I've just returned from the World Money Show in Orlando where more than 10,000 investors gathered to learn about global investing. I had a chance to meet with many of the U.S. and foreign financial experts featured at the show, who have shared some of their top investment ideas. To view all of the stocks featured in this special global report, click here.
Global expert John Christy -- editor of the Forbes International Investment Report -- has been very successful in selecting Indian outsourcing companies; two such firms -- Infosys (NASDAQ:INFY) and Wipro (NYSE:WIT) -- are both strong performing holdings in his model portfolio in recent years.
A third player in the sector -- Sify (NASDAQ:SIFY) -- has not shared in that success. Christy explains, "Sify shares got off to a decent start last year. But like other emerging market stocks, they got clobbered in the sell-off last May. Problem is, unlike the rest of the group, Sify never bounced back."
However, the company's prospects may be changing. He notes, "Sify's outsourcing business serves global companies like GE, Oracle, and Whirlpool, as well as local blue-chips such as Ranbaxy Laboratories, Bharti, and Jet Airways.
"It runs a chain of internet cafés throughout India and a family of internet portals. It also provides broadband access to about 200,000 homes. Sify's internet backbone reaches 186 cities across the country.
"Sify's investor presentations tick off some exciting numbers about the potential market for its services. The number of internet users in India is expected to more than triple to 100 million over the next two to three years. But only about 4 million households own a personal computer.
"That's where Sify's cybercafés come in. With 3,500 locations, it is far and away India's dominant player in this business. The internet café model is important in India, where widespread PC use isn't coming anytime soon.
"Sify's broadband business also has enormous potential. It reaches more than 200,000 homes in India. But ultimately, this is a 60 million market -- they have barely scratched the surface.
"Sify has stumbled in its efforts to take advantage of these opportunities. Its latest quarter was hardly a disaster, but it disappointed a lot of investors. Two factors weighed on earnings: the foreign exchange impact of the rupee's strength versus the dollar and a nagging problem with delinquent accounts.
"It might take a while for Sify to work out some of the kinks and growing pains in its business model. But I think it all comes down to two outcomes: either Sify gets its act together, or somebody else will do it for them. Sify might be a nice addition to a larger firm's portfolio, and with a $330 million market cap, it would be easy to swallow.
"Meanwhile, there's some smart money betting on a turnaround. In the latest issue of Barron's, Michael Cahill, a global technology hedge fund manager at Chilton Investment Co., named Sify as one of his top picks. He sums up things up well: 'This is not something you put all the college savings into. But on a multiyear basis, [Sify] could appreciate very, very significantly.'"
Steven Halpern's TheStockAdvisors.com provides a free, daily overview of the latest stock ideas from the nation's leading financial newsletters.
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