Mr. Market continues to grapple with his mood swings on the back of nervousness about subprime woes. As bad as current sentiment seems, the sell off in the S&P 500 just about matches the selloff in May of 2006. And emerging markets — which sold off 26% during that correction — actually have held up much better this time around to drop only 10.5%. This bodes well for a strong recovery.
Overall, the fundamentals of our Global Stock Investor portfolio remain in place. Commodities giant Anglo American (AAUKD) announced better than expected earnings, and investment bank Deutsche Bank reiterated its BUY recommendation of Tesco (TSCDY).
As I noted last week, I want to keep an eye on both Millicom International (MICC), one of my favorite growth stories, and the Sweden ETF (EWD) as positions we may want to reenter. Both hit our stop price in the midst of the recent market turmoil, but have stabilized this past week.
I reiterate my view that I believe that the market will regain its footing as we head into the fall, and that global bull markets will hit their stride by Q4 of this year.
ABB Ltd. (ABB) was flat on the week, even as it caught the eye of money madman Jim Cramer, who said the Swiss-Swedish giant was an even better pick than GE. I expect ABB to rise to $30 during the next six months. The stock is a BUY.
America Movil (AMX) controlling shareholder Mexican telecom billionaire Carlos Slim was featured in Fortune magazine this week as the world’s wealthiest man. Fortune said Slim has increased his net worth by $12 billion so far this year based on the market value of his companies listed on stock exchanges, and a total net worth of $59 billion based on the value of his public holdings at the end of July. With AMX rebounding from its lows, it is a perfect opportunity to BUY the stock.
Anglo American (AAUKD) announced that its first-half profits rose 15% thanks to strong metal prices. Net income for the six months through June 30 rose to $3.4 billion from $2.9 billion in the same period a year earlier. Revenue climbed 5.4% to $19.8 billion. Production volumes were up for copper, coal, iron ore, industrial minerals and diamonds.
Anglo American also announced a $4 billion share buyback program, which should boost its stock. The company also plans to press ahead with an auction to sell its Tarmac Ltd. building supplies division, which is expected to fetch more than $5 billion. The stock remains a STRONG-BUY.
Home Inns & Hotels Management (HMIN) is now dangerously close to our sell stop. The stock may move after its next earnings call on Tuesday, Aug 14. It remains a HOLD.
India’s ICICI Bank (IBN) has played a key role in foreign institutional investors by pumping $8.4 billion into the markets from January up to July 13, compared to an outflow of $2.0 billion in the corresponding period a year earlier. Multibillion-dollar public offerings in ICICI Bank helped India’s foreign exchange reserves rise by $22.9 billion to $222.0 billion as of July 20. The Indian currency, the rupee, has risen nearly 10% since January to 40.53 per dollar. The recent sell off in the stock is a perfect opportunity to add to your positions. The stock is a BUY.
Global steel giant Arcelor Mittal (MT) completed the sale of a Maryland steel mill, paving the way to complete its acquisition of Arcelor and become the world’s top steelmaker. With the company announcing better than expected earnings last week, the stock is a BUY at these levels.
Tesco (TSCDY) stock has recovered strongly from its lows last week as Deutsche Bank raised its recommendation on the stock to "buy’," citing the strength of Tesco’s emerging U.S. business. It noted that it believes that a recent sell off in Tesco’s shares "fundamentally misunderstands" the U.K. food retail industry and Tesco’s position within it. We agree. This offers investors a good entry point to a quality, long-term investment, and Warren Buffett’s pick Tesco remains a BUY.
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