Ignore These Stocks at Your Peril

The worst of the crash is behind us.

I believe it has to be. Stocks are down so far from their 2007 peaks that if they fell the same amount in 2009 as they did in 2008, the market would literally be giving a bunch of companies away. Not just any companies, mind you, but even global powerhouses that have managed to remain profitable throughout this meltdown.

The lessons from 2008
If anything, the tumultuous nature of the 2008 market should teach us just how interconnected our world has become. What started out with a few American subprime borrowers failing to make their mortgage payments has morphed into a global financial and economic meltdown. Whether you're looking at Middle Eastern oil, Chinese factories, Indian technology companies, or Manhattan real estate, it seems that nearly everybody is hurting from this mess.

Yet as in any crisis, there's tremendous opportunity bubbling up from this one. Not only has global economic growth ground to a standstill, but stock markets worldwide have, too. You can now buy stakes in any number of strong, profitable, global businesses for a fraction of where they traded in the past few years.

The world on sale
Take a look at just how far some profitable, rather large global companies have fallen as a result of this malaise:

Source: Capital IQ, a division of Standard & Poor's.

Yet in spite of their stocks plummeting, they remain fundamentally strong businesses. Plus, with their international headquarters and worldwide focus, they've got some built-in advantages compared to their distinctly American compatriots.

For starters, there's the fact that with its rescue efforts, the U.S. Federal Reserve and Treasury are pursuing policies that weaken the dollar. If you're an American investor, foreign stocks you buy today will naturally get pricier in dollar terms as the dollar sinks in response to the rescue efforts.

Then there's the price-value discrepancy. In spite of the global financial meltdown and the impact it has had on these companies' stock prices, their businesses have all remained largely intact. They're mostly acknowledged to be among the leaders of their industries, have proven earnings power, and are names people trust. Sure, their sales might slow along with everyone else's, and their earnings may temporarily slip. But five, 10, even 20 years from now, do you honestly believe they'll have vanished?

Finally, there's the corporate tax rates:

Combined national & sub-national tax rates. Sources: Organization for Economic Cooperation and Development, Inland Revenue Authority of Singapore.

Now, as fund manager Ron Muhlenkamp has said, the tax tail should never wag the investment dog -- so investing based on country-by-country taxation rates does not make for an investing thesis. But with the global economy in a rut, you cannot overlook the companies that are able to hold onto more of the fruits of their labor -- they're likely to be the ones best positioned to emerge stronger when the trouble ends.

With lower home tax rates than their American competition, these companies have an advantage. Sure, in ordinary times, American companies can stay competitive by borrowing at home and investing the cash internationally to lower their effective tax exposure. But in these days of extremely tight credit, the debt brought on by that sort of financial engineering is more of an anchor around a firm's neck than an intelligent international capital structure.

What's not to love?
At this point, a pretty strong catastrophe has already been priced into the market and these particular stocks. As the world starts to move past the meltdown and instead focus on the recovery steps yet to come, strong, global companies will be the ones best positioned to lead the way.

Businesses worldwide are starting to lick their wounds, assess the current situation, and rebuild their foundations. Those with the right global focus, structure, and scale will very likely emerge soonest, ready to pounce on the remains of their more heavily burdened competition. The worst of the crash is behind us. At this point, the bigger peril you face is quite likely the risk of not being invested when the inevitable recovery does take place.

At Motley Fool Global Gains, we intend to profit from this trend as the world returns to normalcy. By buying some of the best businesses in the world now, before the recovery is obvious, in full swing, and priced into their stocks, you can profit right along with us. Simply click here to learn more and start your 30-day free trial.

At the time of publication, Fool contributor Chuck Saletta did not own shares of any company mentioned in this article. Cemex is both a Global Gains recommendation and a Motley Fool Stock Advisor pick. Nokia is a Motley Fool Inside Value selection. The Fool owns shares of Cemex and has a disclosure policy.