A Teutonic Play on Global Recovery

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Indeed, Germany’s highly specialized machinery exports are synonymous with quality. China may now export more, but chances are, they are using German machinery to manufacture everything from low-end trinkets to high-end computer equipment.

This week’s Global Bull Market Alert pick, Aixtron AG Ads (AIXG), is a combined play on this strong tradition of German manufacturing, the ever-strengthening recovery in Asia, as well as the highly cyclical technology sector.

Aixtron specializes in manufacturing metalorganic chemical vapor disposition (MOCVD) equipment for clients in the semi-conductor industry. Suffice it to say that this is precisely the kind of high-end manufacturing that Germany is known for.

And with global economic recovery now in full swing, as Goldman Sachs Chief Economist Jim O’Neill pointed out to me in London during December, German exports are now higher than they were at their peak before the onset of the “Great Recession.” And with 80% of the company’s revenues coming from Asia, AIXG shares are poised to continue their strong recovery in the coming year. Finally, like all German (and euro-denominated) exporters, the recent sharp drop in the euro makes AIXG’s exports that much more attractive to its customers.

Boosted by strong exports to Asia, AIXG’s recent numbers are nothing short of spectacular. Earnings per share grew at an eye-popping 533% last quarter, on the back of a 47% jump in sales. Earnings are expected to grow 94% this year. It is at turning points like this that fortunes are made. No wonder investment bank UBS just initiated coverage on the stock with a “Buy” rating.

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So buy Aixtron AGS Ads (AIXG) at market today, and place your stop at $32.00. If you want to play the options, I recommend the September $40 calls (QWA100918C00040000).

Portfolio Update

Cognizant Technology Solutions Corp. (CTSH) fell back slightly this past week. With the stock consolidating recently, this is a good time to add to your position before the stock resumes its upward trend. CTSH remains a BUY.

UltraShort Euro ProShares (EUO) has pulled back in the past week. Although the long-term case against the euro remains intact, with market sentiment improving across the board, your bet against the European currency is now a HOLD.

Millicom International (MICC) got off to a roaring start, shooting up to $92.78 on Thursday, before pulling back later in the day. Technically, the stock is quite strong, and poised to resume the breakout to the upside. Traditionally, a terrific bull market stock, MICC remains a BUY.

Mechel (MTL) continues to be the star of the Global Bull Market Alert portfolio, soaring 11.72% over the past five trading days. Up 27.89% since March 1, Mechel just might be the top-performing major global stock over the past two months. MTL remains a BUY. Tighten your stop to $26.75.

National Bank of Greece (NBG) remained frustratingly flat. It may take a few weeks for the market to regain confidence in Greece, but when it does, this stock will soar. I continue to believe that this pick could be a big winner. NBG remains a BUY.

China North East Petroleum Holdings Ltd (NEP) pulled an unexpected fast one on investors by delaying the announcement of its much-awaited earnings until April 15. The company did announce that proved reserves for 2009 increased 39% to 6.13 million barrels from 4.40 million barrels for year-end 2008, thanks to the increase of additional wells drilled by the company in 2009. With oil now back above $86 per barrel, NEP is a speculative BUY.

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P.S. Don’t miss out on the 22nd annual MoneyShow Las Vegas, May 10-13 2010 at Caesars Palace. This event will be your one-stop resource for the comprehensive education, efficient research, and valuable advice you need to make smart investment decisions in 2010 and beyond. Join me there and hear leading experts reveal where they see growth opportunities in stocks, bonds, ETFs, commodities, and options. Also learn about which overseas markets may outperform in the near term. Visit The MoneyShow Las Vegas to register FREE online, or call 800/970-4355 and mention priority code 017443 today!

P.P.S. If you want to keep up with my latest insights on developments in fast-paced global markets, you can now follow me on Twitter on @NickVardy.

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