Escape Red Tape

Washington, D.C. – A week ago, the World Bank and its private sector arm, the International Finance Corporation, released “Doing Business in 2006: Creating Jobs.” The annual survey, now in its third year, sizes up 155 countries to find the best and worst in the world when it comes to regulation on starting a business, hiring and firing workers, getting credit, registering property and other activities essential to free enterprise.

Last November, we argued that data from the World Bank’s report, then titled “Doing Business in 2005,” was a useful starting point in an international stock search. We singled out the five countries, excluding the U.S., that scored above average in all the “Doing Business” criteria. Then we mined our databases for ten reasonably valued, U.S.-listed stocks issued by companies hailing from those countries.

Full story at Forbes.com

The Feds Take On Electronic Trash

Washington, D.C. – Three weeks ago, Sen. John Thune, the South Dakota Republican who in 2004 unseated Senate Minority Leader Thomas Daschle, held his first hearing as chairman of the Senate Subcommittee on Superfund and Waste Management. The topic: electronic waste, something Thune confessed he wasn’t too aware of previously.

“I had heard of e-mail and e-commerce,” Thune mused. “I guess it makes sense that we have e-waste.”

For business, what makes sense is that Congress pay more attention to e-waste now. Speaking on behalf of the Consumer Electronics Retailers Coalition, an industry group representing the likes of Circuit City Stores and Target, Michael Vitelli of Best Buy said his group favored “a national solution to the issue of electronic waste.” Vitelli noted that in the first half of 2005, 50 e-waste bills were introduced by 30 state and local legislatures.

The legislative flurry underscores the significance of the problem. A recent report from the Government Accountability Office warned that 100 million computers, monitors and televisions become obsolete each year. In those devices lurks nasty stuff such as lead, mercury and cadmium.

Full story at Forbes.com

Airport Defense, Beltway Offense

Washington, D.C. – At a crowded congressional hearing on aviation security two weeks ago, the temperature in the room was uncomfortably high. So too, with the London Underground bombings still fresh in the headlines, was the frustration voiced by some of the members of the Subcommittee on Economic Security, Infrastructure Protection and Cybersecurity.

“The Transportation Security Administration spends approximately $4 billion a year to screen passengers and baggage,” said Rep. John Linder (R-Ga.), “I fear that this country is not getting nearly the return it would hope on such an investment.” Rep. Loretta Sanchez (D-Calif.) grumbled that “we’ve had plenty of meetings with many technology companies who tell us they have a solution to everything.”

One witness feeling the heat that day was Deepak Chopra, chief executive of OSI Systems. His company pulled in half its $247 million in 2004 revenues from its security division, Rapiscan Systems, which makes X-ray and gamma-ray inspection systems, as well as devices to detect dangerous materials (explosives, drugs and so on) using bursts of subatomic particles. After the Sept. 11, 2001, terrorist attacks, the U.S. Transportation Security Administration spent heavily on Rapiscan machines. TSA remains Rapiscan’s biggest customer.

Full story at Forbes.com

Jet-Set Debt

Morningstar analyst Arijit Dutta advises stateside investors not to stray too far from home in their bond portfolio. “You should start with a core bond holding,” he says, “something domestic and investment grade.”

But with more than half the world’s debt issued outside the U.S., there are plenty of ways to wager on overseas fixed income and make good money doing it. The tricky part is figuring out how and where. Forget about buying foreign bonds themselves. Most people can’t cope with the time, taxes and transaction costs involved.

Low-cost bond funds get rid of those problems but don’t solve a big one:allocation. These funds tend to either stay out of the U.S. market altogether or keep a majority of their holdings–usually 60%–overseas. You can tack on one of these to your core domestic portfolio, but how much is too much, especially as global economic conditions shift?

Full story (reg. required) at Forbes.com

Dialing Up Emerging Markets

Investors who gag on the prices of U.S. telecom stocks but want to stay with the sector should look abroad. “There is still a ton of growth within emerging markets telecom,” says Meagan Morris Nace, equity analyst at DuPont Capital Management.

Nace is one of four analysts focused on emerging markets at DuPont Capital, which oversees $26 billion for its chemical company parent and for outside clients. She points to the opportunities awaiting Russia’s Mobile TeleSystems, the largest mobile phone operator in the former Soviet Union. The $4 billion (2004 sales) company does most of its business in Russia, where, Nace says, barely half the population has wireless service. She expects that three-quarters will have it within three years. The company also controls half the Ukrainian market, the next largest in the region, where wireless penetration is only 34%.

Full story (reg. required) at Forbes.com

Digging Into Natural Resources Stocks

A value manager for 31 years, Andrew Pilara has piled up an impressive record in natural resources investing. Since its launch in 1995, his no-load fund, RS Global Natural Resources, has beaten the S&P 500’s 9% return by three percentage points.

RS Global Natural Resources (RSNRX), with $1.1 billion in assets, also gets good performance grades from FORBES: B and A+, respectively, for up and down markets. So what’s Pilara’s take on natural resources these days? Bullish. “For the rest of the decade,” he says, “this is the place to be.”

Bold words, given the frothy prices for many commodities and the stocks of companies doing business in them. But Pilara, a self-proclaimed contrarian, waves off talk of a commodities bubble. “If you look at the resources stocks we’re invested in,” he says, “they sell at single-digit multiples.”

Full story at Forbes.com

Israel: Near-Peace Dividend

In early June, Shopping.com shareholders enjoyed a 19% pop in the value of their holdings when eBay said it would buy the Israeli online comparison shopping service. Robert Goldman, chief investment officer at Banneker Capital Management, says that isn’t unusual for Israeli companies.

“They tend to dominate a specific area,” explains Goldman, who also oversees investment for the Blue & White Fund, a mutual fund devoted to investing in Israeli stocks. And once Israeli outfits reach a certain size and mastery of their niche, he argues, bigger buyers often come calling.

Full story at Forbes.com

Revving Up Fuel Cells

On a drizzly day in Washington last week, tourists lining up for a visit to the Capitol could catch a glimpse of something else they probably don’t see every day: a bunch of cars powered by fuel cells. Parked just outside the U.S. Botanic Garden, the three vehicles had company reps hovering nearby to pop the hood, answer questions and even take gawkers out for a spin.

The cars–from General Motors, DaimlerChrysler and Nissan Motor –were part of a technology showcase sponsored by the U.S. Fuel Cell Council, an industry group. Fuel cells, in case you’re wondering, are devices that use a chemical reaction, not combustion, to generate power. It’s basically the reverse of your grade-school electrolysis experiment–instead of separating hydrogen and oxygen with electricity, hydrogen and oxygen are combined in the fuel cell to produce electricity and water.

Up the Hill in the Cannon House office building, the U.S. Fuel Cell Council had also pulled together a mini trade convention for the benefit primarily of members of Congress and staff. In a large conference room, dozens more company reps–from the likes of General Electric, Delphi, and Ballard Power Systems –showed off their employers’ fuel cell wares.

Full story at Forbes.com

Support The Troops And Your Portfolio

With U.S. military spending now reaching half a trillion dollars per year, investors have shown plenty of appetite for defense stocks. Over the last 12 months, shares of aerospace and defense companies in the S&P 500 have outpaced the broader index by 14 percentage points.

If you’re looking to invest in this sector, research from brokerage house analysts may be a good place to turn for ideas. But which analysts? A starting point: the six identified as the tops for aerospace and defense in our annual Forbes.com/StarMine survey.

Compiled by StarMine and published this week by Forbes in print and online, the rankings name brokerage analysts who had the best track records during calendar 2004 in two areas: the accuracy of their earnings estimates and the timeliness of their recommendations on whether to buy, sell or hold.

Full story at Forbes.com

The Best Brokerage Analysts

The world’s brokerage houses employ 6,000 stock analysts. That’s a lot of opinions to follow, but we cut through all the noise and zeroed in on the elite in the business. Our rankings present equity analysts who in 2004 proved themselves superior at one of two skills: accurately forecasting earnings or recommending when to buy, hold or sell.

The bulk of our information comes to us courtesy of StarMine, a San Francisco research organization and our partner in this project. Since 1998, StarMine has built a business on a simple premise: Certain brokerage analysts are worth listening to more than others. With the right amount of number crunching, it’s possible to not only identify the best analysts but to profit from that knowledge as well.

Full story at Forbes.com