Let's start listing the problems in the world today that could weigh on our global economic "recovery":
- An earthquake, tsunami, and ongoing nuclear issue in Japan.
- High unemployment in the U.S. and quantitative easing about to come out of the system.
- A massive potential banking crisis in China.
- Political instability in the Middle East.
- Rising oil prices.
- A European debt crisis that threatens the future of the euro.
- Austerity in the U.K.
- A housing bubble in Australia.
This is not an insignificant list. And yet, world stocks are up more than 5% so far this year. That may not sound like a lot, but it comes on the heels of better than 30% gains in 2009 and 10% gains in 2010. All told, it's a tricky time to be a stock picker. There just aren't many obvious buys on the world markets today. To wit, a money manager friend of mine told me recently that he hasn't had a new idea in months.
All is not lost
To be fair, I am seeing some pockets of opportunity in stocks that don't neatly fit into one category or another. Japan's Universal Entertainment (UETMF.PK), for example, was at one point down more than 20% after the earthquake there. That makes sense if you think of the company as a manufacturer of pachinko machines for the Japanese market, but since nearly all of the company's value lies in its near 20% ownership stake in Wynn Resorts
But Universal Entertainment -- like a lot of the ideas I'm seeing -- is a bit quirky and maybe not appropriate for long-term, individual investors. So is there anything else investors should be doing in these uncertain yet expensive times?
What a Fool's to do
The answer, I think, is to start making a list of great businesses that you would like to own and the prices at which you would like to own them. That's called a watchlist, and if you have it, then you will be prepared to profit once the volatility that has to hit the market this year (again, just look at the list above) strikes.
What companies should be on your list? Here are three I added to my own this week.
Looking for a good time to buy
Odds are you know Swatch (OTC BB: SWGAY.PK) is a Swiss watchmaker, but did you know that the company is growing sales rapidly in Greater China thanks to its sales of well-known luxury brands such as Breguet, Glashutte, and Omega as well as licenses to manufacture watches under brands including Tiffany
But Swatch stock is up more than 30% since this time last year, and this is the first year the company will be without the guidance of founder and visionary entrepreneur Nicolas Hayek, who died in 2010. Hayek's son is now running the company, and though he has been a Swatch executive since 2003, public companies are notorious for struggling with leadership transitions. Couple that fact with the potential for a slowdown in consumer spending in China and Japan, and 2011 could turn out to be a rocky year for Swatch. That makes me hopeful that investors will be able to buy shares in the future closer to my estimated fair value of $15 per ADR.
A smoking opportunity
I already own shares of Philip Morris International
Yet based on my estimates, the stock's current $63 price tag will give buyers market-matching -- rather than market-beating -- returns. That's not sufficient given the political risks associated with cigarette manufacturers, which is why I'm waiting for something closer to $50 before adding to my position.
This one's in the bag
Like Swatch, Coach
Yet there is so much potential international expansion for Coach that the chance to buy this stock below $40 would be a steal.
The global view
Swatch, Philip Morris, and Coach are three stocks on my global watchlist, and given the potential for volatility, I'm waiting for lower prices before buying in. Yet if I get the prices I want, I expect all three to be significant long-term winners. Each offers access to a premiere brand that's gaining in popularity in the world's fast-growing emerging markets.
Add these names to your own watch -- or even start your watchlist -- by clicking here.
Get Tim Hanson's top global stock picks by joining Motley Fool Global Gains. Tim's "Global View" column appears every Thursday on Fool.com.