With the continued and justified talk of the continual decline of the US dollar as the Federal Reserve looks to print massive amounts of money for at least another two years, I think it's wise to venture abroad and see if there are any opportunities to put some money to work and benefit from the expected rise in foreign currencies. Needless to say, as the European Union fears are even greater than ours in the States and most other markets experiencing significant economic declines, stocks abroad have been hammered and seem to be a great buying opportunity:
1. Telefonica (TEF) doesn't get any help being based in Spain and being associated as one of the PIIGS (Portugal, Ireland, Italy, Greece and Spain) countries in need of a bailout. However, the stock is trading at levels last seen during the mega-crisis of 2008 and there's some true value here when we see it trading at less than 1x price/sales, 6.5 price/earnings, and with a 8.5% dividend yield. I think this is a buy right here at $19/share.
2. France Telecom (FTE) may not be one of the PIIGS, but it still is indirectly affected being a part of the European Union and the market has punished this company mercilessly. Trading at a .7x price/sales, 10.5 price/earnings and 8.1% dividend yield, this stock is trading right near its multi-year low is a buy at $17/share.
3. Vodafone (VOD) may be based out of England, but its tentacles reach worldwide, most notably with its 45% ownership of Verizon Wireless (VZ). It's not as cheap as the other two telecommunication stocks mentioned above trading at 1.8x price/sales, but it still trades at under 11x price/earnings and a 7.3% dividend yield. I think this is a buy at $25/share.
4. Arcelor Mittal (MT) is the largest steel manufacturer in the world based out of Luxembourg. It has significant insider ownership by the very well-respected and in my opinion, beautifully run Mittal family management team. Moreover, the valuations are real compelling when trading at .3x price/sales, under 9x price/earnings, .5x price/book, and a respectable 3.2% dividend yield. I think this multi-year low stock is a buy here at $19/share.
5. Posco (PKX) is a large steel manufacturer itself based out of South Korea. It's had Berkshire Hathaway as an investor in years past and currently has Third avenue, Dimensional Fund Advisors, and Mohnish Pabrai among many other great value investors. The valuations look nice trading at .4x price/sales, 12.5 x price/earnings, and .8x price/book, however it has a rather small 1% dividend yield. I'm not as excited with this as Arcelor Mittal, but if it were to come back to $90/share, I think that's a great entry point at 11x price/earnings.
6. Potash (POT) based out of Canada is a massive producer of its namesake, potash fertilizer. As world population and prosperity grows, people need to eat and that's where this company benefits. This is not for the typical value investor trading at near 7x price/sales and price/book, and 22x price/earnings, but the company is showing strong revenue growth, achieving over 60% year over year and looking to have that continue as potash prices remain strong. Being a conservative investor, my entry point is at 20x price/earnings translating to $55/share.
7. Silver Wheaton (SLW) based out of Vancouver, is a very large silver-oriented stock that very nicely has little mining risk by just being a silver streaming company. Very wisely securing many of those contracts years ago at the $3-$4/oz. range has become very profitable as silver is trading north of $40. Of course, this has been reflected in the stock over the years since going public at the $3 range to its most recent high right near $48. However, while this for so long was largely tracking the silver ETF (SLV), that has changed course dramatically this year with the ETF up 40% while Silver Wheaton is right near 0%. I like this very volatile stock at 25x price/earnings giving me an entry point at $35/share if it happens to fall back there.
8. BHP Billiton (BHP) based of Austrailia, is very large diversified natural resources company. It has everything from oil to zinc to gold and is now trading at decent valuations with a 9.5x price/earnings, .5x Price/expected earnings growth and 2.7% dividend yield. I like the company at 9x price/earnings giving me a $77/share entry point.
9. Souther Copper Corp. (SCCO) may be based out of Arizona, but its operations are largely in Peru, Mexico, and Chile. It produces predominately copper, which is largely tied to economic growth. Of course, while now economic growth is depressed, you have to figure it will revive again soon and this company will be a great beneficiary. Trading at just under 14x price/earnings, .5x Price/expected earnings growth and with a very nice 7.6% dividend yield, I think this stock is compelling, but I want to get paid more as I wait for the world economies to recover. So buying this at a 8.5% dividend yield means $29/share.
10. Banco Santader of Spain (STD) is a financial behemoth with over $46 billion in sales. With the on-going financial worries of the European Union, this stock is getting clobbered, which is nice for the long-term value dividend investor. Trading at just over 1x price/sales, .5x price/book, 7x price/earnings and with a very nice 7.2% dividend yield I like the stock right here at $8/share.
11. Deutsche Bank of Germany (DB) is another financial behemoth with over $41 billion in sales that is suffering from the European Union worries as well. However, it fits the same mold trading at .7x price/sales, .4x price/book, 8.5x price/earnings, and with a respectable 2.2% dividend yield, I think this is a buy here as well at $34/share.
12. Barclays Bank based out of England (BCS) may not be a part of the European Union, but it still has suffered nonetheless making way for a nice investment opportunity. Trading at .7x price/sales, .4x price/book, 8x price/earnings, and with a respectable 2.5% dividend yield, I think this is a buy here as well at $10/share.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TEF, FTE, VOD, MT, PKX, POT, SLW, BHP, SCCO, STD, DB, BCS over the next 72 hours.