Markets in the United States have done well early in 2012, and that is leading some to think the U.S. is decoupling from the Eurozone. Given the recent rally in the U.S. markets, it might make sense to also be looking abroad for bargains. Many areas outside the U.S. have been hard hit in recent months. Brazil has dropped over inflation and other concerns, China has dropped over fears of a hard-landing, and of course the European debt crisis has hammered many stocks there. This is probably a good time to go shopping for stocks overseas.
A recent CNBC article discusses why Jim Cramer thinks buying foreign stocks makes sense now and it states: "When considering what foreign stock to invest in, he said doesn't necessarily have to be a Chinese, Indian or Brazilian company, even though those countries are where the growth is. A Cramerican could buy a Canadian stock, if they "don't want to stray too far from home." Canada has one of the healthiest economies right now, he noted. "The country doesn't matter as long as it isn't here," Cramer said. "If you're going to build a portfolio that can work in any market, one that's diversified by strategy, not just sector, a foreign stock is a must." Read more here.
Buying into Brazil makes sense due to the fast growth this country continues to see. If Europe can sort through their debt crisis, there is plenty of long-term value in many large cap European stocks. Some Chinese stocks could make sense now also thanks to depressed valuations and the huge population in that country. Aside from the cheap valuations in many parts of the world, going overseas can give your portfolio diversification and balance. For example, there are probably quite a few European investors who wished they had more of their portfolios invested in the U.S. after the plunge seen in European stocks. Here are a number of stocks that are based overseas and therefore provide U.S. investors with the diversification Cramer is calling for. These stocks are also trading well below the 52-week highs:
National Grid Transco (NGG) is based in the U.K. and operates as a utility. This company has a electricity transmission network in England, Scotland, Wales, and the Eastern United States. They also operate a gas national transmission system in Great Britain, and have storage facilities for liquefied natural gas. This stock would provide investors with a lower risk way to add foreign exposure. It also offers investors a solid yield. Th dividend is only about half the earnings estimates so it appears very safe, and it could be raised in the future.
Here are some key points for NGG:
- Current share price: $48.62
- The 52 week range is $42.29 to $52.18
- Earnings estimates for 2011: $3.97 per share
- Earnings estimates for 2012: $4.10 per share
- Annual dividend: $2.19 per share which yields 4.5%
Novartis (NVS) is based in Switzerland and is a global pharmaceutical
company with a diverse range of products and treatments. The company produces vaccines, prescription drugs, over the counter and other products. The stock has recently dipped to about $52 a couple of times since August. Buying on those dips has made sense and if the stock gets close to that level again, it makes sense for long-term investors to buy. The European debt crisis and stock market weakness is giving us a rare opportunity to buy a world-class pharmaceutical company for only about 10 times earnings.
Here are some key points for NVS:
- Current share price: $56.73
- The 52 week range is $51.60 to $64.82
- Earnings estimates for 2011: $5.55 per share
- Earnings estimates for 2012: $5.56 per share
- Annual dividend: about $2 per share which yields about 3.5%
Ensco PLC (ESV) is based in the U.K. This company is a leading offshore oil-and-gas drilling contractor that operates worldwide with a fleet of 42 jackup rigs, 4 ultra-deepwater semi-submersible rigs, and a barge rig. The stock looks undervalued based on a number of metrics including the book value which is $46.46. The stock trades for less than 10 times 2012 earnings estimates, and it pays a solid yield that is likely to rise in the future. With drilling in the Gulf of Mexico coming back, there should be growing demand for drillers like Ensco.
Here are some key points for ESV:
- Current share price: $47.12
- The 52 week range is $37.39 to $60.31
- Earnings estimates for 2011: $3.11 per share
- Earnings estimates for 2012: $5.93 per share
- Annual dividend: $1.40 per share which yields 2.9%
Teva Pharmaceutical Industries (TEVA) is based in Israel and sells its products worldwide. This company is a leading maker of generic drugs and it is likely to see continued growth as more major drugs come off-patent in the future. The stock saw major weakness in December and traded around $37, but it has since rebounded. I would wait for another buying opportunity to arise before investing in this world-class maker of generic drugs.
Here are some key points for TEVA:
- Current share price: $44.26
- The 52 week range is $35 to $57.08
- Earnings estimates for 2011: $4.96 per share
- Earnings estimates for 2012: $5.61 per share
- Annual dividend: 69 cents per share which yields 1.6%
Vodafone Group PLC (VOD) is a U.K. based provider of mobile communications services including voice, data, Internet, etc. This company also provides services in a number of other countries which adds some diversification and emerging market exposure. This stock has recently found support at around the $26 level, so buying on dips at that price will likely be a solid entry point. The European debt crisis is far from over, so I expect more buying opportunities in the near future.
Here are some key points for VOD:
- Current share price: $27.81
- The 52 week range is $24.31 to $29.75
- Earnings estimates for 2011: $2.64 per share
- Earnings estimates for 2012: $2.84 per share
- Annual dividend: about 97 cents per share which yields about 3.5%
Unilever PLC (UL) is based in the United Kingdom, and makes some very popular food products with brand names such as Ben & Jerry's, Knorr, Hellmans, Wish-Bone, Amora, Ragu, Bertolli, Vaseline, Suave, Slim Fast, Dove, and others. This company sells its products throughout the world so if demand in Europe remains soft or gets worse, this will be offset from growth in emerging market countries. This stock dropped to about $30 per share in October, and seems to have strong support at that level.
Here are some key points for UL:
- Current share price: $32.12
- The 52 week range is $28.45 to $34.55
- Earnings estimates for 2011: $2.20 per share
- Earnings estimates for 2012: $2.34 per share
- Annual dividend: about $1.23 per share which yields about 3.8%
Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.