Welcome to edition 33 of Suria Investment Newsletter (SINLetter), a free monthly investment newsletter. The objective of this newsletter is to provide you with unbiased initial research and basic facts about individual stocks and other financial instruments so that you can research them further before deciding to add them to your portfolio or not. If you are reading this and are not a subscriber, you can subscribe by going to www.sinletter.com/subscribe.aspx and you will start receiving this newsletter from next month. I have provided relevant links throughout this newsletter, but if you have any questions or comments, feel free to write to me.

The Pen Is Mightier Than The Sword

Writing these newsletters has been rewarding in more ways than one and a recent example was when the Director of Customer Support from NetSuite (N) contacted me after reading my article about NetSuite on Seeking Alpha. NetSuite worked with us to resolve one of the bugs that was causing my client a lot of trouble and I hope that some of the other issues will be resolved soon now that we have the "ear" of upper management at NetSuite. Even though I did not act upon it, the investment thesis of shorting NetSuite has proved to be sound thus far with the stock dropping almost 8% in April when compared to a gain of 5.87% for the Nasdaq. I realize that NetSuite is listed on the NYSE but prefer to compare it to the tech heavy Nasdaq or the Software HOLDRs ETF (SWH), which was up roughly 3% in April. NetSuite reports earnings today (May 1st) and it will be interesting to see how their first quarter as a publicly traded company turned out. Analyst expectations are for a two cent loss in Q1 2008.

As many of you are aware, I have had a publishing relationship with Seeking Alpha for over two years through which they publish a portion of these investment newsletters one week after they are sent out to subscribers. This relationship has been mutually beneficial as Seeking Alpha gets content and I get wider distribution thanks in part to their partnership with Yahoo Finance. However there has been a lot of debate about the benefits of contributing free content to investment websites like Seeking Alpha and much of this debate has been captured in the comments following the article Blogonomics: The Seeking Alpha Model by David Jackson, the founder of Seeking Alpha.

Portfolio Performance:

Gains in portfolio stocks like ICON Plc (ICLR), Suntech Power (STP), and Lionsgate Entertainment (LGF) were partially offset by drops in Blockbuster (BBI), Marcus (MCS) and Alvarion (ALVR) leaving the SINLetter model portfolio with a small gain of 2.03% in April. After 5 continuous months of outperforming the S&P 500 and Nasdaq, our gains for the month fell short of the gains the major indices posted in April as you can see from the table below.

Performance Metric	Dow	S&P 500	Nasdaq	SINLetter
April 2008	4.54%	4.75%	5.87%	2.03%
Since Inception (Aug 2005)	20.68%	12.16%	9.9%	108.26%

Irish medical research company ICON Plc (ICLR) has now become the top performing company in the model portfolio with a gain of 93.03% after the company reported first quarter results with income increasing 38% to $16.9 million and revenue increasing an equally healthy 48% to $201.3 million. The company once again boosted its earnings and revenue outlook. If there is one hard lesson I have learnt with stocks like Suntech Power, Diamond Offshore Drilling and Alvarion, it is to protect your profits either by selling part of your position or using protective put options. I have at times followed this process by selling partial positions in Suntech Power, Medifast (MED) and SourceForge (LNUX). Just a few days ago I wanted to buy put options on Diamond Offshore Drilling when the stock hit $140 right before its quarterly results came out. I hesitated and the opportunity was lost when the stock declined due to earnings that did not meet expectations. Since the volume and open interest in put options of ICON is very low, I am going to instead opt to sell part of our position in ICON by selling 100 out of the 250 shares.

Despite higher commodity prices that have been affecting all consumer staple companies, Procter & Gamble (PG) reported another stellar quarter with net income rising nearly 8% and revenue increasing 9.47% to $20.46 billion. The company's well recognized brands like Gillette and Tide have helped it retain pricing power and pass along increasing costs to customers. Procter & Gamble has posted a gain of 20.59% in the model portfolio while delivering a dividend yield of 2.88% based on our $55.60 purchase price in June 2006.

Just as BlockBuster's (BBI) turnaround strategy was beginning to bear fruit, the company decided that it might be a good idea to shoot itself in the foot by making a bid for ailing electronics retailer Circuit City (CC). Pulling off one turnaround is hard enough, attempting to pull off two at the same time is insane. The only silver lining in this story is BlockBuster's timing. Circuit City was trading at $3.90 a share when BlockBuster made its $6 to $8 offer public. Circuit City did not reach such low levels even in the last recession where it bottomed out at $4.40 per share. Those of you who have been following Circuit City for a long time would remember the $8 per share bid by Mexican billionaire Carlos Slim Helu (briefly the richest man in the world) in 2003. Circuit City declined that offer and the stock went on to hit a high of over $30 in May 2006. Maybe Carlos and Jim (the current CEO of BlockBuster) know something the rest of us don't. I have decided to let BlockBuster remain in the portfolio for now and see how the Circuit City situation plays out.

Gold continued its downward trend to close the month of April at $876.60 per troy ounce, a drop of $39.1 or 4.66% for the month.

Portfolio Readjustment:

As mentioned in the Portfolio Performance section above, I am going to sell 100 shares of ICON Plc (ICLR). Getting back to the international focus of this newsletter, I am also going to purchase 200 shares of Companhia Siderurgica Nacional (SID) as discussed below.

Companhia Siderurgica Nacional (SID) $43.15

Editor's Note: Matt, a SINLetter subscriber and the recent winner of CNBC's Fast Money Contest, has contributed the following section of the newsletter. Matt is a consultant within the biotech industry and also a full time trader. I occasionally seek out his opinion on the pharma/biotech sector.

The Story:

The price for steel, as well as iron ore, has seen extraordinary price appreciation in recent months.

Fueled by a seemingly insatiable demand for basic materials, developing nations are falling victim to the increase in pricing power by global steel makers who have been consolidating over the last few years. Even raw iron ore commodity prices have surged as high as 65%, in which South Korean steel maker POSCO (PKX) and Japanese steel maker JFE Steel Corp have recently complied with Brazil's largest iron ore producer, Companhia Vale Do Rio Doce (RIO).

One of the few steel companies in prime position to benefit from this current environment trades on the NYSE as an ADR by the name of Companhia Siderurgica Nacional (SID).

Founded in 1941, SID is a fully integrated Brazilian steel company that as the name implies used to be a state-owned company until 1993. Full integration means SID can not only produce steel products that are in high demand, but also owns iron ore mines, railroads, and sea ports. This makes SID supremely positioned to support the increasing steel demand in Asia, the Middle East, and even its own governmental demands for increased infrastructure and urbanization.

The primary benefit of this integration will undoubtedly be its ability to tolerate, if not ignore, the cost of goods impact from the increase in iron ore prices.

This could give SID a dramatic advantage on the international steel market by undercutting other steel manufacturers thanks to lower than industry averages in basic raw materials (i.e. iron ore). Ostensibly, this sort of lowball price war is highly unlikely in the short term thanks to strong global demand, but provides SID with a several advantages rarely seen thanks to a higher than normal profit margin potential compared to it’s competitors.

Numbers and Valuation:

The chart below certainly proves that SID has richly rewarded investors during the last 12 months with a 184% return. However despite these returns, the company trades at a trailing P/E of 19.36, a P/S of 4.94 and a very attractive forward P/E of just 10.15 (according to Yahoo Finance). Net income increased an astounding 150% to $1.64 billion in 2007 and revenue increased 27% to $ 6.44 billion.

The forward P/E of 10.15 is indicative of a strong growth stock and would not (at least to this investor) suggest price appreciation is over. Growth rates for 2008 are expected to be in the 35% to 50% range, which differ among analysts covering the stock, but this could be due in large part to the frequent changes in short term steel prices.

While the company had $2.71 billion in debt on its balance sheet at the end of 2007, net debt fell by 28% when compared to 2006. Declining interest rates in Brazil (they fell from 19.75% in mid-2005 to 11.25% before a recent 50 basis point increase) combined with declining debt should help SID’s bottom line in 2008. If you are interested you can find the 2007 annual report here (PDF) (Note: All numbers calculated using the Real/Dollar exchange rate of 1.771 from December 31, 2007)

Conclusion:

Additional positives for SID include the increasing popularity of Latin American stocks (particularly Brazil) in the ETF market, and finally Brazil likely reaching investment grade status (shortly before publishing this newsletter we came to find out that S&P has raised Brazil's credit rating to investment grade). While the US is at the brink of a recession or already in one based on whom you ask, Brazil posted GDP growth of over 5% in 2007 and is expected to growth 5% in 2008. Therefore, SID is definitely worth serious consideration as a global growth story for 2008.

Voluntary Disclosure: Matt has a long position in SID.

Every month we add featured stocks into a model portfolio started with a cash position of $100,000 on August 2, 2005. To keep calculations simple, trading costs and regular dividends are not included. Prices reflect the closing price as of the last trading day of the previous month (April 30, 2008 for the May 2008 newsletter).

Voluntary Disclosure: From the stocks that are currently in the model portfolio, I own shares of Lionsgate Entertainment (LGF), Tata Motors (TTM), Canon (CAJ), PowerShares Water Resources (PHO), Barclays (BCS), Medifast (MED), Suntech Power (STP), Teva (TEVA), Alvarion (ALVR), WisdomTree (WSDT.PK), Unilever (UL), Gymboree (GYMB), BlockBuster (BBI) and Marcus (MCS).