Investing Outside the U.S.: 12 Stocks Worth Considering

Citigroup reports that in July the world outside the US was where to invest, as we tend to argue. The non-US DR index in dollars rose 10.10% that month vs a 7.41% rise in the S&P500, and in the year to date, the non-US index is up 22.52% vs a mere 9.33% for the S&P.

Best performers were Latin America and CEEMA (Central Europe and Middle East), both up over 50% YTD. Asia Pacific ex-Japan and Asia Pacific Emerging markets are up over 33%.

Agrium (AGU) CEO Mike Wilson in a prepared statement wrote that there are “signs of improved fundamentals as we approach the fall season” for planting wheat. The Canadian firm is upbeat on fertilizer demand.

*Our picks are Israel Chemicals, (ISCHF.PK), and SoQuiMich, (SQM) of Chile, which fell because of poor earnings at another Canada fertilizer co, Potash of Saskatchewan (POT). POT is the manager of the potash cartel, and a shareholder in both our recommended stocks in the sector, as well as others. So it acts as the Saudi valve,cutting its own prices to match demand. We think demand will pick up because people have to eat even in a recovery from recession, but still prefer the marginal producers in the portfolio to POT. Potash is hot ash.

*Glaxo Smith Kline (GSK) is taking 3.4% of the shares of Britain's Vernalis,(VNPLY.PK), which is developing drugs for another British firm, Shire (SHPGY), to deal with genetic disorders like Gaucher's and Fabry's disease, where certain proteins are not dealt with properly by the body. GSK will pay $3 mn upfront plus milestones and royalty payments.

*Also in Britain, shareholders of Barclays Bank (BCS) voted to sell control of its BGI sub today, to Blackrock (BLK), in return for $13.5 bn and a stake in BlackRock. The bank will get enough fresh capital to bring its ratio to 8.8% of assets (ie loans out) which is well-capitalized indeed.

*Veolia (VE) which the Paris market prices as a utility was bopped by bad earnings today. Its H1 profit fell 56% on declining demand for industrial waste water treatment, linked to La Crise. At euros 220.3 mn or $317.3 mn, this is disappointing. However, sales were virtually flat at euros 17.4bn. And VE is writing down waste water and Italian assets worth euros1 bn priof to their sales. Debt is steady and the money raised will help undo some of the binge buying by prior management in 2007-8.

*Coca Cola Hellenic (CCHBF.PK) surprised on the upside reporting Q2 net of euros 188.1 mn up 4%, on revenues off only 3% to 1.89 bn. The management spoke of a “challenging” period and promised furthe cos cutting on inputs and operating costs.

*Scotiabank (BNS) won another recommendation, with a new target foC$49.50 from Desjardins. Its earlier target for BNS was C$44.50.

*Morgan Stanley cut its DryShips (DRYS) estimate to 97 cents for this year and 96 cents in 2010, both off a nickel. DRYS is cheap but sailing in dangerous waters. It will rise with the economic tide more than other plays, given its dry bulk shipping business will benefit from renewed demand for raw materials.

*ICICI (IBN) is now rated buy by analysts polled by Nelson, forecast to earn 35.09 cents this fiscal year (ends March) and 43.81 next FY.

*Bonus stock Ormat (ORA) managed to break the $100 mn ceiling on sales which rose 25%. Net was up 33% at $16 mn. This I sraeli-controlled American geothermal firm is an alternative energy plan with fast growing business likely to benefit from US alternative energy support. Thanks to its Mammoth geothermal power plant, its electric generation volumes rose14% in Q2 to 811,000 gigaWatts.

Comments

[A Barrel Full:]

I like Ormat a lot. I think that the potential for their products in both geothermal and energy recovery is almost unlimited.

Almost any industrial process has low quality energy that their products can utilise. UTC has a similar product.

Aug 07 02:22 AM

[naidle:]

It's sad to me how often I hear that Potash (or ag stocks in general) will pick up because "people have to eat". It's like investing in funeral homes because "everybody dies".

Can you please develop an argument that shows you better understand the sector?

Aug 07 11:21 AM

[castle:]

smiling, excellent reply. I have had the same thought


On Aug 07 11:21 AM naidle wrote:

> It's sad to me how often I hear that Potash (or ag stocks in general)
> will pick up because "people have to eat". It's like investing in
> funeral homes because "everybody dies".
>
> Can you please develop an argument that shows you better understand
> the sector?

Aug 08 08:10 AM

[sheeple123jump:]

...as a matter of fact,I own stock in several funeral homes....except the problem is...business is dead


On Aug 07 11:21 AM naidle wrote:

> It's sad to me how often I hear that Potash (or ag stocks in general)
> will pick up because "people have to eat". It's like investing in
> funeral homes because "everybody dies".
>
> Can you please develop an argument that shows you better understand
> the sector?

Aug 20 12:25 AM