The Best Stocks to Buy Today

"We're like children in a candy shop."

Who said it, and what was he talking about? I'll give you a hint: It was a master investor, and he was talking about buying a small group of stocks. But before I can reveal the exact investor and the precise stocks, I need to set the stage.

How much do you know about the global economy?
You're probably aware that the United States is in a recession. In fact, according to a recent report from the National Bureau of Economic Research, we've been in a recession since December 2007. American stocks over that period of time -- paced by enormous declines in financial sector stocks such as Bank of America (NYSE: BAC  ) , Goldman Sachs (NYSE: GS  ) , and Capital One (NYSE: COF  ) -- are down 39% in aggregate.

Now, while the U.S. economy has receded (i.e., seen negative GDP growth), it looks like China has grown its GDP 9% or so, India 7% or so, and Brazil 5% or so. Given those facts, and holding all other variables equal, we would expect that the stock markets in these countries would have far outperformed our own.

That, however, has not been the case.

Here's how it breaks down
In fact, Brazil's stocks are down 40% since December 2007, India's 52%, and China's an astounding 61%. Again, that's despite the fact that all three of these countries saw healthy growth in 2008.

The fact is that there is more to an investment's performance than the GDP growth rate of its home country. One has to take into account valuation (emerging markets stocks were overvalued last year relative to their U.S. peers), risk (emerging markets stocks will be more volatile than their U.S. peers), and future outlook (emerging markets are expected to perform worse than the U.S. going forward).

Wait a second ...
If you're paying attention, your eyes ground to a halt upon reading the last bit of that last sentence. You may have even set to writing a nasty email to me that questioned my facts, sanity, and competence.

That's because economic growth in the world's emerging markets, though it will slow in 2009, is expected to continue to outpace that of the United States for many, many years to come. Of course, it's that divergence between the performance of emerging markets stocks and their outlook for the future that prompted famed Templeton money manager Mark Mobius to tell Bloomberg that, when he and his team look at emerging markets stocks these days, "We're like children in a candy shop."

And that, dear Fools, was the reveal
See, emerging market stocks have been oversold by investors who -- for whatever reason -- need safety. It could be because they're professional investors seeing redemptions, individual investors who can't stomach additional losses, or any other kind of investor who doesn't want to worry these days about currency risk, political upheaval, unpredictable tax rates, or the myriad other concerns that keep global investors on their toes.

But current prices of global equities mean you're being more than compensated to take those risks with the benefit of the tremendous growth potential that emerging markets offer. Again, that's why Mark Mobius feels like a kid in a candy shop.

And Mr. Mobius isn't the only institutional investor who's salivating over the opportunities in emerging markets today. JPMorgan wrote in a recent note to clients that "China is a must buy today." Credit Suisse raised its Asia ex-Japan rating to overweight. Our Motley Fool Global Gains team just returned from Mexico with a few more great ideas.

Today's the day
The fact is that, thanks to the recent economic downturn, savvy investors are being given the opportunity to buy up the fastest-growing companies in the fastest-growing parts of the world for cheap. Just last year, emerging names such as China Mobile (NYSE: CHL  ) and America Movil (NYSE: AMX  ) -- two firms that have been growing the top line at 20% or more annually -- traded at substantial premiums to slower-growing peers such as AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) . Today, they trade in-line or at slight discounts.

That's silly, of course, and the market will correct that discrepancy eventually. In the meantime, take advantage of the situation to put emerging markets growth in your portfolio on the cheap.

You can take a look at our best ideas at Global Gains -- and see all of our notes from Mexico -- by joining the service free for 30 days. Click here for more information.

Tim Hanson owns shares of America Movil. America Movil is a Motley Fool Global Gains recommendation. Bank of America is an Income Investor recommendation. The Motley Fool has a disclosure policy.


Read/Post Comments (32) | Recommend This Article (163)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 12, 2008, at 6:45 PM, DKnumberOne wrote:

    FinancialFellow...if you are saying you open credit cards for the 'free' cash and then close them shortly thereafter, you also should understand the tremendous negative impact this can have on your credit history.

  • Report this Comment On December 12, 2008, at 11:20 PM, foorpoof wrote:

    I am an old man and therefore very careful about using what time is left to me.

    I wish you would get to the point. In everything you write, you use about 30 times the number of words necessary to get your point across.

    In fact, many times I have to give up trying to figure out what your point is!!!

  • Report this Comment On December 13, 2008, at 10:48 AM, prphil wrote:

    With your general out look on emerging markets I would like to know what your readership thinks of getting into something like EEV at this time?

  • Report this Comment On December 13, 2008, at 11:10 AM, Momoftwokids wrote:

    " future outlook (emerging markets are expected to perform worse than the U.S. going forward)"

    Morning all. Any help on interpreting the above article quote and why one would consider EM's? Didn't the author mean "better" rather than "worse"?

    Thanks. Been reading too much lately on financials in general.

  • Report this Comment On December 13, 2008, at 12:57 PM, paducah5102 wrote:

    I had the same experience as Foolproof. Your point, if there is one, was not clearly made. No need to act erudite, especially, just well informed.

  • Report this Comment On December 13, 2008, at 1:14 PM, TMFJoeInvestor wrote:

    I'm a bit confused. Tim's article takes 2 minutes to read and clearly was written to express that he thinks emerging market equities are cheap right now. Hence, his concluding statement of "take advantage of the situation to put emerging markets growth in your portfolio on the cheap." He even named a couple of specific companies that he likes (AMX and CHL). Just sayin'.

  • Report this Comment On December 13, 2008, at 5:47 PM, rottweilers wrote:

    I am convinced they are just selling investment letters with no more idea what a good stock looks like than the average slob on the street.

    I am over $260K under water with their MDP stock recommendations.

    And yes they dress up their presentations with lots of words. Most of these so called stock experts I suspect are english students.

  • Report this Comment On December 13, 2008, at 8:06 PM, bkill wrote:

    Re: Motheroftwo: I'm having the same problem with the same sentence. Seems to be one of two possibilities: 1) Either Mr. Hanson meant to say "out-perform US peers," or; 2) If the average investor's future outlook is that foreign stocks will perform worse than US competitors, that would keep downward pressure on foreign stocks' pricing, continuing to make them a good value buy until the rest of the market realizes that, indeed, the foreign stocks aren't under-performing in relation to their US counterparts. I hope Mr. Hason will clarify.

  • Report this Comment On December 14, 2008, at 12:08 AM, YEN4PESOS wrote:

    "Foreign Markets" Sounds like the headlines on the day Manifest Destiny was recognized. And, as it was then, beware of speculators fools. ,, Chinas whole economic machine is directed by the State. One could lose it all overnight on the turn of a political card. No... thats for you big boys. I'm staying here with mine... If there isn't plums to pick now,.. there never will be.

  • Report this Comment On December 14, 2008, at 10:43 AM, halley12 wrote:

    I am on the sidelines because I am sick of reading about failing companies and the CEO makes $100,000,000. I know you try to find companies with CEO ownership and I applude you for that. I also applude the companies that are debt free or are serious about lower debt. I am looking for companies that pay the shareholder back. I see a lot of companies with a 3 - 5% dividend and we are told that is great. That depends on what they do with the remaining funds.

    If companies paid more look at the taxes that would be paid under our double tax standards on dividends. Look at the retirement income that would be going into your 401k.

    The guy at the top, you watch, will be going back to his board of director and crying his stock options are worthless. And asking to trade them in at a reduced number but at the new price. Forget the fact they are going to get millions of options for there current helping of the sharehoolder out and when the market (nothing they do) rebounds they will make more millions.

    Yes sir, I want to jump back in to a system of corruption hoping I will not buy the company with shakey books. Think I will take my money and build spec houses.

  • Report this Comment On December 15, 2008, at 4:31 PM, barreyes wrote:

    Flowery bait for: joining the service free for 30 days. If you cant do it, teach it?

  • Report this Comment On December 16, 2008, at 10:05 PM, javnnf wrote:

    I fully agree with rottweilers.

    I too am a victim of MF's recommendations losing more than 100K!

    It is too bad that we can not bring soem kind of class action suit against MF. Or can we?

    It would be very useful to collect all the data of all the MF losers as a result of their recommendations.

  • Report this Comment On December 18, 2008, at 11:47 AM, mmwmmr wrote:

    I thought this was a good article to remind us that though emerging market stocks are not the recession-proof stocks that many investors initially thought they were, there is still potential for significant growth in the years to come.

    As for those investors complaining of losing money based on stock picks by Motley Fool, I think it is important to keep a couple things in mind:

    1.) As an investor, you take risks when you put your money into any investment. Ideally it is an educated risk, but there is not guarantee of success.

    2.) The Motley Fool is primarily an educational site about investing that encourages the well-accepted idea of investing in what you know. While the Motley Fool does advertise certain stocks that they think are a good buy, they always emphasize doing your own homework. In the end, it is your decision.

    If you are upset about losing money on stocks that were picked by Motley Fool, maybe the best thing would be to learn from those losses by having a portfolio with more diversity and better understanding your own risk tolerance, and last but not least doing your own research in the future.

  • Report this Comment On December 18, 2008, at 10:05 PM, bearlyalive wrote:

    what does MF recommend we do about MF recommendtions which are now under water-- e.g. Cemex, Select Comfort and similar disasters? Take our medicine and sell? Buy more at the new, lower prices?.

  • Report this Comment On December 19, 2008, at 12:21 PM, rmiers1 wrote:

    started with MF three and half years ago and sold some non performing mutual fund and started with 324K. With two letters I had it up to 880 and thought I would never see a poor day. I rode ISRG and GRMN (Goog to 295) and frequently sold issues with a 30% short term profit. Then came along the market manipulators and naked shorts and stole the market. The financials and the SEC helped them do it. They say that there is four trillion setting on the sideline. Thats our money and Goldman, Lehman, Bear Sterns, and other slimeball insiders learned how to game the market with hugh amounts of money they didn't have.

    This no more Motley Fools fault than the man in the moon> Other than exposing publicly the uptick scam and naked shorting, the thieves have done it legally. Scumball Paulson stated that naked shorting was good for the market.....as in selling something you don't own. If you look closer you will see their hand in the election for insurance. I am now down to 200K but I own good companies making money without debt. Never trust a financial again....except Fidelity...they seem to have clean hands. MF gives you the tools...at a fair price

  • Report this Comment On December 19, 2008, at 4:36 PM, MFMerlin wrote:

    Very well put, rmiers! The disgust that disatisfied MF readers have is totally misplaced, although I would also like to note that some MF authors have written about the necessity of the government to intervene in the financial debacle. That was their opinion however, NOT a stock analysis, and definitely NOT the opinion of all MF authors; n.b. some of Ms. Alyce Lomax's extremely well written analysis of the government's mismanaged assistance.

    It's too bad we can't harness all this well deserved anger at the obvious current goverment mismangement and inequitable treatment of shareholders. We would probably be able to achieve at least a couple of Mr. Chuck Saletta's goals as listed in his piece of writing, 4 Steps to Economic Recovery.

    We would all be much better for it.

  • Report this Comment On December 19, 2008, at 4:40 PM, rocketspicks wrote:

    I subscribed to both RYR and the MDP. It now seems that

    every other email I receive from the MF is a solicitation for another newsletter. I suspect the MDP has recovered their losses with subscription fees. FOOL me twice, shame on me!

  • Report this Comment On December 19, 2008, at 9:12 PM, keoweekid wrote:

    I totally agree with the 12/12/08 comment of the older gemtleman (fool) who said you are too wordy. Get to the point and stop trying to sell us a lot of gibberish with hyperbole. I only read executive summaries, not whole damn report.

    I'm about ready to cancel my subscription to Motley Fool for the reasons of too much BS and lack of solid info and get to the point advice. At my age, 70, I don't have time to waste on your convoluted writings.

    Walter

  • Report this Comment On December 19, 2008, at 9:44 PM, sh10453 wrote:

    Almost two decades ago, while I was working on my master's degree, I had the chance to know a good number of colleagues who were working on their MBA (mine was in engineering).

    Having known how they were taught to think and operate, and having dealt with a good number of people in the finance business over the years, I had reached a decision many years ago that I would rather trust to sleep with a poisonous cobra snake than trust a guy in the finance business. Sorry if that sounds harsh to some, but I have yet to meet, just one of them with a bit of integrity, although I am sure that there are some rare exceptions here and there.

    If you have doubts, just look and see what they have done to people's lives, from Enron to whoever is falling to pieces these days.

    If this is the best they can do (to drown some of the largest companies and banks around, if not in the entire world), are they the people you want to trust and invest your money based on their recommendation?

    Commonsense is always helpful!

    Good luck, and good commonsense investing.

  • Report this Comment On December 19, 2008, at 11:32 PM, skyabyb wrote:

    Starbucks is a distination place for me.An iced tea,$2.15 usually with a refill for .50. a newspaper or good conversation is a wonderful relaxing break in my busy day. There is nowhere else with the same ambiance. Thank you starbucks for the consistantly good training you give your employees, and the consistant quality of your drinks, and other product.

    Sharon Rose

  • Report this Comment On December 20, 2008, at 4:37 AM, ltcolonel52 wrote:

    Rmiers1...unfortunately, many of us have shared your difficult experience. My "safely diversified" Fidelity 7-figure IRA accounts suffered through a 75% incineration into a low 6-figure "investment" before I could comprehend (or believe) the extent of the greed, moral decay and deceit among the Wall Street crowd and those annointed, elected, or hired officials whose responsibility it was to protect "Joe the Plumber". And, we both agree that MF gives you educational tools at a fair price,

    However, I do NOT agree with your conclusion regarding Fidelity's ability to keep clean hands. I personally found that Fidelity (probably like other brokers), in their rush to find a financial exit, stepped on investor's rights, thereby increasing the large unnecessary damges being suffered by their customers. In a world run by margin clerks, customer relationships became collateral damage as brokers rushed to cover their open postions. The degree by which this type of broker behavior accelerated the US meltdown has not been addressed, to my knowledge, and its magnitude is probably not well understood.

    By example, Fidelity WAS my broker for more than 20 years. In the end, my accounts were often unceromoniusly liquidated by Fidelity, frequently when there were NO margin violations (shortfalls). And, while Fidelity was busy generating "surprise" forced sales of customer accounts and earning extra commissions while doing it, they took matters to another level when they eliminated the Company's long-held practice of contacting "good" customers a day prior to any independent action by Fidelity against the client's 401K or other accounts.

    Adding insult to my personal injury, the involved margin clerks charged transaction fees that were a thousand times greater (yes, this is not a typo. Fidelity's commissions per transaction increased by (1000-1600 %) When I confronted the usarious department, the Fidelity reps informed me they would not return their ill gotten gain and gleefully exclaimed they had done the SAME THING to "thousands of other good customers".

    Finally, there were other times when, while talking to Fidelity account executives, I would ask them to confirm no margin calls existed on my accounts at that time and verify (with the margin clerks) that none of my investments were scheduled for "early termination". You alreay know what happened next...I would't be off the "confirming" phone call 20 minutes when I would find Fidelity making changes (sales of securities) to my account..

    Fidelity's hands aren't as clean as you believe. Bear in mind that, as a long time mutual fund company, Fidelity's strength and research resources are devoted to and are still brought to bear against the mutual fund side of the business.

    Want to trade in a foreign market...Fidelity cannot do so without sending you to the "dreaded" pink sheets or an ADR. How about all that current research gathered and analyzed by individual(s) for the mutual fund business? Don't hold your breath waiting for even strong retial customers catching a whiff. Finally, it never failed to amaze me that Fidelity would not provide margin onmaajor

  • Report this Comment On December 20, 2008, at 5:00 AM, ltcolonel52 wrote:

    Continuation to message at 4:37 AM.

    ...Don't hold your breath waiting for even strong retail clients catching a whiff. Finally, it never failed to amaze that Fidelity refuses to consider margin for the purchase of major overseas comanies. Some of the smaller guys understand this and see Fidelity's lack of inertia as an opportunity to develop and offer a trading platform to accomplish securities transactions directly into foregn financial markets.

    MF makes a strong case that the economic recovery and a major part of world growth will be driven in large part by the BRIC and certain other developing nations. Setting aside the relatively limited ADR's, who wants to pay multiple levels of broker's commissions and fees buying through the pink sheets?

    In conclusion, I would caution you to shop around and pick your broker and trading platform carefully.

    I would be interested in hearing back from anyone with your thoughts as to the strengths and weaknesses of investing/trading through Interactive Brokers in Greenwich, CT.

  • Report this Comment On December 20, 2008, at 6:14 AM, tia010 wrote:

    Hi,

    Nics and very interesting article about stocks.Viewer's comments are very fun and useful to read.Thanks for such a nice article.

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  • Report this Comment On December 20, 2008, at 6:14 AM, tia010 wrote:

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  • Report this Comment On December 20, 2008, at 6:19 AM, tia010 wrote:

    Hi,

    Nice and very interesting article about stocks.Viewer's comments are very fun and useful to read.Thanks for such a nice article.

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  • Report this Comment On December 20, 2008, at 8:26 AM, vintroadracer wrote:

    hummmmm.I foolishly put my money where advised by the folks at the motley fool and I would like to say it is doing great. Alas! I have lost over half of the value of every investment recomended by the fool. I wish I had not purchased the "membership" which is nothing more than a paid oppertunity to flood my email with meaningless tripe and usless advertising. The reason the articles are hard to find a point in is because there is no substance.

    I lost my behind listening to these guys.

  • Report this Comment On December 20, 2008, at 9:59 AM, Hijincs wrote:

    I am letting my subscription expire. The MF's are a business but the benefits, to me, aren't worth the price. 'You pays your nickle...'. Folks are, rightly so, angry about the whole financials, stocks, real estate and etc. mess but if they look into the mirror they will see who is the most responsible for their plight. Reminds me of the time I asked a relative (who really is a nice person- believe it or not!) how he could be a senator and get anything done. The response was that you'd just have to get into the 'muck' with the rest of 'em! The same applies to the stock market (and everything else)- just get into the muck with the rest of 'em!

  • Report this Comment On December 20, 2008, at 11:19 AM, pauldoit wrote:

    Could not agree more with the many others above...clarity of thought is the key to good communication !

    Say what you mean; mean what you say.

    Cut the blather and get to the key elements of what you are writing about.

  • Report this Comment On December 20, 2008, at 1:44 PM, lsgv wrote:

    Buy Gold and Silver. That is the only way you can preserve that left over wealth after corporate greeds devoured through investments on their stocks. You will see people all over the world moving to gold and get hold of what ever is available before there nothing more to sell. USD is another bubble waiting to burst. befre that happens, buy gold and silver.

  • Report this Comment On December 21, 2008, at 8:04 PM, uknowthis wrote:

    ya know what? you know this ! .........most of these guys are idiots...started out meaning well.... and then capitalism sets in......talk_talk_talk_...bottom line today....you need to think like a contrarian..... MF..they don't know...trying to help you and keep their bills paid....lets not forget they have sponsor's too....most financial writers get paid by the word or line.....meaningless or not.............they are here to make you think.....think you can do that?......read every word with a grain of salt........do your own research....guidance is what you seek......hopefully not a broker to make a "foolish" decision for you.........Bottom line on the main focus of this article.........Buy selectively the foreign markets, and very selectively the em's....use ETF's as they are more encomassing.........

    I do agree with most of you...... and these folks far too often say nothing with lots of words and can't commit..............I will.....help yourself !

    u do know this

  • Report this Comment On December 22, 2008, at 10:40 AM, ahfockler wrote:

    I agree with a previous comment from Walter. TMF is getting too wordy. To much cutesy stuff. Sounds like my college days when I had to prove myself.

    I am about ready to drop my subscriptions. There is good info in TMF articles but you have to wade through gibberish to get to it.

    Cut the cutesy -- maybe it sells with some - not me.

    Red

  • Report this Comment On October 27, 2009, at 6:05 AM, andy560000 wrote:

    thanks for the advice, but i guess i still need to study the pros cons of it before investing my money and see how high my chances are of really earning.

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