Scan across your Global Stock Investor portfolio, and you’ll see it awash in an unfamiliar color: green. Every single one of your positions was up for the week — including double-digit percentage gains in Potash (POT), up 17.29%, as well as in Barrick Gold (ABX) and Millicom (MICC), each rising more than 10%. The iShares MSCI Brazil Index ETF (EWZ), Veolia (VE) and Arcelor Mittal (MT) each also rallied about 8% this week.
Nevertheless, I know that many of you are concerned about the state of the market. Bears will point out that rallies in bear markets tend to be short and sharp. Bulls retort that once markets calm, riding the wave of recovery offers the moments where you can make your biggest profits — as you did from mid-August through early October of 2007. My own view is that it is too early to tell if we are over the worst of it –though I do believe the Rothchild’s maxim that the best time to invest is “when there is blood in the streets.”
But I also want to offer some perspective to balance the incessant stream of bad news from the media. As tough as markets have been, your Global Stock Investor portfolio has fared unusually well. All of our recommendations since the turmoil began in August have shown gains that have far outpaced the U.S. stock market. Potash (POT), up 28.64% since October, and Barrick Gold (ABX), up 26.67% since November, have been particularly strong performers. Only last month’s pick, Veolia (VE), which I recommended in the middle of the latest market rout, is down slightly from your buy price.
As I noted last week, your top defensive plays in the Global Stock Investor portfolio are Barrick Gold (ABX) and the CurrencyShares Japanese Yen Trust (FXY). I’d expect the biggest bounce in Potash (POT), the Brazilian ETF (EWZ) Millicom (MICC) and ICICI Bank (IBN) on any relief rallies. Coca-Cola Hellenic (CCH), Arcelor Mittal (MT), and Veolia (VE) are all rock-solid, global blue chips that I hope you will keep in the Global Stock Investor portfolio for a long time. But as always, it is important to stick to your stops.
Barrick Gold (ABX) had yet another strong week as the gold futures price stayed above the $924 level. Although ABX was up more than 10% this week, it remains substantially below Citigroup’s $62 target price for the stock. Your play on the gold price remains a BUY.
Coca-Cola Hellenic Bottling (CCH) continues to bounce strongly after what was a peculiarly sharp sell off a few weeks ago, and it rose 6.7% this week. Based on the company’s own guidance, the stock is trading at a P/E ratio of less than 15. That makes it a bargain — and a BUY.
iShares MSCI Brazil Index ETF (EWZ) soared 8.14% as markets calmed. Banco Bradesco, Brazil’s second-biggest, non-state bank, reported a 29% rise in fourth-quarter net income on higher lending and one-time gains. As the head of Bradesco’s London office pointed out to me yesterday, Bradesco now has a market cap that is larger than either Morgan Stanley or Merrill Lynch. This Brazilian ETF is a BUY.
CurrencyShares Japanese Yen Trust (FXY) was steady over the week. This defensive position remains a BUY.
ICICI Bank (IBN) rose slightly this week as India’s central bank left interest rates unchanged in its quarterly review and reiterated its economic growth forecast of 8.5% annually. The company also noted that there was no visible or immediate threat to financial stability in India from global developments. Ignore the volatility and BUY ICICI Bank.
Millicom International (MICC) announced its intention to launch services in several new African markets this week, even as a Citigroup report suggested its African assets may be sold to other larger mainstream operators looking to expand in the region. The stock soared over 10% and more mutual funds are buying into the African growth story. BUY Millicom.
ArcelorMittal (MT) climbed 7.77% this week as both Citigroup and Deutsche upgraded the stock to a BUY.
Potash (POT) jumped 17.29% this week as investors realized the agricultural boom wasn’t going anywhere. Potash is a BUY.
Tesco (TSCDY) announced plans to open its first Tesco Express convenience stores in China during the coming weeks in Shanghai. Tesco already has hypermarkets in the country, where it began operating in 2004. Tesco launched operations outside of the United Kingdom more than 10 years ago and they now account for about half of its retail floor space. Given the headwinds in the global retail sector, and the weakening of the pound, this Warren Buffett-favorite is a HOLD.
Veolia Environnement (VE) jumped 8.86% this week and was upgraded to buy by Brean Murray with a target price of $97. That give the stock substantial upside and it remains a BUY.