It was a terrific week for most of our Global Stock Investor portfolio with several of our holdings — including steel giant Arcelor Mittal (MT) and global mining play Anglo American (AAUK) — hitting record highs.
As global markets settle, and the wailing of the Cassandras wane, the opportunity for global stocks can’t be any better. Here’s why.
First, the fundamentals of our global megatrends are firmly intact. Second, the Fed’s injection of liquidity into the global financial system will naturally flow to stronger foreign markets that have been outperforming U.S. markets in 2007 — as they have in previous years. Third, as the Fed’s cut in interest rates weakens the U.S. dollar, as an investor in foreign stocks, every downtick in the dollar is an uptick in your global portfolio. Finally, since Q4 tends to be the strongest quarter for global markets, this is the time of the year to bulk up your global holdings.
The bottom line? After some inevitably rocky weeks in October, I expect our Global Stock Investor portfolio to perform very strongly in the coming few months.
Anglo American (AAUK) hit record highs this past week, breaking the $33 barrier for the first time. The stock is our #1 play on the global commodities supercycle and is a BUY.
ABB Ltd. (ABB) garnered yet another order this week, this time to supply four robotic automation lines and 45 robots to Charleston Stamping and Manufacturing located in West Virginia. The project includes engineering, programming, installation, project management and training, with production start-up scheduled for early 2008. The stock is up a solid 4.94% this past week. ABB is a BUY.
America Movil (AMX) holds the best "Fundamental Rating" among 60 stocks in the red-hot telecom industry group, according to the Investors Business Daily. Earnings rose 56% and 44% during the past two quarters. Annual earnings have climbed steadily, gaining 37% in 2006. Analysts expect a 53% rise this year. The company’s cash flow, margins and return on equity all show healthy levels. AMX is a BUY.
iShares MSCI Swedish Index ETF (EWD) is benefiting from its own "Reagan Revolution." Economic growth remains robust and unemployment is down. Prime Minister Reinfeldt said he will continue cutting income taxes in 2008 in an effort to boost the incentive to work in Sweden. Communicating his vision to the public in a country where the Social Democrats have governed Sweden for 65 of the last 75 years is not easy. But the numbers speak for themselves. The Swedish ETF is up 35.84% over the last 12 months. It remains a BUY.
iShares MSCI Brazil Index ETF (EWZ) is up 5.69% this week, as October’s pick got off to a strong start. The Brazilian currency’s appreciation against the dollar — combined with high weightings in the natural resource sector — will ensure that this will be a top performer for our global portfolio.
Currency Shares Japanese Yen Trust (FXY) continues in its defensive role as a hedge against potential market declines. It is a BUY.
ICICI Bank (IBN) soared over 6% this past week, nearing record highs. It announced that it is likely to offer a benchmark-size offshore bond despite shaky market conditions amid worries over U.S. subprime mortgages. ICICI Bank tapped the offshore bond market in January to raise $2 billion in debt — the largest single-currency high-grade bond from Asia since late 2003. "India’s Citibank" is a BUY.
Millicom International (MICC) was rated a "buy" by analysts at Morgan Joseph with a target price of $104. With Millicom’s Ghana operations back on track and price cuts resulting in a rise in subscriber volumes, the company’s margins are expected to improve going forward. Despite Africa being the company’s riskiest market, Millicom International Cellular has achieved notable 2Q07 revenue and EBITDA growth of 46% and 15%. Millicom is a BUY.
Arcelor Mittal (MT) was up 8.30% this week, hitting record highs. Lakshmi Mittal also announced its intention to spend $35 billion expanding capacity with particular emphasis on India. The money would be invested in the next eight years, with about $20 billion going to two steel plants in India. Mittal officials want to build a plant in Russia, where Arcelor Mittal has no production. Mittal confirmed that current credit problems were having no impact on the majority of its customers and said steel industry conditions were very favorable, with the exception of a weak U.S. market. Lehman Brothers also initiated coverage with an overweight. The stock is a BUY.
Tesco (TSCDY) is already a giant in the U.S. retail sector, even before it opens its doors. Investment bank Credit Suisse estimates Tesco might capture $8.2 billion in U.S. sales by 2011 and take 5.6% of the $68 billion in the U.S. markets it enters. You heard it here first. Get in early and BUY Warren Buffett’s favorite.
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