Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • AI Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    • Postcards
Login Archives Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • AI Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    • Postcards
    ×
  • Subscribe
Enter stock ticker or keyword
×
Join 100,000+ Like-Minded Investors Today
Twitter
Tags: best stocks to buy, Good Stocks to Buy, Stocks to Buy, stocks to buy in 2012, Stocks to Buy Now, Stocks to Buy Right Now, stocks to buy today, stocks to watch, The Biggest News from the Stock Market Today, top stocks

How to Choose the Best Global Value Stocks to Buy

By G.S. Early, Money Morning • December 7, 2012

Start the conversation

Leave a Reply Click here to cancel reply.

You must be logged in to post a comment.

It's no surprise investors are having a hard time finding strong stocks to buy.

After all, nobody's getting too excited about the recent rally. Europe is about to implode, Japan's in a coma, China's suffering a slowdown and the United States faces the possible fiscal cliff.

That's why I was talking to fund manager George Fraise of SGA Global Growth (MUTF: SGAGX) the other day, to find out where the growth - and potential for profit - is in the global market.

Fraise said he's very bullish on global value stocks, and outlined his strategy for picking the right ones.

Factors for Picking Global Value Stocks to Buy Now

Fraise's recipe for finding the right value stocks to buy comes down to five characteristics:

  • A high degree of pricing power. He's looking for companies that have a lot of control over the prices they set.
  • A high degree of repeat revenue. He wants companies whose products and services are used frequently and need to be replaced regularly.
  • Global opportunity. This brings long periods of growth that in turn give investors the confidence to stay with investments for long periods. Fraise stays with companies he invests in for an average of three to five years.
  • Financial strength. He looks for companies that generate a lot of free cash flow, because they can then return that cash to shareholders in the form of higher dividends or share repurchases.
  • Good management teams. That means finding management teams that have demonstrated they're good stewards of shareholder capital.

I asked Fraise if he had any criteria for finding stocks to buy that are outside the slow-growth, mature markets of the United States and Europe - say, for example, companies for which 50% of revenues are generated outside the United States or Europe.

Fraise said picking companies based on these five characteristics might lead to a list of 60 to 70 companies, of which SGA would hold 25 to 30 at any given time. Those companies generate more than 50% of their revenue outside the United States, even the U.S.-based companies.

And the markets where many of these companies are finding growth are - you guessed it - in Asia, particularly China, whose gross domestic product, even with a slowdown, is still growing nearly 8% annually.

Right now, China's economic drivers are transitioning from export growth - i.e., selling to outside markets ­- to internal growth focusing on the country's growing middle class.

Two companies that embody Fraise's philosophy are U.S.-based YUM! Brands Inc. (NYSE: YUM), the parent company of KFC, Taco Bell and Pizza Hut, and Chinese medical device maker Shandong Weigao Group Medical Polymer Co.

YUM has 4,500 restaurants in China now. Rival McDonald's Corp. (NYSE: MCD) has only 1,500. And Fraise is confident YUM can easily expand its franchise units to a total ranging from 10,000 to 15,000 in China.

Shandong is a government-backed favorite to serve the growing need for medical services and devices as the nation's population climbs the economic ladder and expects more access to healthcare services.

Don't Overlook These Mid-Cap Stocks to Buy

Value is also evident in U.S. mid-cap stocks in two converging sectors - tech and healthcare.

Mid-caps have the advantage of being small enough to grow faster than large-cap stocks, yet big enough that they're more stable than small-caps. In this kind of market, mid-caps have been overlooked by large-cap investors looking for safety and by small-cap investors looking for adventure.

That's where the value comes in. And it's also where the smart money is starting to look for stocks to buy.

In particular, U.S. President Barack Obama's mandate to modernize healthcare records has brought a boon to electronic records companies. But just as the rally was getting going, "Obamacare" was before the Supreme Court, members of Congress were predicting its demise and healthcare stocks got locked in a state of suspended animation.

And once the court ruled, we were in the midst of a presidential election and Obamacare was once again a straw man.

One company in this sector that has fallen victim to these gyrations and a few internal missteps is Quality Systems Inc. (Nasdaq: QSII). It didn't stop growing; its growth simply fell below expectations in the last quarter, a fairly sour quarter even for many blue chips.

But QSII has a good long-term outlook and has been taken down beyond justification.

When you install a software system, you have to pay maintenance fees on it, so it's difficult to switch providers once you have a large electronic health-records system in your hospital.

The maintenance fees go on, almost forever, which makes for great consistent cash flow. It's a balancing act between landing contracts in a tough environment and having the long-term maintenance contracts to build that bottom line. QSII is well-positioned and well-priced in this cycle, making it among stocks to buy now.

Related Articles and News:

  • Money Morning:
    The Best Stocks to Buy According to Top Hedge Funds
  • Money Morning:
    Three Biotech Stocks to Buy Now
  • Money Morning:
    Stocks to Buy Now: Two Intoxicating Recession-Proof Plays

[epom]

Here Are 10 “One-Click” Ways to Earn 10% or Better on Your Money Every Quarter

Appreciation is great, but it’s possible to get even more out of the shares you own. A lot more: you can easily beat inflation and collect regular income to spare. There are no complicated trades to put on, no high-level options clearances necessary. In fact, you can do this with a couple of mouse clicks – passive income redefined. Click here for the report…

Claim My Free Report

Subscribe
Login
Notify of
guest

guest

0 Comments
Inline Feedbacks
View all comments


Latest News

September 15, 2023 • By Shah Gilani

We're Headed for a Second Banking Crisis - Here's What to Do

September 14, 2023 • By Tom Gentile

Tulips Are the Secret to Trading the Next 300% Rally in AI

September 14, 2023 • By Chris Johnson

Tulips Are Telling Me How To Trade the Next 300% rally in AI
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Penny Hawk Midday Momentum
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Quantum Data Profits Flashpoint Trader Darknet Alpha Accelerators Brutus Alerts Resource Traders Alliance L.A.U.N.C.H. Investor Rob Roy Trader Long-Term Equity Profits

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information

wpDiscuz