Finland is a land of many lakes, trees, endless days in the summer and a period of 51 grueling sunless days in the winter. It has been rated the freest nation in the world, according to international groups who rate such things, and has twice provided the world with the winner of the Miss Universe pageant (including the first woman to win the pageant in 1952).
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An audio podcast of this article is available at: poweropt.com/podcasts/2007_10_17_Finland.mp3
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The Finnish news on the minds of most investors these days, however, is not pageant winners or even the arability of their land, but the profitability of the most Finnish product of all – the cell phone. Analysts are expecting Nokia to shift their earnings estimates up for the remainder of the year and also expect the company will beat its estimated $0.45 per share earnings when it makes its announcement tomorrow.
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Two areas causing a little heartburn for investors is negative pricing pressures for the company’s products from Asian competitors and questionable profitability from the company’s joint networking venture with Siemens.
Although the price of Nokia’s phones has gone down due to the pressure from competitors, the company maintains its profit margins are increasing as they increase their operational efficiency.
Latest Gadgetry:
Although the N95 has received rave reviews, it doesn’t have the wow appeal of the iPhone. This August, the company announced it would be releasing a phone similar to the iPhone – In fact, it’s so similar some have suggested it is the iPhone with a Nokia label on it. Anssi Vanjoki — Nokia’s Executive VP & General Manager of Multimedia — said, “If there is something good in the world then we copy with pride.”
The core customer base for the company remains people, worldwide, who want an inexpensive phone that does the relatively rudimentary task of behaving like a cell phone.
Other Great Finish Companies:
In a country with 5.2% GDP growth in 2006 and unemployment at 3.2%, it is expected there would be other great investment opportunities. Although none of the following companies offer options, we thought it would be interesting to throw out some other Finish companies, who analysts and experts consider solidly profitable companies.
Metso Corp. (MX), produces and sells equipment, machinery, and automated systems to the paper, minerals, and power industries. This stock has consistently paid dividends for the last 8 years.
Stora Enso Corp. (SEO) makes and markets paper, packaging board, and wood products. Amazingly, this company has the oldest known stock certificate, it is dated 1288. Well, the company has changed their name several times since then, but that is to be expected in a 710 year old company.
UPM-Kymmene Corp. (UPM) makes and sells magazine, newsprint, and fine and specialty papers.
Neste Oil (NEF.DE ) this is a petroleum and oil mining company.
Kesko (KEK.DE) Wholesale trade company (up nearly 9% in trading today.)
Sampo (SMPA.DE) Finish finance and investment company.
Potential trades:
Because the Finish companies listed above do not offer options in the American exchanges, we will focus on covered call option trades involving the Nokia Corporation and two other Scandinavian companies, LM Ericson (ERIC) and AutoLiv (ALV).
The positive news today indicates Nokia will continue to outperform forecasts for at least the near term. LM Ericson and AutoLiv manufacture cell phones and automotive safety part (specifically airbags) respectively. Analyst’s opinions of these two companies are they will outperform or keep pace with the general market.
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| Symbol | Stock Price |
OPTION | Strike Info |
Option Bid |
Net Debit |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
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| NOK | 36.53 (+1.22) | NAYAH | 08 JAN 40.0 (94) | 1.45 | 35.08 | 4 | 4.1 | 14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ERIC | 30.55 (-0.78) | RQCAZ | 08 JAN 32.5 (94) | 1.55 | 29 | 5.1 | 5.3 | 12.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ERIC | 30.55 (-0.78) | RQCKZ | 07 NOV 32.5 (31) | 0.65 | 29.9 | 2.1 | 2.2 | 8.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ERIC | 30.55 (-0.78) | RQCAF | 08 JAN 30.0 (94) | 2.65 | 27.9 | 8.7 | 7.5 | 7.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOK | 36.53 (+1.22) | NAYAG | 08 JAN 35.0 (94) | 3.7 | 32.83 | 10.1 | 6.6 | 6.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ERIC | 30.55 (-0.78) | RQCAY | 08 JAN 27.5 (94) | 4.2 | 26.35 | 13.7 | 4.4 | 4.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ALV | 64.01 (+0.87) | ALVLM | 07 DEC 65.0 (66) | 1.7 | 62.31 | 2.7 | 2.7 | 4.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ERIC | 30.55 (-0.78) | RQCKF | 07 NOV 30.0 (31) | 1.7 | 28.85 | 5.6 | 4 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOK | 36.53 (+1.22) | NAYKG | 07 NOV 35.0 (31) | 2.75 | 33.78 | 7.5 | 3.6 | 3.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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[tags] ALV, Autoliv Inc., ERIC, LM Ericsson Co., covered call investment strategy, investment strategy, poweroptions [/tags]