The Well Traveled Portfolio
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Maybe you've seen one of those beautifully battered leather suitcases with worn labels from exotic destinations and brass fittings and initials. They say to all and sundry, I am a citizen of the world, sophisticated and versed in esoteric customs. Regrettably, they are used as pricey vintage decor now.
But...you can be a sophisticated globetrotter in the market. You can kit out your portfolio with stocks worthy of a J. Peterman catalog, you can buy far flung companies with a swoop of a finger. Africa, Asia, Australia, Europe, South America, and North America.
Bill Gross of Pimco believes emerging markets are the way to go in 2013. He told CNBC on New Year's Eve that US stocks were worrisome to him and that gold and emerging economies were the way to go forward.
Water, Not Champagne
Fearless Pathfinder is here to help you find a dazzling collection of souvenirs of those economies. What countries come to mind when you think of Europe? Is it France and champagne? Water is what's helping Paris-based Veolia Environnement (NYSE: VE) generate yield at 6.40%. In 2012, a Morgan Stanley note emphasized water as the world's most valuable commodity and that water related stocks would create alpha going forward.
Veolia is in the water treatment business. It has been scaling back on its waste management business since the advent of new CEO Antoine Frerot who with his Gallic pragmatism is concentrating on paying down debt and throwing off less profitable divisions of the company. By the end of 2013 the company will have sold enough assets to repay $6.43 billion of debt.
While Veolia may be based in France it has a huge contract in India to treat water for drinking in New Delhi. Its growth rate has suffered lately at the hands of European monetary crises but analysts see 14% plus growth over the next five years as it is truly a global water power in over 70 countries. Frerot should be able to turn around the debt burden and there is still that very attractive yield for this "grand chien" of water.
Gold In The Cold
Surprisingly, Canada is the hub of gold miners like Goldcorp, Yamana Gold, and a very new (it only IPO'd a year ago on January 11, 2012) but promising gold miner Pretium Resources (NYSE: PVG) which has discovered a very high grade gold source in its Brucejack and Snowfield projects in northwestern British Columbia. CEO Robert Allan Quartermain (like the adventurer of the H. Rider Haggard novels and movie fame, The League of Extraordinary Gentlemen and Allan Quatermain and the Lost City of Gold!) has been exploring for gold since receiving a masters in Mineral Exploration from Queen's College. With a name like that he just had to go into the gold business.
This most recent find in the Valley of the Kings in the Brucejack project is expected to produce 8.5 million ounces of high-grade gold and a feasibility study for underground mining is expected in Spring 2013. This article and amazing photo by Fool writer Christopher Barker is very bullish on Pretium Resources and also emphasizes the Snowfield project is expected to produce an additional 34.9 million ounces of gold. With Pimco's Gross bullish on gold Pretium should outperform as gold goes higher.
Australia, with its bounty of coal and mineral resources, is a major benefactor of Chinese and Asian demand. Its biggest benefactor is diversified natural resources giant BHP Billiton (NYSE: BHP) which not only is involved with metals and coal but also natural gas and oil exploration. This energy and mining play has a 3.00% yield with a 13.60 P/E and is the largest publicly traded company in Australia. It's raised that dividend consistently over the last decade.
Its profit and operating margins are 21.34 and 36.54% respectively and has a 24.88% return on equity. At a 208.7 billion market cap it's almost twice as large as closest competitor Vale but its P/E is only slightly higher than Vale's at 9.21 and still lower than the industry average of 14.00.
From a low of $5 in 1990 BHP has been a twenty bagger hitting $100 in 2011. It pulled back to a low of $59.87 in 2012 and closed 2012 at $78.42. While the share price has often reflected changes in iron ore supply and demand, the company is much more diversified along with interests in Potash as well as its other metals, coal, and natural gas and oil interests. Dips in iron ore prices should be considered opportunities to buy.
China's Calling You
China Mobile (NYSE: CHU) is not only a play on the rising wealth of the Chinese but also the ever growing adoption of smartphones. Apple (NASDAQ: AAPL) is negotiating with them to carry iPhone 5 in China. Unlike stateside carriers, China Mobile expects a cut of Apple profits. With 700 million current customers and a market cap of 236.04 billion it's the world's biggest telecom carrier and Apple needs it. China Mobile has some leverage as it carries the popular (it sold out almost immediately) Nokia Lumia 920T and three more Windows phones.
China Mobile has an ambitious goal of earning 100 Million 3G subscribers but has been hamstrung by its TD-SCDMA standard. Rivals China Unicom and China Telecom have been carrying the iPhone for some time. China Mobile, however, would be the big "get" for Apple as they say in sales.
With the largest addressable market in the world China Mobile's P/E is only 11.80, lower than both its rivals with net income of 22.1 billion. China Mobile has a 3.30% yield at a 38% payout ratio. Other metrics like margins are good with profit and operating margins at 23.29% and 28.37% respectively. Return on equity is 19.56%.
The Final Leg
There you are, with stickers from China, Australia, Canada, and France on your portfolio and some gold fittings besides. Now your portfolio says to all and sundry I am a stockholder of the world, conversant with markets and custom globally. Not to mention 3% plus yields on each name that will stuff that portfolio until you have to sit on it. Added benefit: traveling to shareholder meetings should be thrilling. Bon Voyage!
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple. Motley Fool newsletter services recommend Apple and Veolia Environnement (ADR). 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!