More than half of the world's market cap now sits outside the United States, and the largest IPO in history now belongs to a Chinese bank, ICBC. This distinction could be temporary, depending on how Japan proceeds with its postal savings bank. Either way, it means that many of the world's most established and dynamic growth opportunities are not American companies.
Scouring the globe for value
Successful international investing requires many of the same skills required to evaluate a U.S. company. But in addition to understanding the fundamentals of a business, international investing requires understanding some of the things we take for granted here in the U.S., because we live and breathe them. A few of these factors are economic policy, political currents, corporate governance, accounting standards, and cultural factors that are at work in different countries. In our recently launched Motley Fool Global Gains service, we take these factors and others into account to scour the earth looking for the most attractive opportunities for subscribers.
I don't have a handful of thoroughly researched ideas to offer you here, but I am having fun mining our new Motley Fool CAPS service to see what other investors are thinking. What is Motley Fool CAPS, you ask? It's a community intelligence database that asks investors to rate stocks. In turn, every investor is ranked, as is every stock. So as more people participate and more time passes, we hope to be able to determine the best investor and the best stock in America -- and, potentially, the world (though, admittedly, we'll have to roll this thing out of beta testing before we can start talking about global domination).
Six all-star foreign companies
The following three stocks all have been recommended by at least 10 CAPS participants, have a P/E below 20, a market cap of more than $10 billion and are rated as five-star picks (the highest possible) by the CAPS community. As you'll see, there are some easily recognizable names on the list.
|
Company |
P/E |
Market Cap | |
|---|---|---|---|
|
Novartis (NYSE:NVS) |
16.8 |
$128.2 billion | |
|
Telefonica (NYSE:TEF) |
10.9 |
$115.3 billion | |
|
Companhia Vale Do Rio Doce (NYSE:RIO) |
11.8 |
$113.6 billion |
And the following three companies have all the same qualities as the companies above, but have market caps of less than $8 billion. As you might expect, these companies aren't exactly household names.
|
Company |
P/E |
Market Cap |
|---|---|---|
|
Tata Motors (NYSE:TTM) |
11.7 |
$6.3 billion |
|
Mechel (NYSE:MTL) |
7.4 |
$5.6 billion |
|
Dr. Reddy's Laboratories (NYSE:RDY) |
10.4 |
$2.7 billion |
In CAPS, you'll also find ratings on all of the exchange-traded funds that track the markets around the globe. In some cases it is easiest to gain exposure to the Italian economy, for example, with the iShares MSCI Italy Index ETF (AMEX:EWI).
When you go digging for the world's best stock ideas in a volatile market, it's still crucial to do your due diligence. If you'd like to get started doing just that, come and see what our CAPS investors are actually saying about these companies. To do so, just follow the link to join the free beta test of CAPS today.
Nathan Parmelee is a contributing analyst to Global Gains and is ranked No. 11,000 out of more than 60,000 investors in CAPS. At the time of publication, Nathan had no financial interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.
