Unsurprisingly, three of the four stocks are in the international finance sector, which is particularly susceptible to macro factors. While the global economy expanded 4.3% in the first quarter 2011, it has slowed in the second quarter, primarily due to the greater-than-expected weakness in the US economy and the volatility in the euro zone, according to the IMF.
HSBC Holdings Plc ADS (HBC)
HSBC Holdings Plc (HBC) traded at close to its 52-week low of $47.62. It is owned by 11 Gurus.
HSBC Holdings is one of the largest banking and financial services organizations in the world and the largest bank in Europe. It is headquartered in London and has 7,500 offices in 87 countries around the world.
HSBC Holdings Plc has a market cap of $170.37 billion; its shares were traded at around $48.11 with and P/S ratio of 1.7. The dividend yield of HSBC Holdings Plc stocks is 3.9%. The company paid a dividend of $0.34 in 2009, its lowest payout since 1999. Last year it bumped it up to $0.36.
HSBC stock fell to its lowest point in a year after a stress test revealed that under a two-year recession scenario, European bank profits would crash, with HSBC and one other bank performing the poorest.
Though the bank was profitable in all regions in the first half of 2011, the company expects that the pace of recovery might be impeded by higher oil and food prices and higher inflation. It generated $57 billion in free cash flow in 2010, a dramatic increase from almost $10 billion in 2009. It also boosted its return on shareholders’ equity to 11.4% in the first quarter 2011 from 8.8% in the previous quarter and 8.4% in the first quarter 2010.
The company laid out a wide-ranging strategic plan in London in May. It said it aims to cut costs by $2.5 to $3.5 billion and expenses by 48-52% of revenues by 2013, by limiting retail banking to select markets and cutting back in wealth management, among other things, reports Reuters.
Petróleo Brasileiro S.A. or Petrobras (PBR)
Petrobras (PBR) is traded at close to its 52-week low of $31.87. Petrobras is a state-run, integrated international petroleum and petroleum by-products company. It is the largest company in Latin America by market capitalization and revenue, with sales of $118.3 billion in 2008.
The company generated free cash of $862 million in 2010, a 10-year average and significant rise from $378 million the previous year. It has cash of $17.6 billion and long-term liabilities of $92 billion. An additional $70 billion was raised in October 2010 through a global stock offering which will help finance its 2010 – 2014 Business Plan. The plan provides for global investments of $224 billion that will focus on its Exploration and Production segment.
Petrobras shares dipped 9% in April on news that the government ordered Petrobras to ramp up its ethanol production, and that the company was selling its Argentine refinery just weeks after Argentina accused it of manipulating the gasoline supply which led to shortages. The stock slid 8% further in May after Petrobras’ CEO announced he foresaw near-term volatility in oil prices and did not plan to raise domestic gasoline and diesel prices any time soon.
Petrobras has a market cap of $120.64 billion; its shares were traded at around $32.42 with a P/E ratio of 8 and P/S ratio of 1. The dividend yield of Petrobras stocks is 0.5%. Petrobras had an annual average earnings growth of 20.2% over the past 10 years.
Itau Unibanco Holding S.A. ADS (ITUB)
Itau Unibanco Holding S.A. ADS (ITUB) is traded at close to its 52-week low of $20.1. Banco Itau is one of the largest banks in Brazil and the tenth largest bank in the world by market value, with headquarters in Sao Paulo. It provides commercial and corporate banking services to individuals and businesses throughout the country and around the world.
Itau Unibanco Holding S.A. has a market cap of $94.42 billion; its shares were traded at around $20.66 with a P/E ratio of 11.9 and P/S ratio of 1.5. The dividend yield of Itau Unibanco Holding S.A. stocks is 0.4%. Banco Itau had annual average earnings growth of 11.7% over the past 10 years.
The stock hit its 52-week low after falling for almost two straight weeks in the beginning of July, along with the Bovespa index which fell to its lowest point since May 2010.
Recently its return on equity (ROE) has hovered around a robust 20%. In the last three years, sales have grown more than 30% each year. Net income in 2010 was 11.9 billion reais, a decrease from 14.6 billion reais in 2009. Non-performing loans comprised 5.1% of Banco Itau’s total loan portfolio, representing a slight decline from 5.6% in 2009.
Barclays PLC ADS (BCS)
Barclays Plc (BCS) is traded at close to its 52-week low of $13.48 and is owned by five Gurus.
Barclays Plc operates in commercial and investment banking, insurance, financial and other related services. The business has two divisions: Corporate & Investment Banking and Wealth Management, and Global Retail Banking. Barclays rejected the British government’s offer to rescue it and two other banks in 2009 through a capital injection of £40 billion, opting instead to raise its own £6.5 billion through cancelling its dividend and through private investors.
Barclays Plc Ads has a market cap of $43.99 billion; its shares were traded at around $13.96 with a P/E ratio of 6.1 and P/S ratio of 0.7. The dividend yield of Barclays Plc Ads stocks is 2.5%.
Currently Barclays is seeking to make major cost cuts, which will include laying off workers and closing one-fifth of its 587 Spanish branches. In 2010, however, it created 2,000 new jobs. Barclays reported a2 010 return on equity of 7.2% and announced in July that it aims to increase that number to 13% by 2013. Barclays generated $65.5 billion in free cash flow in 2009, which decreased to $27 billion in 2010.
Shares have been trending downward since the company released disappointing first quarter results in late April. Its profits dropped by 9%.