US stocks: A 'good deal' for foreigners

"Private equity and foreign money are supporting the US stock market," notes Daniel Frishberg, editor of TheMoneyMan newsletter and BizRadio financial talk show host.

Frishberg explains that the current wave of private equity deals is supporting the market in a couple of ways. First, he says, it reduces the actual number of public companies available for investors to buy stock in. This reduction in supply, he notes, has a positive impact on valuations.

Second, he continues, individual investors are encouraged by the fact that professional investors are finding bargains. He points to a total of $81 billion that was invested in private equity deals last month, and that certainly stimulated the market.

In particular, he sees demand from China. He states, "The Chinese have a lot of cash accumulated from years of running a positive balance of trade with us. They used to lend it back to us by buying our government bonds with low interest rates. Now, they are putting their money directly into U.S. companies."

He views this as extra demand coming into our market that will benefit all investors. Indeed, he suggests, our stock market must look cheap to foreign investors. He notes that we have overall market p/e multiples of around 18, while some foreign markets trade at multiples between 50 and 80. Says Frishberg, "We are just a good deal."

In line with his bullish outlook, he continue to recommend what he considers long-term value stocks including Home Depot (NYSE: HD) and General Electric (NYSE: GE). He notes that both offer superior returns on equity and stocks that are taking in a strong flow of money growth.

He argues, "We would love to see a pull-back that would provide a buying opportunity, but we understand that a strong market like this one may not be that cooperative."

Meanwhile, for income investing, he is recommending a close-end fund -- Nicholas-Applegate Convertible & Income Fund (NYSE: NCV). He notes that it yields over 9% and he see "good growth potential."

Also for a combination of growth and income, he looks to a Canadian energy trust -- Canetic Resources Trust (NYSE: CNE). He notes that the trust offers an annual dividend yield just under 14%, which is paid monthly. He states, "We believe this will be a good compliment for a diversified portfolio seeking income generation and capital gains."

For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free daily website, TheStockAdvisors.com.