The Investment U e-Letter: Issue # 667
Wednesday, April 25, 2007
Global Investment Strategies: The 7 Characteristics of Explosive International Stocks… and a Simple Screening Tool
by Alex Williams, Managing Editor, Investment U
According to The Wall Street Journal, three out of every four dollars invested last year moved outside of the United States… and this movement has attracted more money than all U.S. stock funds combined.
In fact, the World Federation of Exchanges reports that nearly 60% of the world's market capitalization and more than 70% of its gross domestic product (GDP) is located outside the United States… As you know, with only 3% GDP growth, the U.S. certainly doesn't have a blistering economy. Not compared to China, which has seen GDP growth in double-digits for years. Not even compared to Russia or India, which have GDP growth rates of 6.6% and 8.5%, respectively. With economic growth like this, the companies that are a part of - or located in - this international expansion of wealth are only bound to get richer themselves… It's no surprise, then, that seven of the top 10 performing stocks in the U.S. last year were international companies. Here's what they all had in common, and a simple screening tool for finding global investment strategies that can triple in value… How to Build Your Fortune Quickly by Thinking Globally… Over the past four years, powerful international companies such as Canon and Huaneng Power have more than doubled the performance of the S&P 500 and the Dow… and they've tripled the return of the "high-flying" Nasdaq. So if you want the greatest chance for huge market-beating returns, the international market is just too vast to ignore. Think of global stocks as a beefed-up extension of the U.S. stocks already in your portfolio. The trick is finding the companies poised to soar fastest and farthest (without taking on unnecessary risk). So how do you find international momentum stocks and profit from these global strategies? I asked Investment U Chairman and Oxford Club Investment Director Alexander Green to show me what he looks for when he recommends companies in his international stock-trading service. If you take a methodical approach and keep your emotions at bay, he says, it's simple… "Look at history and make a thorough, systematic study of every stock that ever gave fantastic, ten-fold or better returns. Pinpoint unique elements they all had in common, and then look for those same elements in the stocks available today." Alex said he screens global stocks for dozens of specific momentum characteristics. But there are seven big global investment characteristics that will dramatically narrow your search… How To Screen Your Global Investment Strategy Using the 7 Major Characteristics… 1. Annual earnings growth of at least 24%. 2. An average percentage increase in earnings for the current quarter of at least 34%. 3. Rising institutional sponsorship. 4. A rich, innovative product pipeline. 5. A minimum of 5 million shares outstanding. 6. An average daily volume that exceeds 75,000 shares. 7. An industry group that is in the top 30% of the market. Of course, this is just an initial screen. There are other factors you'll have to look at as well when evaluating your global investment strategy… You'll need to know, for example, how to apply these qualifications to different industries within different sectors. And you'll have to look at management's track record: - How is the company's Return on Equity (ROE)?
- Is it buying back shares?
- Or is it diluting them with a flurry of option grants?
But overall, this screen will eliminate thousands of companies globally that are not worth investing in… not if you want to double or triple your money. Global stocks are the fastest-moving equities on offer. And individual investors should have significant exposure to the global asset class as an investment strategy; institutions certainly do. The potential returns are too great to pass up. Good Investing, A. Williams P.S. To learn more about Alexander Green's international momentum screen, and his 29 "predictive protocols," here's how it works. Today's Investment U Crib Sheet More than two-thirds of the world's publicly traded companies are outside the U.S. So, investors who take a global investing outlook have three times as many investment possibilities to choose from. And when you blend global companies together with your U.S. holdings, it actually reduces the overall volatility of your investment portfolio strategy, since international shares often move independently of the S&P 500. Global stocks benefit from a declining U.S. dollar, too. While the dollar will always rally from time to time, its long-term direction is clearly down. Massive trade and budget deficits are reducing confidence in the long-term value of the dollar. And interest rates are low relative to other nations - global investors shopping for the highest yields are likely to sell dollars and invest in higher-yielding currencies elsewhere. This makes trading international companies - denominated in stronger currencies - even more profitable. Here's how to get Alexander Green's top picks. Related Articles: Investment U Archives
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