On the back of a 110% gain in 2006, China's Shanghai Exchange has risen another 174% this year! Similarly, India's Bombay Exchange has had a nice run this year -- it's up 37%.
Investors the world over have wondered whether this type of outsized growth is sustainable. Nowhere, perhaps, is the debate more lively than on Motley Fool CAPS, the Fool's investing community, where more than 65,000 investors rate their favorite -- and least favorite -- stocks.
Despite the red-hot growth on the other side of the Pacific, only one Asian company ranked among the top 50 stocks that CAPS investors rated this month. Back in December, Aluminum Corp. of China held the No. 1 spot and has since surged 254%. Aluminum Corp. still retains its five-star CAPS rating, but a few brave bears have recently reared their heads and helped to drop the stock a bit in the overall rankings.
Moving westward?
While Asian stocks are still generally favored among CAPS investors, stocks from other regions, including Europe and South America, have become more common in the top 50. Investor sentiment may be shifting westward for now, but the growth potential in Asia is still too great to ignore.
Without further ado, here are the top five Asian stocks, according to CAPS.
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Company
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Country
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China Netcom Group (NYSE: CN )
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China
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Mahanagar Telephone Nigam (NYSE: MTE )
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India
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Silicon Motion Technology (Nasdaq: SIMO )
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Taiwan
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Guangshen Railway (NYSE: GSH )
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China
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Korea Electric Power (NYSE: KEP )
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South Korea
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Please bear in mind that these are not formal recommendations but rather jumping-off points for further research.
All aboard in Shenzhen
A Chinese railroad company providing passenger and freight transportation in the booming Hong Kong region sounds like a pretty obvious growth story. And Guangshen Railway doesn't disappoint: Revenue nearly doubled between June 2006 and June 2007, while net income grew more than 60%.
But investors have already taken notice of Guangshen's growth potential and have bid up the shares by 95% over the past year. Its current price-to-earnings ratio of 31 is nearly twice that of stateside competitors Union Pacific (NYSE: UNP ) and Burlington Northern Santa Fe (NYSE: BNI ) , so expectations are already high for Guangshen, to say the least.
What do you think? Can Guangshen grow into its valuation? The thousands of investors participating in Motley Fool CAPS are waiting to hear what you have to say about the stocks you follow.
To make your voice heard, register for CAPS. It's 100% free, and don't let the lofty positions of the top players intimidate you. There's room for everyone.
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