These Stocks Beat Canadian Stocks

With its abundance of natural resources, Canada has become increasingly lucrative for many raw material companies operating there -- and hence their investors as well. But I've found investments from another sector that are beating the pants off Canadian stocks -- and I know where you can find out more about them.

Would the real hot stocks please come forward?
The 5,500 stocks that the 110,000-plus Motley Fool CAPS community members have rated include descriptive "tags" that group them with other companies sharing similar qualities -- a country of origin, a sector, or an end product, for example. The Canada tag contains a list of 56 stocks that have collectively gained 5.1% in the past year.

But CAPS tags can lead you to stocks that have outpaced even the near-term returns from the Canada group: Luxembourg. The four companies with this tag have outperformed the returns of the Canada group with a 14.7% average gain in the past year.

Each group has its share of winners and losers, of course, but CAPS can be a great resource for zeroing in on potential opportunities in each area.

From macro to micro
You can sort tag groups by their CAPS ratings, from one to a maximum five stars, and then see which players -- from Wall Street to Main Street -- are bullish or bearish on a company, and why.

For instance, here are a few of the stocks in the Canada group:

Sources: Yahoo! Finance and Motley Fool CAPS, as of July 18.

And here's how CAPS members rate the four Luxembourg stocks.

Sources: Yahoo! Finance and Motley Fool CAPS, as of July 18.

ArcelorMittal
As commodity prices soar, ArcelorMittal and major miners are working hard to secure access to raw materials. POSCO recently took a 10% stake in Australian coal miner Macarthur Coal, of which ArcelorMittal already owns 19.9%. And while ArcelorMittal recently decided against a takeover of Macarthur, speculation persists that the company might have London-based miner Rio Tinto on its mind. The rising demand for steel, along with the merger drama, has 97% of the 1114 CAPS members rating the company expecting it to outperform the market.

Millicom International Cellular
Wireless services provider Millicom is flourishing thanks to its focus on emerging markets -- places in the world where everyone does not yet own a cell phone. The company reported a 42% increase in revenue in the first quarter while adding 2.8 million net subscribers. With the forward P/E under 15 and long-term growth expected to top 25%, more than a few investors have concluded that Millicom is a quality stock on sale. CAPS members definitely agree, with 402 of the 412 members rating the company believing it will outperform the S&P.

Ternium
Although its corporate headquarters is in Luxembourg, all of steel maker Ternium’s operations are in the Americas, primarily Mexico, Venezuela, and Argentina. In February, Ternium shed some non-core assets for $726 million to focus on its core steel business in the Americas, and to continue to penetrate more profitable markets. Some investors wonder how long steel makers like Ternium can pass on the soaring price of iron ore, but CAPS members have largely made up their mind, with 97% of the 335 members rating Ternium seeing it outperform the broader market.

Tenaris
What could possibly be better than combining a steel manufacturer with an oil and gas industrial supplier? Investors have both in steel tubing and pipe maker Tenaris, a company that provides high-tech parts to oil and gas drillers. Tenaris showed up on Wall Street's buy list as net profits have compounded at over 60% per year for the past five years, and its war chest ballooned by $1.12 billion with a check from General Electric (NYSE:GE) for its pressure-control business. Even with some warning flags spotted in the fundamentals, 97% of the 435 CAPS members rating Tenaris expecting it to outperform the market going forward.

Before you buy ...
Of course, what's happened in the past is no indicator of where investors should be putting their capital now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify trends that may significantly affect investments. Just make sure to do your own due diligence rather than simply following crowds or individual recommendations.