Hot China Companies To Watch For 2014

Two months after telling investors it plans to open 100 new coffee stores in the Philippines and 100 more in Indonesia over the next three to four years, Starbucks (NASDAQ: SBUX  ) completed a Southeast Asian trifecta Wednesday when it said it plans to open an additional 100 stores in Malaysia.

The new stores will be opening over the course of the next four years, said Starbucks China�and Asia Pacific Channel Development and Emerging Brands President John Culver at a stop in Kuala Lumpur, according to the company. "We have a historic opportunity to become one of the most respected and enduring brands across Southeast Asia, delivering an unparalleled experience to Starbucks customers, while supporting local communities," he is quoted as saying.

Starbucks has been present in the Malaysian market for 15 years already, having opened its first store at the KL Plaza in�Kuala Lumpur in 1998, and has grown its presence to 141 stores. This week's announced expansion would grow that total by 71% in four years' time. It operates more than 700 stores across six Southeast Asian markets, including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Hot China Companies To Watch For 2014: Monolithic Power Systems Inc.(MPWR)

Monolithic Power Systems, Inc., a fabless semiconductor company, designs, develops, and markets analog and mixed-signal semiconductors. It offers direct current (DC) to DC converter integrated circuits (IC) that are used to convert and control voltages of various electronic systems, such as portable electronic devices, wireless LAN access points, computers, set top boxes, televisions and monitors, automobiles, and medical equipments. The company also provides lighting control ICs for use in systems that offer the light source for liquid crystal display (LCD) panels in notebook computers, LCD monitors, car navigational systems, and LCD televisions. In addition, it provides audio amplifier ICs to amplify sound produced by audio processors; and Class-D audio amplifiers for plasma televisions, LCD televisions, and digital versatile disk players. The company serves consumer electronics, communications, and computing markets. Monolithic Power Systems, Inc. sells its products thr ough third party distributors and value-added resellers, as well as directly to original equipment manufacturers, original design manufacturers, and electronic manufacturing service providers. The company was founded in 1997 and is headquartered in San Jose, California.

Hot China Companies To Watch For 2014: MCG Capital Corporation(MCGC)

MCG Capital Corporation is a private equity firm specializing in investments in middle market companies. The firm does not prefer investments in highly cyclical and volatile industry sectors and businesses with significant volatility exposure. It seeks to invest in small to mid sized companies. The firm prefers to invest in acquisitions, growth financings, organic growth, recapitalization, and leveraged buyouts. It invests in companies based in the United States. The firm seeks to invest upto $75 million in debt and equity in companies having revenues between $20 million and $200 million and EBITDA between $3 million and $25 million. It seeks to invest in the form of senior debt, including amortizing, bullet maturity, term loans, and revolving credit facilities; institutional sub debt, including junior capital; second lien debt, that includes term loans on sole source and participant basis; secured and unsecured subordinate loans structured as current interest, deferred in terest, and equity linked components; mezzanine debt and equity that includes minority equity investments. The firm may invest in minority or control equity positions. It was formerly known as MCG Credit Corporation. MCG Capital Corporation was founded in 1990 and is based in Arlington, Virginia.

Hot Energy Companies To Invest In 2014: Carnival Corporation(CCL)

Carnival Corporation operates as a cruise and vacation company. It provides cruises to various vacation destinations with a portfolio of cruise brands comprising Carnival Cruise Lines, Holland America Line, Princess Cruises, and Seabourn in North America; and AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, and P&O Cruises in Europe, Australia, and Asia. The company also involves in operation of hotels, as well as offers tour and transportation services. It operates approximately 98 ships, as well as owns and operates 15 hotels or lodges that include 3,420 guest rooms; 395 motorcoaches; and 20 domed rail cars. The company sells its cruises through travel agents, including wholesalers and tour operators. Carnival Corporation was founded in 1974 and is headquartered in Miami, Florida.

Advisors' Opinion:

• [By Geoff Gannon] ns how the cruise business really works. But all of the companies in the industry (CCL, RCL and NCL) freely discuss the economics of their business in great detail. They break out costs before and after fuel. They give you per-passenger prices of how much newly built ships cost. They give you lots and lots of details. They explain how they price their product (the way airlines do) and so on. There is an extreme level of detailed explanation of the business in the various conference calls, 10-Ks, etc.
  
  A great source for this information is going back to the time the company went public or at least finding the S-1 of a competitor. When a company goes public it often gives much more detail into product economics, etc., than it will later on when it reports annual results.
  
  That is also a good place to learn about market share, competitors, etc. It is very important to know who a company's customers are. And to think about the circumstances under which they make purchases.
  
  In many businesses, you will find at least two kinds of "customers." You will have the middlemen (distributors) and the end user (consumer). For Hanes Brands (HBI) the middlemen are Wal-Mart, Target, the dollar stores, etc.
  
  And the end user (consumer) is really the female head of the household. This is complicated somewhat in almost all situations by the possibility ��as we have with Hanes ��where the user is not always the purchaser. Plenty of underwear purchases are not made by the person who will use the product. But they are obviously an influencer of the purchase decision.
  
  The strongest example of this is kids' toys. Kids do not buy toys. Parents buy toys. But kids influence the parents.
  
  For many companies, sales are first made to distributors, then go from distributors to retailers, then from retailers to households. And even within the household the buyer may not be the user.
  
  It is helpful to make these distinctions. And not to be overly technical about the way accounting defines! customers, etc.
  
  For example, a key group to consider with Western Union is agents. The way Western Union's statements are prepared, however, treat agents simply as an expense line with their revenue belonging to Western Union. The reality is more complicated. Western Union's financial statements appear to have a ton of variable costs in them. But this is really all just agent expense. The business is in reality a very fixed-cost business. Once an agent is in place an additional customer of that agent adds to the bottom line of both the agent and Western Union to a very great extent relative to the fees that customer pays. In other words, marginal revenue turns into marginal profit very easily.
  
  When considering investing in a company like Western Union, you have to think about both agents and customers. It would be wrong to focus only on customers. The agents are a key part of the business. In many ways, they are the best chance of having a competitive advantage. So it is Western Union's job to attract both agents and customers.
  
  That is the kind of thing Warren Buffett would intuitively understand and focus on. However, it is not something that appears in any way on the financial statements. It is often easiest to see these important competitive points when you have 10-Ks from more than one company in the same industry in front of you.
  
  A lot of times people have emailed me saying I referenced information that must be from other sources ��not SEC reports, etc. But that's rarely true. Often, I am referencing information that can be inferred after you have read all the 10-Ks (and S-1s where available) of all the public companies in the industry.
  
  For example, Copart (CPRT) is one of two companies in its industry that are public. The other company is part of a kind of conglomerate car sales company. That other company, KAR Auction Services (KAR), was much more explicit in detailing the competitive position of Copart and Insurance Auto Auctions. It even gave market share! data.
  This is common. Often one company will choose not to give names or put percentages on certain competitive facts. The other company will do so. And even when that is not the case, the two companies will often make statements that ��when taking together ��can give you rough indications of certain realities that neither company entirely intended to provide.
  
  The same is true for certain suppliers and customers. Although this is complicated by size. Very large customers of small companies are not good sources of information. But smaller companies often provide better insights into the larger suppliers, customers, etc., they deal with. That's because ��due to their small size ��more information is material and is explained in detail.
  
  I have found situations where one company simply says who the customer is that they are supplying. While the other company explains what product that supply goes into, the purchase amount, whether it is an exclusive arrangement, etc.
  
  So it is always important to ��at a minimum ��read the 10-Ks, 14As, and (where available) S-1s of every public company in the industry. This will give you a lot of insight into the competitive situation. Sometimes it is helpful to also look at customers and suppliers. However, this is not true of very large customers and suppliers because they will not discuss the specific area you are interested in.
  
  For example, Honeywell is a large customer of George Risk. It would do me no good to study Honeywell to learn about George Risk. Honeywell is a huge company. What they buy from George Risk is irrelevant to their shareholders. So they do not discuss it.
  
  An exception to this is where the product sold is going into a huge "generational" type project. Examples include defense, aerospace, video game consoles, operating systems, etc. This can be very helpful with suppliers way down the chain. For exam
• [By John Reese]  

  Carnival Corporation is a cruise and vacation company. CCL recently traded at $29.5 and has a 3.4% dividend yield. CCL lost 5.8% during the past 12 months. The stock has a market cap of $23.4 billion, P/E ratio of 12.5 and forward P/E ratio of 9.8. The stock has total debt/equity ratio of 0.41 and Beta of 1.48. Harris Associates had more than $250 Million in CCL at the end of March 2011.