"True Wealth" Opportunities
02/25/2005 12:00 am EST
"Just because the market is weak and stocks might look expensive, there are still great opportunities," says Steve Sjuggerud, editor of True Wealth. Here, he discusses his favorite global investments for those with a multi-year investment horizon.
"Contrary to most on Wall Street who are bearish on bonds, I like iShares Trust Goldman Sachs (LQD ASE), an exchange traded fund that holds corporate bonds and trades like a stock. I think that everyone has already sold bonds. Everyone is short bonds. Everyone hates bonds. So that bearishness is already priced in. I actually do believe that long-term interest could stay where they are or continue to move down from here. In my view, this ETF is a way to earn income with the additional potential for capital appreciation.
"There are two timber stocks out there right now that I particularly like—Rayonier (RYN NYSE) and Plum Creek (PCL NYSE). These are pure timber plays. They pay dividends in the 4% range. These are just fantastic companies with fantastic timber managers. Rayonier has some extraordinary lands. It is trading at about $1,000 an acre and much of that land—particularly its holdings in coastal areas of Florida— is worth well above the value that the market is according the stock.
"Looking globally, I'd note that things have improved dramatically in Argentina in the last few years. I’ve been to Argentina six times in the last year, and after looking around, I’ve found the very best way to buy real estate in Argentina is through a stock in the US called Cresud (CRESY NASDAQ). The company has about a billion dollars' worth of real estate and the market value of the stock is about $200 million. Cresud is also Argentina's largest publicly traded commodities company. The firm has an enormous amount of hidden value in its assets. And I expect that Cresud could ultimately become one of China's key lumber suppliers. And it is producing agricultural goods and beef that China (and the rest of the world) wants. I think it’s an easy double.
"If you want a blanket play on commodities, BHP Billiton (BHP NYSE) is the world’s largest commodity company. Most of their operations are in Western Australia, which is at China’s doorstep. I think it’s a fantastic company and a great opportunity. The company is near the top of the heap in aluminum, energy, and metallurgical coal, copper, ferro-alloys, iron ore, and titanium minerals, and it has substantial interests in oil and gas, liquefied natural gas, nickel, diamonds, and silver. The story is simple. China is booming, and it desperately needs raw materials. Importantly, even if China disappeared tomorrow, BHP Billiton would be just fine. BHP Billiton is so huge that China currently makes up less than 10% of sales. So even if the China bubble ends badly, we will still own the world's largest diversified commodities producer, which we feel is a great place to be."