) while undertaking various bursts of "stimulus" public spending to boost the economy. The consequence is Japan's budget deficit is forecast by the Economist team of experts at 8.1% of GDP this year. This helps Japan maintain a dubious honor: Country with the highest national debt (as a percent of GDP). At 226% of GDP, it keeps company with number two Zimbabwe and number three on the list, Greece. By contrast, the U.S. national debt is 72% of GDP. Third, Abe has promised structural reforms, but with the Trans--Pacific Partnership trade agreement probably stalled in Washington, and other reforms opposed by powerful agricultural and retail lobbies, those don't look likely. We aren't far now from the point at which that national debt becomes unsustainable. The largest debts that have ever been paid off were 250% of GDP by Britain, twice, after huge wars in1815 and 1945. For Japan, debt default in 2016 or 2017 looms large. It will only require an international credit crunch to make this occur. Looking on the bright side, in the short term Abe's policies will cause the yen to decline. It has already fallen from 80 to the dollar two years ago to 119 now, and is likely to fall further. That will be good indeed for Japanese exporters and its stock market and moderately good for Japanese growth in general. So there is at least a year or so of likely upward move in the indices. For income investors, Japan is not fertile ground; few Japanese companies have yields above 3%. Still, there are a number of ways of getting a reasonable dividend yield and some exposure to the next year's rise in the market, without too much short-term risk. Some suggestions are as follows: Mitsui & Co. Ltd. (OTC: MITSY) is one of the largest Japanese trading houses, dating back to the 17th century, although the modern Mitsui was founded only in 1947. Trading houses specialize in international trade and big-ticket projects; Mitsui itself has 40,000 employees, with businesses in metals, infrastructure, aerospace, machinery, chemicals, food, textiles and finance. MITSY has a dividend yield of 4.1% and a historic P/E ratio of only 7.5. Canon. (NYSE:CAJ) is one of Japan's principal exporters, specializing in office multifunction devices, copiers, printers, cameras and lithography equipment. It's trading on a historic P/E of 17.6 times, a prospective P/E of 15.4 times and with a yield of 3.4%. Sumitomo Mitsui Financial Group (NYSE:SMFG) is the second largest financial group in Japan, trading on a historic P/E ratio of only 7 times, a prospective P/E of 8.7 times and at only 76% of book value, with a dividend yield of 3%. Unlike the other suggested investments, which are so international they will easily survive a Japanese financial crisis, it has a large exposure to Japanese government bonds, so you should be quick to pull the trigger and sell the stock if warning signals appear. Unlike most income investments, Japanese stocks are not a long-term holding unless there is clear evidence that the country's debt problem has been sorted out. However, all but the last suggested here should easily survive any financial crisis, and for the next 12 to 24 months they are likely to do well. This article originally appeared in the Income without Borders column. Never miss an issue. Sign up to receive Income without Borders by email. The One and Only Profitable Way to Trade Options Option buyers lose money on 7 of every 10 trades. They place high-risk trades, hoping for a big payout. But they lose – a LOT! But I don't buy options. Instead, I flip them on their head and do this with them. When I do, I make money 82% of the time. I turned $50,000 into $5 million trading options this way. To know my little option secret, you must click here. You are receiving this email at benjamart.ss.stock@blogger.com as part of your subscription to Investing Daily's Stocks To Watch, published by Investing Daily. To ensure delivery directly to your inbox, please add postoffice@investingdaily.com to your address book today. Email Preferences | About Us | Premium Services | Contact Us | Privacy Policy Copyright 2014 Investing Daily. All rights reserved. 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