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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Monday, September 20, 2004 - Vol. 6 No. 179
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In This Issue:
* COMMENT: Cash In on the Sweet Taste of Success.
* OFFSHORE: U.S. Virgin Islands Tax Break Questioned. Aruba-U.S. TIEA. Ireland Leading U.S. Corporate Tax Haven. Caymans Says Finance Sector OK; Looting, Destruction Problems; Elections Postponed.
* WEALTH: Aussie Tax Relief. Rich Grandchildren. Homes for Very Rich.
* PRIVACY & RIGHTS: PATRIOT Act Sneak Attack. Air Security Gropefest.
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Today's guest comment is by Eric Roseman, member of the Sovereign Society Council of Experts and editor of The Renegade Investor.
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COMMENT: Cash In on the Sweet Taste of Success.
Dear A-Letter Reader:
The 1990s belonged to technology stocks and companies with negative earnings and weak cash flows, but that investors believed would soar in value. We all know how that story ended--with a crash in 2000- 2002 from which we're still recovering.
This decade, however, will reward large-cap global brand name companies with big cash flows. From banks, insurance, health care, tobacco and food and beverages, the "defensive" sectors of the market, I believe, will dominate stock market performance over the next several years. That's because these companies make real earnings, harbor real cash in their coffers, pay real dividends and don't rip off their shareholders. Plus, in tough economic times, (which I think will dominate this decade), companies with highly visible brand name products normally are very steady earners. You can count on these global brand name products to increase revenues.
The food and beverage sector is a prime example. No matter how tough times get, people have to eat. This is one industry I'm watching closely. And I think I've found a golden opportunity--in Switzerland.
A few days ago, I noticed that Nestle SA, the world's largest diversified food and beverages company, was selling 20% below its 52- week high and at its lowest price-to-earnings multiple in years. Finding a company like Nestle, a world class company with a $95 billion market cap, trading at this deep discount really raised my eyebrows.
Nestle is a Swiss based company founded in 1866 with annual sales of over $70 billion. Net profits in 2003 were $5 billion with cash flow increasing to a record $2.6 billion (all US dollar figures). Net earnings are growing at roughly 15-20% per annum. The stock now trades at 18.7 times trailing earnings--the lowest multiple for this gem in a long time. Nestle usually commands a premium over other food conglomerates because of its rich net cash flow. The company generates billions in free cash every year and continues to raise its dividend, now at 2.4%.
You can find Nestle products everywhere. They're in almost every grocery 'store, café, kitchen pantry and restaurant in the world. Key global brands include Nestle's Crunch, Kit-Kat and Smarties chocolate; Carnation instant breakfast; Coffee-Mate; Perrier, San Pelligrino and Vittel mineral and spring water; Nestea and Nesquik, and a whole range of other great global brands that over 200 million people consume daily.
The company has seven strong brand name divisions, including chocolate, ice cream, baby food, breakfast cereals, dairy products, prepared foods, beverages and bottled water. Each one of these has solid cash flow and strong recognition in every market. Nestle is simply the trademark for quality and tasty packaged products.
Over the next 24-36 months, this stock could double as global investors 'scramble for "old economy" stocks with consistent, dependable earnings growth. My target for 2006 is $100 a share.
My recommendation: BUY Nestle ADR on the over-the-counter market up to $66. Last bid: $57.85. The stock symbol for Nestle is NSRGY.PK and the CUSIP is 641069406.
You can buy US-listed ADRs and stocks from any US discount broker. I like E-Trade http://www.etrade.com in the US and http://www.etrade.ca
in Canada.
Yours for tasty profits,
Eric N. Roseman, Montreal, Quebec
Editor, Renegade Investor
E-mail: enr@qc.aibn.com
Web site: http://www.eas.ca
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Editor's Note: Eric Roseman has a new weekly contrarian trading service called 'The Renegade Investor'. Eric's covered global markets for 15 years as money manager and investment editor. His picks include rises of 400% on The Singapore Fund, 330% on National Bank of Canada, and 315% on Brazil's Telebras. This year Commodity Trend Alert subscribers reaped gains of 208% on Chicago Mercantile Exchange, 279% on International Uranium Corp. and 192% on Fording Canadian Coal Trust. Eric's CTA portfolio is up on average 22.8% over 15 months. For more about The Renegade Investor, click here:
LINK: http://www.agora-inc.com/reports/RGI/WRGIE900
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COMMENT LINKS:
* Nestle Considering Perrier Sale. LINK:
http://www.forbes.com/business/energy/feeds/ap/2004/09/15/ap1546335.html
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* OFFSHORE *
CAYMANS GOVERNMENT CLAIMS OFFSHORE SECTOR O.K.
GEORGE TOWN: CMA says 'close to restoring services'. LINKS:
http://www.cimoney.com.ky/templates/pressrelease/defaultDisplay.asp?text_id=PressRelease90076&button=1
http://news.ft.com/cms/s/0d08c064-0847-11d9-9d00-00000e2511c8.html
* Caymans police crack down on looters. LINK:
http://www.caymannetnews.com/2004/09/739/looters.shtml
* November general election postponed until 2005.
LINK: http://www.caymannetnews.com/2004/09/739/election.shtml
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U.S. VIRGIN ISLANDS TAX HAVEN STATUS QUESTIONED
ST. THOMAS, USVI: IRS charges fraud in business tax breaks.
LINK: http://www.nytimes.com/2004/09/18/national/18taxes.html
* Virgin Islands attorney comments on Islands' tax breaks. LINK:
http://www.offshoreinvestment.com/current_issue/commentary/main.html
* US & ARUBA sign tax information exchange agreement.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17301
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U.S. BUSINESSES CUT TAXES USING IRELAND
DUBLIN: Ireland is most profitable tax haven for US firms. LINK:
http://www.ireland.com/newspaper/front/2004/0917/2884987887HM1SEAN.html
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* WEALTH *
AUSTRALIA PROMISED OFFSHORE TAX RELIEF
MELBOURNE: Ruling coalition makes election business bid. LINK:
http://news.ft.com/cms/s/6b67c676-0a79-11d9-a415-00000e2511c8.html
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GIFTING CAN MAKE YOUR GRANDCHILDREN RICH
You've got the power to make grandchild wealthy. LINK:
http://seattletimes.nwsource.com/html/businesstechnology/2002039571_pfburns19.html
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HOMES FOR VERY RICH AMERICANS
$10 million for a new family residence is not uncommon. LINK:
http://www.fortwayne.com/mld/journalgazette/business/9706338.htm
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* PRIVACY & RIGHTS *
CLU CHARGES SNEAK PLAY ON PATRIOT 2
New bill in US Congress expands PATRIOT Act powers. LINK:
http://www.aclu.org/SafeandFree/SafeandFreeList.cfm?c=206&ContentStyle=7
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U.S. AIR SECURITY POLICE GET PERSONAL
Flying in U.S.? Prepare for more Gropefest fun. LINK:
http://www.enquirer.com/editions/2004/09/17/loc_airsecure17.html
* The crass stupidity of TSA 'security' employees.
LINK: http://www.local6.com/news/3738885/detail.html
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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER.
* Bob Bauman, Editor * Daniel Aponte, Jr. Editorial Asst.
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