American Capital Strategies: A 9% Yield that is Sustainable

American Capital Strategies (ACAS), which currently is trading around $41-42 a share, pays an enormous dividend of $3.68. This equals out to an approximate yield of 9%. More importantly, ACAS as a company has never decreased its dividend since its IPO in 1997. Furthermore, the company has raised its quaterly dividend 37 times according to Yahoo Finance. According to the company, $10,000 invested in 1997 in the Company's stock would be worth $69,584. That figures to a cumulative gain 595.8 percent. Whats more, is that the company has an above average credit rating compared to its peers and has very little exposure to the subprime fiasco accoring to its CEO, who spoke to this topic considerably in the company's most recent quaterly presentation. The company's success has even landed it a place on the S&P 500, a feet no other alternative asset manager has achieved. However, the company's share price has dropped recently because of worries about the subprime mess. The very subprime mess that ACAS has advoided. For investors, this presents a near perfect opportunity for high growth and significant income. For purposes of disclosure, I own shares of this company and has recently added significantly to my holdings.

A True Alternative Fuel Company

Clean Energy Fuels (CLNE), according to the company's website, is "the largest provider of Natural Gas for transportation in North America with a broad customer base in the refuse, transit, shuttle, taxi, police, intrastate and interstate trucking, airport, and municipal fleet markets." CLNE serves approximately 200 fleet customers who operate approximately 13,000 Natural Gas vehicles in various markets, including public transit, refuse hauling, airports, taxis, and regional trucking. Moreover, the company owns, operates, and supplies 168 Natural Gas fueling stations as well as sell and lease Natural Gas fueling stations to third parties.

Moreover, the United States Government is currently subsidizing a significant percentage of the upfront costs incurred by customers as they switch from Diesel or Gasoline powered vehicles to Natural Gas powered vehicles. The reasons for this are simple. First, 100% of the Natural Gas used in the U.S. is currently produced by North American countries meaning, unlike oil, U.S. dollars are not flowing into the hands of unfriendly nations or violent extremists intent on harming U.S. interests. Second, Natural Gas is far cleaner than any other alternative fuel with the exception of Hydrogen, which is, at best, decades away from mass use. Moreover, producing Natural gas does not take up any valuable cropland away from food production. Natural Gas vehicles produce 95% less pollution than Gasoline or Diesel ones. Third, natural gas is far cheaper than Petroleum meaning substantial savings in the long run for Natural Gas operators. Fourth, Natural Gas is currently viewed by industry experts, including Spencer Abraham, the former head of the Department of Energy, as the most efficient feedstock to produce Hydrogen. Furthermore, much of the infrastructure built to support fleets of Natural Gas powered vehicles can be easily converted to distribute Hydrogen instead of natural gas when comes to do so. It is even possible to produce Hydrogen-Natural Gas blended fuels, which make good economic and environmental sense.

According to Jon D. Markman of the Street.com the potential for the Natural Gas fuel market in the U.S. alone is $21 billion, of which, a large portion will likely go to CLNE. Moreover, according to Mr. Markman the company is likely to earn between $0.60 and $0.84 per share in 2009. This is a 1900% to 2700% increase over this years projected earnings of $0.03 per share. Moreover, the company, which has almost no debt is only priced at roughly 71 times next years projected earnings and 27.5 times 2009 projected earnings, assuming the company only makes $0.60 per share in earnings. In short, this company is a buy and, for purposes of disclosure, I have recently acquired shares.

Stocks to Buy Now

Considering the fallout from the subprime mortgage crisis, which is increasingly begining to affect prime morgages across the country, investors should focus their investments on those companies that are in solid financial shape and in no need of outside capital and whose business models revolve upon government or business spending rather than consumer spending. The reasons for this are simple. As more and more mortgages default, banks will tighten their lending practices signifigantly lowering the overall amount of liquidity in the overall market, thus affecting the ability of companies to raise cash. Furthermore, consumers have been able to spend much more than income would have allowed under more normal circumstances by raising dept through refinancing their homes. Such refinancing is rabidly becoming a thing of the past and thus the consumer will very quickly find themselves with a great deal of debt and far less cash to spend than anytime in the past several years thus greatly affecting consumer spending. With this in mind, the top stocks I am recommending now include Air Products and Chemical (APD), International Business Machines (IBM), and Flour (FLR). The first, APD offers investors a great growth story, with more upside exposure to the so-called hydrogen economy than any other U.S. company. IBM is a spectacular company in solid financial shape, which is selling chaep and growing earnings at a sustainable pace. Flour is a pure play in the infrastructure segment and is another great growth stock.

For purposes of disclosure, I currently own IBM and APD and looking to increase my holdings in each. I am also looking to buy FLR on dips.

Time to Buy American Capital Strategies

American Capital Strategies (ACAS) is the largest publicly traded Private Equity Firm operating in the United States with over $15 billion in assets under management. According to its website American Capital Strategies is "an investor in managemnt and employee buyouts, private equity buyouts, and early stage and mature private and public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations. American Capital and its affiliates invest from $5 million to $800 million per company in North America and €5 million to €500 million per company in Europe."

Recently, concerns regarding the real estate market and the subprime mortgage market have caused shares in ACAS to tank falling over 19% from its 52 week high in a span of roughly six months. These fears are, however, overblown and have created a significant value opportunity for prudent investors seeking both high income and a chance of capital appreciation. First, ACAS is an extremely diversified firm with investments across many industries and geogrpahic locations with relatively little exposure to the current residential real estate and subprime mortgage woes. Second, the company pays a very large dividend and is currently yielding over 8 percent giving the company's shares a high degree of yield support. Third, the company enjoys an excellent credit rating, which means the company has an extremely low cost of capital thus ensuring any capital raised is very likely to be able to be invested at extremely beneficial rates as far as shareholders are concerned. Morevover, any concerns that private equity firms, hedge funds, and other alternative asset management firms will face any changes in their tax structure, which would severly impact earning of such firms is unlikely for several reasons (a small but very vocal group of Senators and Representatives are currently calling for such a change). Such a change in the tax structure lacks widespread support in either the House of Representatives or the Senate. Furthermore, President Bush is unlikely to be sympathetic to such a change in the tax structure as are the major Presidential candidates form both the Democratic Party and the Republican Party considering the vast and deep ties the leading candidates have within the industry.

For purposes of disclosure, I own shares in this company and am bullish on its prospects.

A Telecomunications Company Worth Owning: Chunghwa Telecom

According to its website, Chunghwa Telecom (CHT) "chiefly provides telecommunication and information-related services. Its scope of business covers city call, long distance calls, international calls, GSM, data communication, Internet services, broadband networking, satellite communication, intelligent network, mobile data and multimedia broadband." Furthermore, the company boasts the following in regards to its subscriber base, range of services, and cooperation with international partners:

• CHT is the largest telecommunication operator in Taiwan with a subscriber base of over 20 million.
• CHT has the largest range of services of any telecommunications operator in Taiwan with operations consisting of fixed line networks, GSM, and data networks throughout Taiwan and offshore islands.
• Of all the telecommunication companies operating in Taiwan, CHT has the closest cooperation with other international telecoms with circuits to over 200 other countries.

Corporate Governance is also sound as CHT recently was awarded the coveted Best Financial Disclosure Procedures in the Asia/Pacific Region by Technical Criteria in 2007. Just as important is the fact that CHT trades at significant discounts in terms of Price/Earnings and Price/Sales relative to its peers despite offering superior margins and comparable growth rates. Moreover, the company boasts a hefty dividend of 4.6%. The advent of 3rd Generation Cellular Technology should also be a strong catalyst for future earnings for CHT.

For these reasons, it is my belief that this company is a strong buy for long term investors. For purposes of disclosure, I have recently obtained shares in this company.

Sunny Days for Suntech Power

Business at Suntech Power (STP), China's most established photovoltaic cell and module manufacturer, is booming. The company just released its fourth quarter and 2006 year end earnings and investors have a lot to be pleased with. For starters, the company's quarterly results excluding items were 4 cents per share better than Wall Street's expectations coming in at $0.23. For the year, net income rose sharply to $106 million, or 68 cents per share, versus $28.2 million, or 26 cents per share, in 2005. Furthermore, the company upped production guidance for 2007. The only negative for the company was quarterly revenues slightly missed expectations. For investors in the company, this last bit of bad news should not be too discouraging. Overall, the company is firing on all cylinders and should continue to reward patient shareholders as China's ravenous demand for energy continues to grow. In short, this company is a buy for long term investors who can afford to buy and sit on an investment for many years. For purposes of disclosure, I do not own shares in this company.

Itron Powers Ahead

"Helping the world to make the most of its energy and water resources" is both the business and passion of Itron, a Washington State based company. Itron (ITRI) produces a wide variety of products, including solid-state meters and automated meter reading technology to enterprise-wide software platforms and real-time analytic applications, for energy and water providers around the world. Currently, these products are in high demand as energy prices have skyrocketed and the nature of providing energy to consumers has changed drastically due to structural changes in the global and domestic energy markets. Furthermore, water resources are, in many parts of the world, well below sustainable levels given current usage patterns, propelling the sell of Itron's portfolio of water utility products as water providers desperately seek to curtail wasteful practices. These developments have, in turn, generated very positive results for shareholders.

The company recently reported strong fourth quarter and record yearly operating results for the period ending Dec. 31, 2006. The company also reported its future profit outlook, which was well ahead of analysts estimates. So far, the year-to-date performance of Itron's shares has been phenomenal and, as of March 8th, 2007, stood at 21.2 percent.

Recent events point to even further growth in the company's shares. On February 25th the company announced it would acquire Actaris, a European competitor for approximately $1 billion, a deal which will add 20 to 30 cents a share in 2007 earnings, according to management. Then on March 8th, the company announced it had received the largest ever international order for SENTINEL solid-state electricity meters from Mexico's largest utility. Itron's vice president and general manager of international relations, Doug Staker, in remarks regarding the deal, stated, "This is a very important step forward for Itron in this market." Speaking more broadly, Mr. Stoker stated, "On top of other meter sales in the region, this agreement makes Itron one of the top meter suppliers in Mexico. We're optimistic about continuing to grow our presence in Mexico and throughout Latin America." With a leading technological edge, Itron is poised to continue to generate awesome returns for shareholders and should be considered by all long term investors who can withstand the volatility that goes along with investing in small cap stocks.

PetroChina is Selling at a Deep Discount

When analyzing stocks, my favorite valuation metric is the PEG ratio. This ratio is simply the product of the price the company sells for divided by the company's forward earnings divided by the company's 5 year projected growth rate. Any stock selling under 1 is generally seen as being a good buy. Any stock selling for a PEG of less than 0.5 is considered a steal. When the largest integrated oil and gas company in China sells for 0.38 its time to buy. As stated, PetroChina is China's largest integrated oil and gas company. Furthermore, the company has a virtual monopoly on its domestic market, due to the fact that it is partially state owned, and receives preferential treatment from the Chinese government in various matters for the same reason. According to Morningstar, PetroChina now yields 4.37 percent in terms of its dividend, which is much higher than the industry average of 1.43 percent. Morningstar goes further stating that the company's forward earnings yield (the annual return the company would generate if all of its profits were distributed to shareholders in the form of dividends) is also much greater than other companies in the Oil and Gas industry. In short, this company is a screaming buy for long term investors and should be bought aggressively.

Why Posco?

That is the question many investors have been asking themselves since the recent announcement that Berkshire Hathaway owns a minority stake in the South Korean Steel Company. As of Friday's (3/2/07) close, the 4 percent stake purchased by Berkshire Hathaway in 2005, according to CBS MarketWatch, is worth $1.35 billion. Already, the initial investment has more than doubled, rising over 102 percent and providing Berkshire shareholders a considerable return on the initial investment. More intriguing than this, however, is the fact that Warren Buffet, Berkshire's legendary Chairman, is still very bullish regarding the company stating, business is "outstanding." After a quick look at Posco's website, the source of Buffet's optimism becomes self evident. According to the company, net profits for the fourth quarter, 2006 increased 148 percent year-over-year. Furthermore, the company's credit rating has been upped to A (Stable) from A- (positive) by S&P. The current rating is, by far, the highest of any company in the steel industry and signifies the confidence, which analysts have in the firm. The company is also rapidly expanding its international presence with major products throughout Southeast Asia, India, and Mexico and has significant technological advantages over its competitors. Additionally, Posco has a virtual monopoly on its domestic market (South Korea) and the steel industry as a whole has experienced rapid consolidation in recent years, which shows no signs of letting up. Even better, the company trades at a significant discount to its peers in terms of its one year projected earnings and the company has an impeccable balance sheet. All of this points to higher earnings for Posco and higher stock prices for the firm's shareholders. I am currently long on this stock and am buying shares.

Some Stocks Are Cheap! Some Stocks Are Cheap! Some Stocks Are Cheap

Now is the time buy. There, I have said it. Considering the market's recent behavior, these may be foolish words. However, I do not believe that to be so. For sure, many of the stocks that dropped during this week's correction, which I believe is almost over, were overvalued given their prospects and fundamentals and some may still be. Others, however, were simply victims of a market that blindly slashed the prices of good and bad, cheap and expensive equally. The good and cheap are the companies to buy. Bold investors need to act in the next few trading days for these bargains will not last forever. Dynamic and innovative companies such as Allegheny Technologies and Sasol now sale for PEG Ratios (5 year expected) for 0.88 and 0.68 respectively. Both companies are in good financial shape and Sasol pays a dividend in excess of 3 percent. The key is to strike before the market realizes the error in its ways and bids these companies to new heights. Furthermore, there are literally dozens and dozens of quality companies now selling for bargain bin prices that investors would be wise to snap up.

For purposes of disclosure I own shares in Sasol. Additionally, for those who are unfamiliar with the PEG ratio, I will explain it. It is simply the price divided by earnings divided by the projected 5 year growth rate of a given company. Any company trading at less than one should be considered a bargain.