International stocks, particularly emerging markets, have been on absolute fire over the past few years. Investors have poured more and more money into various regions of the world, including Asia, Latin America, and Eastern Europe. While the general U.S. index has actually lost value over the last five years, indexes such as Vanguard's Emerging Market ETF have seen gains of more than 50%.
2010 saw much of the same, as people sought big growth and great potential abroad. Stocks such as 51job
Tim Hanson, advisor, Global Gains
Markel Chief Investment Officer Tom Gayner was speaking at Fool HQ recently and was asked why his portfolio doesn't have more international exposure. He responded to that question with a question, challenging his interlocutor to decide whether Peoria, Ill., industrial giant Caterpillar
Now keep that example in mind as I reveal that my top international pick for 2011 is Bentonville, Ark.,-based retail giant Wal-Mart
Alex Dumortier, CFA, Fool contributor
In this environment, you're much more likely to find 2011's best international stock in the old-world, slow-growth markets of Europe or Japan. Most investors are now chasing emerging market stocks and acting as if no valuation is too high to own a piece of companies in high GDP growth countries -- never mind that the link between GDP growth and stock returns is very weak. Meanwhile, Europe and Japan have been left for dead by investors, despite the fact that both can boast world-class companies, some of which derive substantial profits outside their domestic/regional markets.
If you are willing to consider buying foreign stocks trading on the pink sheets (which I strongly recommend), I urge you to take a look at Pargesa Holding (OTC: PRGAF.PK). This Swiss holding company is jointly controlled by a master capital allocator, Albert Frere (it is no exaggeration to call him the Belgian Warren Buffett).
Pargesa owns large shareholdings in a small number of European blue chips, including Total
Gerard Torres, Fool contributor
Remember the story of the tortoise versus the hare? Well, Israeli wireless service provider Partner Communications
The Israeli telecommunications market is undergoing a makeover. Recent regulatory changes have been instituted to promote greater competition. Meanwhile, the wireless market has hit its saturation point and is only expected to grow modestly. That doesn't sound like ideal business conditions, but Partner will be able to overcome these obstacles and continue to build its intrinsic value.
Partner Communications has first-mover advantage. While any new competitors will have to build up their infrastructure, Partner is continually adding customers, particularly to its higher-margin data services. Sure, it's not going to win any awards for staggering growth, but new entrants will have an uphill battle over the next decade if they want to take market share.
In the meantime, Partner offers impressive profitability and strong growth of free cash flow. Better yet, it maintains a dividend policy in which it will pay out at least 80% of its net income to shareholders while carrying a tempting price-to-earnings ratio of 9.2. Just like the tortoise, bit by bit it will get you to the finish line.
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Tim Hanson owns shares of Wal-Mart. Wal-Mart Stores is a Motley Fool Inside Value choice. 51job is a Motley Fool Rule Breakers recommendation. Wal-Mart Stores is a Motley Fool Global Gains pick. Partner Communications and Total are Motley Fool Income Investor recommendations. The Fool owns shares of Vanguard Emerging Markets Stock ETF, and Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.