Investment Opportunities in Europe

European equities are back in favor with Investors, who pulled approximately $100 billion from the asset class in 2016, writes Validea CEO John Reese in a recent article for Nasdaq.

The article explains that below average performance in oversea stocks over time has led to a big difference in valuations compared to the U.S. market, presenting opportunities for investors. The article also discusses mean reversion and the role it plays in market movements.

Reese identifies the following five high-scoring international stocks:

  • Vale SA (VALE) is a global producer of iron ore, iron ore pellets and nickel, and earns high marks for its book-market ratio, operating cash flow and return-on-assets.
  • Companhia De Saneamento Basico (SBS) is a Brazil-based water and sewage service provider that scores well due to the ratio of price-earnings to earnings-per-share growth (PEG ratio) as well as its rising earnings trend and pre-tax profit margin.
  • Toyota Motor Corp. (TM), the automobile company, is a high scorer due to cash flow-per-share, dividend yield and the company’s level of outstanding shares.
  • Autohome Inc. (ATHM) is engaged in the provision of online advertising and dealer subscription services. The company earns high marks for its PEG ratio, debt-equity ratio and the level of of inventory-to-sales.
  • NK Lukoil PAO (ADR) (LUKOY) is engaged in oil exploration, production, refining, marketing and distribution, and scores well based on its size, cash flow-per-share, revenue base and price-sales ratio.