10 Experts Go Global For Growth

Banco Santander is the world’s ninth largest bank. Here, Ana Botin, chairman of Banco Santander SA, speaks at a fourth-quarter earnings news conference in Boadilla del Monte, Spain, Jan. 31, 2018. Santander benefited from a surge in earnings in Brazil during a quarter that saw profit hit by restructuring costs, mainly to absorb Banco Popular Espanol SA. (Photo by Angel Navarrete/Bloomberg)

Talk of tariffs and trade wars has led to increased volatility in foreign markets. Nevertheless, numerous investing experts see opportunities for those willing to look beyond near-term uncertainty. Ten MoneyShow.com contributors highlight some favorites from Mexico, China, Japan, Israel, Spain, Germany, Ireland, Denmark, the Netherlands and the U.K.


Chris Preston, Wall Street’s Best Daily

Banco Santander Mexico is the Mexican division of Banco Santander, a Spanish bank and the world’s ninth largest by revenue. The Mexican bank division has a market cap of $11 billion and is on pace to collect $4.3 billion in sales this year. That would be a 19% top-line improvement from last year, to go along with a 10.6% expected jump in earnings per share.

Banco Santander Mexico shares have reacted well to the growth, up nearly 11% year to date with a big gap up in July after an earnings beat. The stock has been trading above its 50-day and 200-day moving averages for more than a month.

A Mexican airport operator based in San Pedro, Grupo Aeroportuario-OMA is up more than 26% this year, with virtually all of the gains coming in the last two months. It is one of three public Mexican airport operators that trades on U.S. exchanges, though it’s been by far the best performing this year.

That likely has everything to do with the fact that Grupo Aeroportuario-OMA is the only one of the three that had double-digit sales and earnings growth in its most recent quarter. For the year, sales are expected to be flat, though analysts anticipate 19.6% EPS growth. With a modest price-to-earnings ratio of 20, it’s a stock that checks a lot of boxes.

Both of these Mexican ADRs have solid business trends and their stock charts look pretty good in the last two months. If you had to choose one to buy, Grupo Aeroportuario-OMA looks like a better bet, with a longer uptrend and better year-to-date performance.

Roger Conrad, Conrad’s Utility Investor

Telefonica SA has been hit this year by a weakened euro relative to the U.S. dollar and concern about the health of emerging markets. The company garners roughly half its revenue from South America, including Brazil.

Nonetheless, Telefonica’s numbers and guidance are still following the improving trend of the past several years. That’s reflected in EBITDA margin now at its highest level in four years (32.1 percent), and rising free cash flow of $5.6 billion the last 12 months.

Core to Telefonica’s long-term strategy is focusing on markets where it operates the best-in-class network, ensuring it competes for high margin customers on quality rather than low margin users on price. That approach means higher capital spending over the next few years, starting with 5G spectrum auctions in Germany. Ability to outspend rivals in key markets, however, ensures growing market share long-term.

There are clear signs that management’s long-term strategy is bearing fruit. And insiders are betting with their own money, increasing their holdings by 47 percent over the last six months. Those are good reasons to stick with this deep value stock, which could become a big winner during the second half of the year.

Spotify shares got a boost after its July 26 earnings report. Here, Specialist Peter Giacchi, center, stands on the floor of the New York Stock Exchange, April 3, 2018, when Spotify Inc. made its stock market debut. (Photo by Richard Drew/AP)

Mike Cintolo, Cabot Growth Stock Investor

Based on Luxembourg, with headquarters in Stockholm, Sweden, Spotify offers online music services to about 180 million monthly active users who can get access to its 35 million music tracks by either paying for ad-free access or via free accounts that include ads. The company isn’t profitable, yet, but losses are moderating, and its large number of users suggests the stock is bristling with potential.

The company just signed a deal with Samsung, making Spotify the official music provider for all Samsung products (smartphones, TVs, tablets, etc.), meaning it will be integrated into the set-up process on all new devices and merged into Samsung’s voice assistant program on smart-home apps.

It’s a big plus in the firm’s competition with
Music. Meanwhile, the stock has been all over the place, but got a nice boost to near $200 after its July 26 quarterly report and — after a post-earnings dip to $175 — back into the $190s after the Samsung news. We like it.


Jim Kelleher, Argus Research

We are initiating coverage of London-based
, a leading alcoholic beverage company, with a Buy rating; we have a positive view of its strong brands, leading position in many spirits categories, and relatively low-cost structure.

Over the last several years, the company has generated above-peer-average revenue growth by working closely with bars, restaurants and retailers on both pricing and promotions. It is also gaining market share as more consumers trade up from beer and wine to spirits (whiskey, gin, vodka, etc.), as well as from less expensive spirits to premium brands.

Despite currency headwinds in the first half of fiscal 2018, net sales benefited from 7% organic growth in both Latin America and the Asia-Pacific region, with revenue in China up 32%. We expect the growth of the middle class in China, as well as a recovery in India, to boost sales going forward.

The shares trade at 19.9-times our fiscal 2019 EPS estimate, below the peer average of 24. However, we believe that they merit a higher valuation given the firm’s solid returns on invested capital and prospects for high single-digit earnings growth over the next five years. Our target price of $168 implies a potential return, including the dividend, of 17% from current levels.

Elliott Gue, Energy and Income Advisor

One stock we believe represents a compelling play on an offshore oil drilling recovery at an attractive valuation is London-based TechnipFMC. When producers drill new deepwater wells, they typically install wellheads directly on the seafloor that are operated remotely.

In addition, subsea wells are often “tied back” — connected by subsea pipelines — to existing floating offshore production platforms. Collectively this business is often referred to using the acronym SURF, which stands for subsea umbilicals, risers and flowlines.

Subsea tie-back work is one of the first areas to see a turn in business conditions in the early stages of a commodity cycle because it’s far cheaper to tie back a few additional subsea wells to an existing platform than it is to build out a brand new deepwater project.
’s business has been showing clear signs of recovery. The pace of incoming orders has been running higher than the company’s ability to complete work for two straight quarters.

In addition, the onshore/offshore division also enjoys several major growth avenues. We also see significant growth to come as demand for LNG increases in key emerging markets like China and India. Meanwhile, the stock trades at a more reasonable 23.7 times 2018 earnings estimates and 21 times estimates for 2019. We’re adding TechnipFMC to our Buy list.

Bill Mathews, The Cheap Investor

SuperCom is an Israeli company that provides digital identity, connectivity, and cybersecurity products to governments, and private and public organizations worldwide. MAGNA is a platform for ID registries, e-passports, biometric visas, automated fingerprint identification systems, digitized driver’s licenses, and electronic voter registration and election management.

Its PureRF suite is a solution based on radio-frequency identification (RFID) tag technology to identify, locate, track, monitor, count and protect people and objects. It also provides house arrest monitoring systems, GPS offender tracking systems, inmate monitoring systems and domestic violence victim protection.

A small cap company, SuperCom has a fair balance sheet with $1 million ($0.07 per share) in cash, a book value of $2.19 and a small debt of $3 million. Insiders own about 27% of the 15 million shares outstanding, and 25 institutions own 25% of the float (shares in public hands).

In April 2018, SuperCom signed a new contract worth approximately $4 million in value with an existing national government customer in Africa and was awarded a $7 million project with the government of Sweden. In June 2018, it also announced the deployment of an innovative protection from domestic violence project with the Swedish national police.

Security is a hot sector, and SuperCom is very undervalued compared to other stocks in that market. We think it could move at least 50% over the next couple of years. If Wall Street discovers the company, the stock could move substantially higher.

Jack Adamo, Insiders Plus

There are three factors that make BYD Company Ltd. speculative. First, it is headquartered in China. Second, it gets substantial subsidies from the government. They were recently lowered, and we cannot be sure how that schedule will proceed in coming years. Third, due to a disappointing sales report, the shares are down 40% from last year’s high.

Why on earth would I recommend this stock? In September of 2008, Warren Buffett bought 225 million shares of BYD Company for an 8.25% stake in the company. Even after the recent plunge, the shares are up more than 300% since Buffett’s buy.

The company’s main business is rechargeable batteries on every scale from phones to buses and mass storage for solar and other intermittent sources of electricity. Because of horrific pollution problems due to rapid industrialization, China is the fastest growing user of battery-powered vehicles in the world.

China is also the fastest growing user of solar power. That requires storage. BYD Company is the industry leader and has been making strategic alliances to put its products in the hands of the largest, most important buyers. It is by far the best bet in the sector.

The growth potential, especially in the long term, is great. I think it’s a reasonable investment here for risk-tolerant speculators, with a good risk-to-reward ratio after its recent pullback. Buy the stock only with a limit order, as the shares are thinly traded.

Paul Goodwin, Cabot Emerging Markets Investor

RYB Education, with a market cap of $635 million, is a player in the crowded field of for-profit education companies in China. But it isn’t trying to take on giants like TAL Education and New Oriental Education in a battle for tutoring and test-preparation services.

Rather, RYB Education is essentially a kindergarten company, providing age-appropriate services for kids from infancy through six years old. It operates nearly 1,000 franchised play-and-learn centers and 212 kindergartens in 210 Chinese cities and towns.

Ultimately, the attraction of RYB Education is in the size of opportunity for growth via both franchising and organic growth. The total number of the company’s kindergartens and play-and-learn centers has grown from 627 in 2014 to over 1,200 today.

We think it’s time to start gradually increasing our exposure to emerging markets. Accordingly, we will add a half position in RYB Education to our portfolio. Just be aware that the stock is thinly traded, so expect choppiness on a day-to-day basis.


John Buckingham, The Prudent Speculator

Despite a steady, and perhaps unsurprising, decline in fixed-line voice service, Japanese telecom provider Nippon Telegraph & Telephone has been able to grow revenue via mobile phone line sales, expansion of the data communications business and international communications expansion.

While fixed line in Japan isn’t a growth business and wireless revenue is sluggish, we expect Nippon Telegraph to continue to focus on global cloud infrastructure as a service product. Further, we like management’s continued focus on cost controls and push for the Nippon group companies to better collaborate.

Additionally, we are constructive on the firm’s overall large customer reach, wide array of services and solid cash flow generation. The stock offers a 2.5% net dividend yield, and trades for less than 12 times estimated earnings and less than one-times sales. We think that the stock, which has recovered from a February plunge, still has plenty of room to run toward our current $63 target price.

Chuck Carlson, DRIP Investor

It is extremely easy for any U.S. investor to buy individual foreign stocks via American Depositary Receipts. ADRs are securities that trade on U.S. exchanges and represent ownership in shares of foreign companies. Investors buy and sell ADRs just as they buy and sell U.S. stocks.

Despite the higher risks, owning quality foreign stocks makes good investment sense. Over the long term, growth in certain foreign economies should outstrip that of the U.S, and owning that growth should help your portfolio.

Another reason to look abroad is that a number of quality foreign stocks currently offer very competitive dividends and yields. Among the stocks listed here, my favorites include
, Koninklijke
Novo Nordisk
Ryanair Holdings
, and

Baidu is viewed as the “Google of China.” The company’s sprawling internet operations should help drive growth for the next several years. Another tech play is Switzerland-based STMicroelectronics, which makes semiconductors and sensors used in a variety of industries, including the automotive and aerospace fields.

For exposure to healthcare, Germany-based Fresenius Medical is a leading provider of dialysis services. Novo Nordisk, based in Denmark, is a leading provider of diabetes treatments. And Netherlands-based Philips is a leading provider of health-care technology products and services.

Ireland-based Ryanair is a low-cost provider of commercial airline services throughout Europe. Though labor strife will impact these shares periodically, I view the stock as an excellent way to play increased travel and mobility in Europe. I own Ryanair and Novo Nordisk and would feel comfortable buying them as well as the other four stocks at current prices.


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