Top Picks for 2010: iShares Germany (EWG)

The advisor explains, "In 2009, iShares Germany gained 18.1% for the year through mid-December-after bounding up 78% from the March market lows.

"We think Germany's major export-oriented stocks are poised to perform well again in 2010, despite concerns about domestic spending.

"Besides, none of EWG's top 10 holdings (excluding utilities) generate more than 47% of their revenues in Germany. These companies are global leaders in their respective industries and should benefit from renewed worldwide economic growth.

"Many of these companies, like top holdings Siemens, Daimler and SAP, are especially attractive since their major products are in significant demand in rapidly growing emerging-markets countries-and none of them earn more than 20% of their revenue from Germany.

"Despite strong performance in 2009, EWG still has an attractive valuation. Its average price/book value (P/B) is about 1.9. This is considerably lower than that of iShares S&P Europe 350 (3.0 P/B) and iShares MSCI EAFE (2.7).

"EWG's portfolio holds about 50 stocks. Six sectors account for no more than 19% and no less than 11% of the portfolio (EWG does not have any energy exposure).

"Financials lead the way with about 19%, but the ETF also includes significant exposure to attractively valued industrials, consumer-discretionary and health care sectors."

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