Many people regret not having bought more stocks in 2009 when the US market plunged so much, it created some amazing opportunities. Many of them are fully or mostly in cash, waiting for the next 2009-like opportunity. In fact, we currently do have a similar opportunity. Apart from the financial sector in US, almost all sectors in Europe are experiencing the same issues our sectors did in early 2009.
2011 was an interesting year in the stock market. Because of the uncertainties in US and Europe, many stocks lost a lot of value in this year. Here I will mention some solid European companies with good fundamentals that keep growing. These companies got punished for no fault of their own in 2011.
Let's look at some of these companies.
Volkswagen (OTCQX:VLKAY): This is the biggest car producer in Europe and it is posting solid growth in every market it operates. The company expects to gain a large market share in Asia and Europe in the next few years. The company also wants to acquire other successful car companies such as Porsche in the near future. Volkswagen pays dividends, currently yielding 2.11%. In the last 52 weeks, the stock's price ranged from 21.88 to 39.43. Currently it's trading at 28.85 with a P/E ratio of 3.20. The company has the lowest P/E ratio among big car companies. The company will be enjoying low levels of Euro in 2012 as it will be able to export its products for cheaper than usual. In 2011, the company's revenue grew 250% faster than the industry average thanks to strong sales in Russia, Asia and North America. In the first 3 quarters of 2011, the company posted a record profit of 16.6 billion euros. The company's AUDI brand has a fast rising demand all over the world. If I were to own a car company, it would definitely be Volkswagen. I see this stock as a buy right now.
Bayer (OTCPK:BAYZF): This company is engaged in mainly 3 businesses: 1) health-care, 2) nutrition and 3) high-tech materials. The company's health-care and nutrition brands are doing very well, while their materials brands haven't been doing that great recently due to lower industrial demand. In the last 52 weeks, the company traded between $49.00 and $88.00 dollars and it currently trades at 67.17 dollars. The company's dividend yield is at 3.3%. The company has loads of cash and it keeps investing into research and development to grow further.
Nestle (OTCPK:NSRGY): The Swiss company is well known for its products in the food sector and it is posting solid growth. The company is expected to gain a lot of market share in Asia due to high quality of its products as a number of Chinese food producers are facing allegations of corruption in food production. If the Swiss are able to keep their currency from jumping up, Nestle's exports should do very well. The company's current dividend yield is around 3.4% and I don't see it going away anytime soon. The current stock price is 56.10 and the stock has been trading between 52.70 and 65.53 in the last 52 weeks. The company is expected to grow by 25-30% next year in the Asian market as much as revenues go. If the stock price falls by another 2-3%, I would be very inclined to buy.
Nokia (NOK): This company is mostly down not because of what is going on in Europe, but because of fierce competition in its field. I believe that Nokia is oversold and it will bounce back up in the next year or so. The company still has a large market-share and it is taking the right steps such as signing an alliance with Microsoft (MSFT) to improve its position. The company still has a lot of weapons in its arsenal such as 16 billion dollars of cash and a lot of patents. The stock has traded between 4.46 and 11.75 in the last year and its current stock price is 5.21. The company has a handsome dividend yield of 10.97% but I expect this rate to fall in the future. The company expects to become profitable again in the second half of 2012 at latest. I see the stock as a buy anytime between now and next summer.
Vodafone (VOD): The company traded between $24.31 and $29.75 in the last year and it currently trades for $26.88. Vodafone also owns 45% of Verizon (VZ) and collects dividends from Verizon regularly. Vodafone passses all the dividends coming from Verizon to its stockholders, thus yielding a good 5.48% at the moment. The company engages in successful business all over the world, which means it will continue to generate profits unless the entire world economy collapses at once. Vodafone has been reducing its debt successfully by paying off significant amounts in the last few years. If this stock falls at $26.00, it will be a strong buy. Even if things get worse in Europe, this company has enough business in other continents that it will be still profitable. In fact, most of the company's growth comes from outside of Eurozone.
Siemens (SI): It would be safe to call Simens "the GE of Germany." The company produces many electronic products ranging from lightbulbs to fridges. In the last year, the stock traded between $84.86 and $146.74 and it currently trades at $95.87. The company's P/E value is at 9.76, a healthy number for its industry. Last week the company announced that it expects a significant rebound in the second half of this year. The company currently pays dividends yielding 4.21% annually.
I am not saying that this is the perfect time to buy all these stocks as they may get even cheaper in the following months, but long term investors may benefit from a rebound that's likely to occur once things get settled in Europe. For those investors who want to diversify their portfolio by being exposed to international stocks, I particularly recommend German stocks that got punished recently due to problems outside of Germany (i.e., Greece, Italy, France, Spain, Portugal, Ireland). My strategy would be to start buying from companies that are closest to their 52 week low and move from there. Many, if not all, of these companies will see a bounce up in 2012, particularly towards the end of the year. I would also recommend holding these stocks for at least 2-3 years upon buying rather than selling them at the first bounce up as some of these companies have very big upside potential. If you are a dividend hunter, then I would recommend buying these stocks anytime now.