M.D.C. Holdings (MDC) is a buy for the total return and dividend income investor. M.D.C. Holdings is among the largest homebuilders in the United States and has an increasing owned backlog of over 17,000 lots to develop and options on another 7,000.

The company has steady growth and has the cash it uses to develop new properties and homes for the average home buyer. The lower interest rates give a tailwind to the company business. The Fed has indicated that they intend to keep interest rates low for at least a year or maybe two.

As I have said before in previous articles.

I use a set of guidelines that I codified over the last few years to review the companies in The Good Business Portfolio (my portfolio) and other companies that I am reviewing. For a complete set of guidelines, please see my article “The Good Business Portfolio: Update to Guidelines, March 2020”. These guidelines provide me with a balanced portfolio of income, defensive, total return, and growing companies that hopefully keeps me ahead of the Dow average.

When I scanned the five-year chart, M.D.C Holdings has a good chart going up and to the right for 2016, 2017, and 2019 in a strong solid pattern. It is a cyclic company and was down in 2015 and has recovered well in 2019 from the flat year of 2018. 2020 was doing good until the pandemic hit, then it went down like a rock in water but has recovered nicely in the past six months. The PE is low at 11, and the earnings growth looks good at 10%, making MDC a strong buy.

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Fundamentals and company business review

The method I use to compare companies is to look at the total return, as shown from my

PARIS (Reuters) – Total

has taken a 20% equity stake in the Eolmed floating wind farm pilot project in France, which the French group said on Wednesday formed part of its broader plans to build up its presence in the wind power sector.

The 30 megawatts (MW) project is located in the Mediterranean, off the coast of Gruissan in France. The power company Qair is the majority shareholder in the project.

“This announcement once again demonstrates the group’s ambition and willingness to innovate in the field of renewable energies,” said Julien Pouget, director of renewables at Total.

Total did not disclose any financial details of the investment.

Last month, Total said it would hike its annual investments in renewable energy and electricity by 50% as it cuts its reliance on oil, emulating European rivals in a bid to become a major low-carbon power producer.

Total aims to have 35 gigawatts (GW) in gross renewable energy production capacity by 2025, up from a previous target of 25GW. The company has said that 70% of this target has already been accounted for, including projects still under construction.

(Reporting by Sudip Kar-Gupta, editing by Louise Heavens)

Copyright 2020 Thomson Reuters.

Source Article

The Tanker Trade: COVID-19 + Floating Storage

The tanker trade was a very popular thematic trade in spring 2020 which led to immense trading volumes; one stock in particular: Nordic American Tankers (NYSE:NAT) enjoyed an all-time record daily volume. This ‘tanker/contango’ or ‘floating storage trade’ lasted from March 2020 to May 2020 and developed due to a COVID-19-related collapse in global oil demand in early-2020, combined with an initial Saudi ‘Oil Price War’ initiated on 8 March. I flagged this trade on Value Investor’s Edge that weekend in March, and I brought the thesis public on Seeking Alpha on Friday, 13 March.

Crude tanker stocks performed wonderfully from mid-March to end-April, but trading momentum fizzled as the enormous oil contango evaporated, and OPEC+ did an exceptional job of holding to their unprecedented export cuts. Additionally, the global economy (with the notable exception of air travel and related jet fuel demand) opened up fairly rapidly, which helped oil markets balance. We therefore had a neat boom-and-bust trading cycle over the course of three months (March-May). We then had four months of residual ‘hangover’ from June-September.

Trend Analysis & ‘Popularity’ Reflection

During the brief time period from mid-March through early-June, there was more interest in shipping trades than at any point I can recall in recent history. The only thing close was last October-November during COSCO sanctions, and if we utilize Google trends for “oil tankers” and “contango”, we can see the interest levels clearly pop out. First, “oil tankers” rose up in fall 2019, but then a massive spike in “contango” interests fueled a much longer-running trend in “oil tankers” during April and May.

Interestingly enough, “contango” peaked 19-25 April and then dropped off while “oil tankers” peaked 19 April to 2 May and then dropped off. Both these drops marked

The midstream space has historically been known for attractive dividends/distributions with yields exceeding those of other income-oriented investments. While the income remains generous, the midstream business model has been tilting toward a greater total-return focus for some time (see this piece from June 2019). Even prior to the impact of COVID-19 on energy markets, companies were emphasizing more sustainable dividend growth, capital discipline, balance sheet improvements, and free cash flow generation. Admittedly, despite the focus on total return, the space has not been able to deliver with equity prices battered by macro headwinds and persistent selling pressure. However, midstream’s substantial income could be complemented by capital appreciation going forward as improvements pay off and free cash flow gains traction. Increasing free cash flow generation means investors could potentially benefit from shareholder-friendly returns such as buybacks when the macro environment stabilizes. Today’s note discusses midstream’s ongoing shift to a total-return focus and what it means for investors.

Midstream companies have improved financial flexibility and positioning.

In contrast to the prior midstream business model that emphasized a grow-at-all-costs mentality reflected in both dividends and capital spending, midstream has been shifting to a more sustainable growth model that is not dependent on equity capital markets (read more). Midstream companies in the past would frequently issue equity to finance prolific growth projects. In the wake of the oil downturn from 2014-16, issuing equity became challenging due to the cost (high yields) and market conditions (weak demand). With the equity market no longer a viable source of financing, companies had to find new ways to fund projects, and in some cases, names had to cut their dividends to shore up their financial positioning. Over time, midstream companies began to shift to equity self-funding, or in other words, using retained cash flows to fund the equity

The entire energy sector is going through a fierce sell-off due to the pandemic, in contrast to the rest of the market, which is hovering around its all-time highs. In such sell-offs, the solid companies are usually punished along with the weak ones. This is the case for Total (TOT), which has plunged 38% this year. Total is much more resilient than the other oil majors in the ongoing downturn and thus it will highly reward investors when the pandemic subsides.

Royal Dutch Shell (NYSE:RDS.A) (RDS.B) and BP (BP) have plunged much more than Total, to their 25-year lows, while Exxon Mobil (XOM) has plunged to its 17-year lows. Consequently, these oil majors may offer greater returns if the energy market recovers strongly from the pandemic. However, there are good reasons behind their significant underperformance compared to Total. The latter is much more resilient at the suppressed oil prices prevailing right now and hence it can endure the downturn much more readily than its peers. It is not accidental that Total is the only profitable oil major this year. As a result, if the downturn lasts longer than expected, Total will perform much better than its peers.

Business overview

The coronavirus crisis has caused an unprecedented downturn in the energy sector. The global demand for oil products is expected to slump by 8.1 million barrels per day on average this year (~8%) before it rebounds by 7.0 million barrels per day next year. This contraction, which is the steepest in at least three decades, has resulted in suppressed oil prices and low refinery utilization rates. Consequently, Exxon Mobil, Chevron (CVX), BP and Royal Dutch Shell are all expected to post material losses this year.

The only bright exception is Total, which is expected to achieve earnings per share of $1.20