| Diversify
Your Portfolio by Investing in Foreign Companies |
Published: February 11, 2005
Millions of U.S. investors have
100% of their funds invested in domestic firms, and for good reason.
History has shown that the U.S. markets are one of the safest places to
put your hard-earned dollars to work. After all, many U.S. firms are
world leaders in their respective industries. In addition, domestic
firms benefit from having access to a stable government, an advanced
national infrastructure (quality roads, phone lines, power sources,
etc...), reasonable taxes, and the world's most educated and productive
workforce. And despite the recent series of high-profile fraud debacles
we've seen in recent years, U.S. accounting standards and practices are
still much more reliable than those in other countries. (Just think of
all the corporate fraud that goes undetected in markets where regulatory
bodies are poorly organized, corrupt, or even nonexistent.) And finally,
thanks to their tremendous size and liquidity, the U.S. equity markets
are some of the most reliable and efficient in the world.
Investing in the U.S. has its
advantages, but if all of your funds are tied exclusively to domestic
companies, then you could be missing out on some incredible
opportunities. After all, many foreign-based firms are also world
leaders in their respective industries, boasting solid management teams
and impressive long-term growth prospects. In addition, since many
foreign firms are involved in industries and geographical markets where
U.S. multinationals don't have a presence, investing in such companies
can help you profit from new opportunities in these markets. Simply put,
foreign stocks give you the ability to diversify your portfolio on more
of a global scale.
If you'd like to diversify into
foreign stocks but you're unfamiliar with (or hesitant to enter) the
international equity markets, then we have a solution for you. There's a
way for you to take advantage of the ease and safety of the U.S. equity
markets while still investing in foreign firms. How? Although many
investors are unaware of their presence, a large number of foreign-based
companies are actively traded on one of the three major U.S. equity
markets (the NYSE, AMEX or Nasdaq).
These unique stocks -- known as
American Depositary Receipts (ADRs) -- are issued by U.S. banks. Without
going into too much detail, ADRs basically represent an interest in
foreign shares that are held in custody overseas, but they trade here in
the U.S. For all intents and purposes, they are identical to purchasing
shares in foreign markets, but are much more convenient (and cost
effective) for domestic investors. In today's issue we're pleased to
bring you a listing of some of the most attractive foreign firms
currently trading as ADRs in the U.S. markets.
With the above analysis as a
backdrop, this week we searched through our universe of 10,000 stocks to
find companies that met the following criteria:
-- Share price of above $2.00
-- Market capitalization of greater than $100 million
-- Foreign company trading in the U.S. markets as an ADR
-- Five-year average compound sales and EPS (earnings per share) growth
of at least +10% per year
-- Projected earnings per share of greater than $0 for this fiscal year
(to eliminate money-losing firms)
-- Projected long-term annual earnings growth of at least +10%
-- P/E (price-to-earnings ratio) of less than 25 based on projected
earnings for this fiscal year
-- Long-Term Debt/Equity ratio of less than 0.5
Our goal was to come up with a
list of ADRs that are fairly large, fast growing, profitable,
financially stable and trading at reasonable valuation levels. After
running this data through StreetAuthority's advanced screening software,
we came up with the following list of companies...
Important: To view the remainder of this article, in which
StreetAuthority.com founder Paul Tracy and his staff provide a table of
high-quality ADRs with solid growth potential, as well as a look at
several international mutual funds and ETFs, you'll
need to subscribe to our premium Market Advisor
newsletter. Please visit one of the following links to continue...
|
Please Note: The above article was merely a
small excerpt from an issue of our premium, long-term-oriented investing
newsletter -- the Market Advisor. To receive your copy of
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