Glencore Xstrata's ADR Gets Extra Attention
NEW YORK (TheStreet) -- Almost every morning I start the day by reading articles on world business news. Very often there are glowing analysts' reports about profitable turnaround opportunities outside the U.S. Investing in U.S. stocks can be complicated enough without having to worry about opening a foreign trading account, currency exchange rates and trying to report trading profits and losses in foreign exchanges.
An easy way to overcome all that is to see whether the foreign company you like is traded on U.S. exchanges as an American depositary receipt or global depositary receipt. Most stock-exchange screeners cover these in their data bases. If not, you can find information on the Internet or some of the brokerages that deal in ADRs, like BNY Mellon, JPMorgan or Deutsche Bank.
A company I'm interested in is Glencore Xstrata PLC (GLNCY), which is trading as an ADR here in the U.S. Glencore began in 1974 as Marc Rich & Co AG as a marketer of metal and oil products. Later, under the name Glencore, it added segments in agricultural and energy products. In May of 2013, it merged with Xstrata PLC to form Glencore Xstrata PLC, trading on the London Stock Exchange (GLEN), the Hong Kong Stock Exchange (805) and in the U.S. OTC as an ADR (GLNCY).
What information besides press releases and new articles can we find?Remember that some of the accounting practices in foreign jurisdictions render numbers that are not comparable to the financial numbers you are used to seeing in U.S. stocks. For that reason, I tend to look at these ADRs more in technical terms. Let's see what we have. First, how is the ADR performing against my U.S. benchmark, the Value Line Index. During the last two-and-a-half months, roughly 50 trading sessions, Glencore was up 27.29%, while the index was up only 6.41%:
Fundamental FactorsUsing the Friday LSE closing price, company has a market cap of £44,995,820, so at an exchange rate of 1.58722, that would make it $71,418,265 USD. Revenue is around $220 billion and net income at about $1 billion. The forward-looking P/E is 23. The dividend yield is 2.95%, with a payout ratio of 39.39%. Last year's revenue growth was 16.54%. U.S. investor interest is reflected by Wall Street analysts having issued 1 strong buy, 1 buy and 2 hold recommendations.
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