I am convinced that 2014 will go down in history as the year the European economy rose from the ashes. #-ad_banner-#​ Many nations in the European Union are showing signs of recovery after a prolonged economic slowdown. These slowly improving economies create profitable opportunities for savvy investors. The question is: What’s the best way to position your portfolio to capture profits from the nascent recovery? The answer lies in the United States’ financial crisis and recovery. While it isn’t likely that the European recovery will be as sharp and rapid as that of the U.S., powerful investing guidance can… Read More

I am convinced that 2014 will go down in history as the year the European economy rose from the ashes. #-ad_banner-#​ Many nations in the European Union are showing signs of recovery after a prolonged economic slowdown. These slowly improving economies create profitable opportunities for savvy investors. The question is: What’s the best way to position your portfolio to capture profits from the nascent recovery? The answer lies in the United States’ financial crisis and recovery. While it isn’t likely that the European recovery will be as sharp and rapid as that of the U.S., powerful investing guidance can be gleaned by studying what happened in the U.S. stock market during its dark days and recovery. First, let’s take a brief look at the European economic picture. In this year’s second quarter, the 17 countries comprised in the eurozone had collective economic growth of 0.3%. That doesn’t sound like much — until you look at it in context.  This is the first overall positive signal since 2011, and its importance is magnified by the fact that the Markit manufacturing purchasing managers’ index has remained above the critical 50 level through October. (I discussed the significance of PMI as a… Read More

For many folks in Latin America, 2011 seems like an awfully long time ago. Just two years ago, regional economies were booming, and growth in middle-class consumption was off the charts. That proved to be a fortuitous time for Arcos Dorados (NYSE: ARCO) to go public.#-ad_banner-#​ At the time, the company operated more than 1,700 McDonald’s (NYSE: MCD) franchises in 19 countries across Latin America and the Caribbean, and in many respects was firing on all cylinders. Sales, earnings and net income were all rising at an impressive clip, and analysts expected more of the same in the… Read More

For many folks in Latin America, 2011 seems like an awfully long time ago. Just two years ago, regional economies were booming, and growth in middle-class consumption was off the charts. That proved to be a fortuitous time for Arcos Dorados (NYSE: ARCO) to go public.#-ad_banner-#​ At the time, the company operated more than 1,700 McDonald’s (NYSE: MCD) franchises in 19 countries across Latin America and the Caribbean, and in many respects was firing on all cylinders. Sales, earnings and net income were all rising at an impressive clip, and analysts expected more of the same in the years to come. And then the wheels fell off. Many Latin American economies eventually hit an air pocket, most notably in Brazil, which accounts for more than half of this company’s sales and EBITDA (earnings before interest, taxes, depreciation and amortization). And as these economies have slowed, analysts have repeatedly lowered their profit forecasts. Shares, which surged after the April 2011 IPO, now remain in a deep funk. How badly has the economic slump affected financial results? Let’s examine a pair of 2013 forecasts by Brazilian investment firm Itau: one made in June 2011, the other issued Aug. Read More

One of my favorite scenes from the classic movie “Wall Street” is the boardroom scene when Bud Fox realizes that Gordon Gekko is going to dismantle Blue Star Airlines piece by piece. A portly, bespectacled investment banker glibly says: “No sweat. We sell the gates and pawn the planes off on the Mexicans. Do we have a deal or what?”  Sure, there are more action-packed parts of the flick. But to me, that particular scene helps explain what investing is all about: buying an asset and watching as the value is realized or unlocked. I’ve… Read More

One of my favorite scenes from the classic movie “Wall Street” is the boardroom scene when Bud Fox realizes that Gordon Gekko is going to dismantle Blue Star Airlines piece by piece. A portly, bespectacled investment banker glibly says: “No sweat. We sell the gates and pawn the planes off on the Mexicans. Do we have a deal or what?”  Sure, there are more action-packed parts of the flick. But to me, that particular scene helps explain what investing is all about: buying an asset and watching as the value is realized or unlocked. I’ve found a stock that fits that scenario that, coincidentally, is also in the airplane business: Fly Leasing (NYSE: FLY). Based in Dublin, Fly Leasing is in the commercial aircraft leasing business. Airlines are increasingly turning to operating leases to supply their fleets. In fact, over one third of the world’s airline fleet is leased.  Basically, the companies are renting the planes to avoid having a gigantic, swiftly depreciating asset sitting on its balance sheet. Firms like Fly assume the risk. Why? As that portly investment banker implied, you can always find someone who needs a plane. Read More

Sometimes, great investments are found in the most unusual places.  Regions that most investors avoid — due to fear, misinformation or a general lack of knowledge — can harbor overlooked stock gems.   One such location is Russia. This former Soviet state is home to an extremely successful company that investors everywhere should know about. #-ad_banner-# There is no question that the transition to a capitalistic society has been difficult for Russia. However, there are signs of improvement. According to research by Deloitte, private consumption expanded by over 6% in each of this year’s first two quarters. A strong… Read More

Sometimes, great investments are found in the most unusual places.  Regions that most investors avoid — due to fear, misinformation or a general lack of knowledge — can harbor overlooked stock gems.   One such location is Russia. This former Soviet state is home to an extremely successful company that investors everywhere should know about. #-ad_banner-# There is no question that the transition to a capitalistic society has been difficult for Russia. However, there are signs of improvement. According to research by Deloitte, private consumption expanded by over 6% in each of this year’s first two quarters. A strong summer harvest has eased food prices, providing consumers greater discretionary income, and inflation has been slipping lower this year. In addition, retail sales climbed more than 4% in July from the same month last year. Most interesting is the fact that the Bank of Russia is expected to continue a policy of interest rate cuts through 2014. Lower borrowing costs are one key factor in economic growth, and the Bank of Russia is on the right track in this regard.  Not only is the central bank staying with the policy of lowering interest rates, it’s also clamping down on unfettered… Read More

As we head into the final weeks of 2013, European central bankers are on pins and needles. They’re hoping the fourth-quarter economic data reveal signs that the Continent is truly on the mend.#-ad_banner-# An early November report from the European Commission sees signs of that upturn coming. The report’s main takeaway: “The signs of hope that we saw last spring have started to turn into tangible positive outcomes. After six consecutive quarters of stagnation or contraction, the EU economy has posted positive growth in the second quarter of 2013. The recovery is expected to continue, and… Read More

As we head into the final weeks of 2013, European central bankers are on pins and needles. They’re hoping the fourth-quarter economic data reveal signs that the Continent is truly on the mend.#-ad_banner-# An early November report from the European Commission sees signs of that upturn coming. The report’s main takeaway: “The signs of hope that we saw last spring have started to turn into tangible positive outcomes. After six consecutive quarters of stagnation or contraction, the EU economy has posted positive growth in the second quarter of 2013. The recovery is expected to continue, and to gather some speed next year.” Indeed, while the European economic region likely contracted a bit in 2013, these economists predict GDP will likely grow 1.5% in 2014, and perhaps 2% in 2015. And where will that strength come from? “Domestic demand is expected to take over as the main engine of growth,” they predict. If they’re right, then it’s useful to make sure you have European exposure in your portfolio. Heading into Labor Day, my colleague David Goodboy profiled the Vanguard FTSE Europe ETF (NYSE: VGK). A quick look at a five-year chart of this ETF against the S&P… Read More

In early 1997, the world was in awe of the record growth of Southeast Asia’s “tiger economies” as markets opened and foreign investors rushed to fund new ventures. However, by January 1998, stock markets across the region had lost as much as 70% of their value, and the crisis had spread to the rest of the emerging world. Even behemoth Russia wasn’t immune, defaulting on its debt that same year. Such massive and rapid growth relied on a constant influx of dollars to fund deficits and pay higher amounts of foreign debt. At the first sign of economic cracks, foreign… Read More

In early 1997, the world was in awe of the record growth of Southeast Asia’s “tiger economies” as markets opened and foreign investors rushed to fund new ventures. However, by January 1998, stock markets across the region had lost as much as 70% of their value, and the crisis had spread to the rest of the emerging world. Even behemoth Russia wasn’t immune, defaulting on its debt that same year. Such massive and rapid growth relied on a constant influx of dollars to fund deficits and pay higher amounts of foreign debt. At the first sign of economic cracks, foreign investors withdrew their accounts, leading to a plunge in currencies and leaving the region’s governments unable to pay debt denominated in now more expensive dollars. Now it seems another emerging market has not learned much from that episode — and may be doomed to repeat it soon. A Financial Crisis With A Latin Flair Latin America escaped the most recent crisis in 2008, with the region managing 4.5% growth in 2010. The iShares Latin America 40 (NYSE: ILF) jumped 120% in the two years after the March 2009 lows, outperforming the S&P 500 Index by 40%. Housing prices have… Read More

There’s a long-standing argument between finance academics and investors. #-ad_banner-# Most academics assert that the market is efficient and there is very little edge available for traders and short-term investors. When challenged with long-term success stories of traders who consistently beat the market, the academics say those individuals are presently the statistical outliers. In other words, they are simply lucky — just like the folks who win the lottery several times or consistently succeed at any game of “chance.” I am fortunate to be married to a woman who holds a doctorate in finance and is a great resource when… Read More

There’s a long-standing argument between finance academics and investors. #-ad_banner-# Most academics assert that the market is efficient and there is very little edge available for traders and short-term investors. When challenged with long-term success stories of traders who consistently beat the market, the academics say those individuals are presently the statistical outliers. In other words, they are simply lucky — just like the folks who win the lottery several times or consistently succeed at any game of “chance.” I am fortunate to be married to a woman who holds a doctorate in finance and is a great resource when it comes to programming trading strategies and understanding market microstructure. However, we are often at odds when it comes to the viability of active trading. I love to prove her ideas wrong by showing her papers by respected academics who take my side. I am certain she gets the same vicarious thrill when my market ideas are proven inaccurate. The one thing my wife and I agree upon is the wisdom of long-term dividend investing. (In that respect, we’re also in agreement with regular readers of Amy Calistri’s Daily Paycheck advisory, which emphasizes the portfolio-growing power of dividends.) My wife… Read More

One of the most underappreciated areas of health care is also instrumental for human development. Baby formula isn’t exactly a market that many investors would consider a growth industry — but that could be about to change. The United Nations estimates that the world’s population could hit 11 billion by 2100, up from a current 7 billion. That’s many more mouths to feed. One of the biggest markets for baby formula is China: With 1.3 billion people and a birth rate of 1.2%, that’s 15.6 million babies a year. The baby formula market is huge and growing — so what’s… Read More

One of the most underappreciated areas of health care is also instrumental for human development. Baby formula isn’t exactly a market that many investors would consider a growth industry — but that could be about to change. The United Nations estimates that the world’s population could hit 11 billion by 2100, up from a current 7 billion. That’s many more mouths to feed. One of the biggest markets for baby formula is China: With 1.3 billion people and a birth rate of 1.2%, that’s 15.6 million babies a year. The baby formula market is huge and growing — so what’s the best way to invest in it? Mead Johnson Nutrition (NYSE: MJN) is the only pure-play pediatric nutrition company, and one that has a strong presence in China, to boot. Mead covers all stages of pediatric development, from newborns to 5-year-olds. It generates over 75% of its revenue from outside the U.S., most notably from China, which accounts for over 25% of its revenue. Infant formula makes up around 60% of revenues, with children’s nutrition accounting for the other 40%. Mead’s major products are sold under the Enfa brand. Mead was spun off from Bristol-Myers Squibb (NYSE: BMY) in 2009. Read More

With a 23% spike since Labor Day, the Spanish stock market may be the hottest in the world right now.#-ad_banner-# Considering that Spain has one of the world’s highest unemployment rates (exceeding 25%), and that its economy that grew a scant 0.1% this summer, the euphoria is simply unexpected. But investors are often well-served by focusing on distressed assets that may have hit bottom. In fact, three of the world’s richest men (Warren Buffett, Bill Gates and Mexico’s Carlos Slim) are taking the plunge. They’re not buying Spanish companies because business conditions are good. They’re doing it because Spanish assets… Read More

With a 23% spike since Labor Day, the Spanish stock market may be the hottest in the world right now.#-ad_banner-# Considering that Spain has one of the world’s highest unemployment rates (exceeding 25%), and that its economy that grew a scant 0.1% this summer, the euphoria is simply unexpected. But investors are often well-served by focusing on distressed assets that may have hit bottom. In fact, three of the world’s richest men (Warren Buffett, Bill Gates and Mexico’s Carlos Slim) are taking the plunge. They’re not buying Spanish companies because business conditions are good. They’re doing it because Spanish assets are quite cheap in relation to both the money that has been invested in them already, and in comparison to other European assets. News of an emerging Spanish revival among global investors was triggered by a $150 million purchase by Gates’ investment firm of Fomento de Construcciones y Contratas (FCC), which is not traded on U.S. markets. The company has cleaned up its balance sheet and diversified its country exposure, but more than half of sales are tied to Spain, mostly in cement-making. Yet Spain, like China, has a massive glut of unsold homes that were built at the height… Read More

I believe in China.  I have no doubt that this nation of 1.35 billion consumers will continue to lead the global growth boom over the next several decades. In addition, I want to share with you an underserved Chinese market that will likely explode over the next several years. There are several companies poised to capture this consumer wave that has swept over the Western world but is in its infancy in China.#-ad_banner-# Although China might not see a double-digit economic growth rate again, its current growth in the mid-single digits appears sustainable with continued government support. In… Read More

I believe in China.  I have no doubt that this nation of 1.35 billion consumers will continue to lead the global growth boom over the next several decades. In addition, I want to share with you an underserved Chinese market that will likely explode over the next several years. There are several companies poised to capture this consumer wave that has swept over the Western world but is in its infancy in China.#-ad_banner-# Although China might not see a double-digit economic growth rate again, its current growth in the mid-single digits appears sustainable with continued government support. In the most recent quarter, growth sank a two-decade low of 7.5% — but compared with any other economy, this remains a very impressive rate. China’s leading economic figure, Premier Li Keqiang, has vowed to keep growth at 7.5% or higher, though it’s important to note that other Chinese officials have forecast lower growth over the next several years. The truth is, the actual growth rate doesn’t really matter much for investors. In fact, the International Monetary Fund (IMF) recently indicated that slowing growth will actually lead to a higher quality of growth, which in turn will… Read More