3 Solid Stocks Left Behind In This Bull Market

Anthony is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

One of Warren Buffett's famous sayings is to be greedy when others are fearful and to be fearful when others are greedy.  The market is mis-pricing 3 international giants that dominate their markets.  These stocks provide appetizing entry points for long-term investors. 

Over the past 5 years, China Mobile Limited (NYSE: CHL)Petrobras (NYSE: PBR), and ArcelorMittal (NYSE: MT) have been hammered.  The international market bull run peaked around 2008, but much has changed.

Source: YCharts

Under normal circumstances, if you saw a chart like that you would think to avoid these stocks.  Upon further inspection, these businesses are massive industrial stalwarts and have long been touted as solid long-term investments.

Holding its own

Of the 3, China Mobile has best held its stock price over the past 5 years.  One of the potential catalysts for China Mobile is the opportunity of landing the iPhone.  It has a vast customer base in China and if it can land a deal with Apple, its stock should see an immediate boost in price.

Last year, the company grew its net income by 3.74%.  This year it continues to grow and has been increasing its dividend.  China Mobil currently has a dividend hovering around 4%.  Its weaker price performance can more largely be attributed to international stocks falling out of favor and general weakness in China.

China Mobile is the largest carrier in the world and that makes it one of the best telecom investments out there.  When international markets turn, you should expect China Mobile to be one of the largest beneficiaries.  Its future is supported by a dominant market position and sticky industry.

Down, but not out

Petrobras has been hammered over the past five years.  Its stock price is trading at around $13 per share, a far cry from its peak in 2008.

Last year, the company lost money and had to suspend its dividend.  But recently, it resumed paying its dividend as the cash has started to flow more freely. 

Recently, it suffered because of a softer Brazilian economy and a weaker currency.  These big picture concerns generally don't have to do with its operations.  Petrobas delivers energy to Brazil which is still an emerging growing market.

In March, diesel increased by 5% which boosted the shares.  Going forward, a more business-friendly political environment backed by aggressive price increases should help Petrobas.  With the stock's price as low as it is, there appears to be a lot more potential upside than downside.  For Petrobas, the future looks bright as it continues to make massive oil discoveries and begins its quest to eliminate Brazil's dependence on foreign suppliers.

Don't overlook this steel giant

ArcelorMittal is the world's largest steel maker by output.  Like the rest, its shares have been beaten down over the past 5 years.  Currently, its trading near a 52 week low.

The company is suffering from weakness in Europe, as a large part of its operations depend on steel demand from that region.  Worldwide steel demand has also deteriorated which hasn't helped the shares.

Rising steel prices, increased demand, and an economic recovery in Europe are all factors that should push the stock higher.  Over the long-term, if the company can hold its market position, a recovery will be inevitable. 

ArcelorMittal is currently trading around 40% of its book value.  It's expected to generate $82 billion in revenue this year and $87 billion next year.  This is huge and if steel prices rise along with demand, profits should skyrocket.

Conclusion

It takes a lot of courage to buy these names right now, but generally, courage is rewarded.  China Mobil, Petrobas, and ArcelorMittal seem to be solid bets, once you do your own research, maybe you'll agree.

The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.


Anthony Parsons owns shares of China Mobile, ArcelorMittal, and Petroleo Brasileiro S.A. (ADR). The Motley Fool recommends Petroleo Brasileiro S.A. (ADR). The Motley Fool owns shares of ArcelorMittal and China Mobile. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus

Compare Brokers

Fool Disclosure