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Perhaps the European Union was doomed from the start and it just took a decade for the more productive member states to realize it.
If you went into a business with a bad partner is there any way for it to work? Inevitably there will be a split and that might be the case for the EU members and the battered euro.
Regardless of the end result shrewd investors should be on the lookout for stock bargains in large successful European companies undermined by the failure of the monetary system. The following three stocks are examples worth considering.
Novartis (NVS) of Switzerland, in the health care industry, is the second largest producer of generic drugs and a leading provider of eye care products. It has been pounded by the downfall of confidence in the euro area system, often referred to as the eurozone. As the five-year chart below indicates the stock had worked its way up to a high if $56.42 before the Greek tragedy created a European nightmare.
Yesterday, Novartis closed at $44.35, down over 23%. It is trading at a slight discount to Teva Pharmaceuticals (TEVA) and Johnson and Johnson (JNJ) with a P/E of 12.02 and has a far superior dividend yield of 4.32%
Telefonica SA (TEF) of Spain has sunk even further than Novartis, off 37% from its recent high of $89.62 to yesterday's final number of $56.66. Spain has debt and banking problems and trades in the euro, unlike Novartis, which is a Swiss company. Some think it is the next domino if the EU does not support Greece to the fullest extent possible.
Looking at its five-year chart, it has been punished for its geographic location, almost dropping to last year's lows. This may be undeserving since most of its business is outside the country with a major stake in South America -- and growing. The stock sells for a lower P/E than AT&T (T) or Verizon (VZ) at 11.47, but more importantly it pays a higher dividend, now at 7.9%.
Unilever ADR (UL) of the Netherlands is a diversified food and household products company with known brand names like Breyers ice cream, Dove and Lux soaps, Lipton tea, and the Vaseline personal care product line. Unilever was the number one consumer products maker worldwide -- until Procter & Gamble (PG) purchased Gillette in late 2005.
At yesterday's close of $26.20, the stock is selling at a discount to the market and is more diversified than Novarits and Telefonica, which makes it the safest play. It is also paying a higher than average yield of 3.51%.
A devalued euro may mean that these three companies, which have global market share now, will have a more competitive advantage going forward. If one were to buy all three, one would have an extremely diversified portfolio with global reach and very strong dividend yields fueling one's retirement.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: At the time of this post he owned shares of JNJ and NVS.
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Reader Comments (Page 1 of 1)
5-26-2010 @ 10:14PM
william lindblad said...
I doubt a debased Euro and I think that the Napoleon's concept will survive. A fly in the ointment could be Spain as they share the same housing problems as the U.S., compounded by water problems. I think that I mentioned this in comments about two years ago. Sometimes it does take a while for reality to sink in.. Personally, I think when all of the dust settles, we are next. Our debt load is getting astronomical and the matter of GDP, a matter of time.
6-07-2010 @ 6:37PM
stockshockmovie said...
To News Media worldwide,
I want to write this letter to clearly put together the story about what took place on Wall Street since the elimination of the uptick rule on July 6th, 2007 up until the current crisis in the United States as of today June 2010, just weeks away from financial reform to be signed into Law here in the United States.
May 2007 Goldman Sachs hired math wiz computer programmer Segei Aleynikov
July 2007 Up Tick rule abolished and Naked Short Selling Scandal begins as Housing scandal ends
July 2007 Massive downgrades in credit ratings as the Housing scandal slows and Goldman Sachs moves into Stock Scandal
FY 2008 U.S in a full blown recession due to financial crisis and naked short selling and other scandals tied to Goldman Sachs and others
June 2008 Secret meeting in Moscow between Goldman Sachs board members and Hank Paulson
Sept 2008 Financial meltdown and Last days of Lehman Brothers. Hank calls Loydd 24 times within a few days
July 3rd 2009 FBI arrest Segei Aleynikov as he had sent over 1,000 secret codes and files to German Web Site
Feb 24th, 2010 Up tick rule voted back in but with some circuit breakers
April 15th 2010 Goldman Sachs tied to Galleon trading investigation
April 16th, 2010 Goldman Sachs Civil Fraud Charges brought by Government/SEC
May 4th, 2010 Goldman Sachs guilty of Naked Short Selling and pays fine
May 6th, 2010 Stock market crash down 700 ponts is minutes to almost down 1,000 points on day. still looking for answers in an ongoing investigation.
May 18th, 2010 Germany bans naked short selling. What does the German secret service know about the Goldman Sachs secret files sent to German web site?
Now today, Newsweek comes out with a story June 7th, 2010 on page 42, where they state the arrest ofthe Goldman Sachs computer programmer.
Newsweek June 7th, 2010 page 42. http://bit.ly/cbM89b Goldman Sachs secret codes/ arrest
These facts are all connected, yet the News media has not put the story together.
see these two video's on youtube that just came out, that clearly explains the connections and it all leads back to Goldman Sachs.
part 1 Utube http://www.youtube.com/watch?v=HGAXCmg-_Vc see part 2 on YouTube http://www.youtube.com/watch?v=tNiTANt8m4Y&feature=channel
Upon watching these two youtube video listed above, you will begin to see the connection to Goldman Sachs. It has taken the action of Germany and other countries upon their investigationm to force the U.S news media to report parts of these facts, yet they still have nottold ENTIRE story and the connection.
Go to these sites listed below to also get the true facts, that connect Goldman Sachs to the financial problems of the world.
www.SiriusNews.com surf the site, blog, stock shock, twitter
www.Twitter.com/StockShockmovie see the links to videos and stories about Goldman Sachs and Wall Street
It is about time the News Media connect all the dots and tell the entire story and truth about Goldman Sachs. Germany has the 1000 secret codes and files from Goldman Sachs and how they have been stealing the money off investors worldwide.
The FBI has the secret codes also. see the youtube video above, where it shows the FBI document that these files were sent to a German Web Site.
Richard Keane
www.SiriusNews.comblog