Vivian's View: A Global Portfolio

06/17/2005 12:00 am EST


Vivian Lewis

Editor and Publisher, Global Investing

Every three months, MSN Money holds a "Strategy Lab" in which six advisors each develop sample portfolios. Vivian Lewis, known for her global expertise, is leading the pack, up 9% over the first seven weeks. Here, she offers an overview of her current stock picks.

"The worst is over in Japan, one country where deflation is running out of steam. Japan, after 13 years of falling prices, may have got over the hump. The country is full of elderly people who may just start to spend their money because they do not want to leave it to their heirs. And it is a major beneficiary of China’s capital investment. The best Japanese play is Japan Smaller Capitalization (JOF NYSE), a closed-end fund, traded at a significant discount from its net asset value. That means that for 90 cents, you get a dollar working for you.

"Schlumberger (SLB NYSE), the Dutch Antilles oil-field services group, saw first quarter earnings more than double, to $534.4 million. Revenues rose 20% to $3.16 billion because of strong drilling activity. Another offshore company with a strong position in finding oil is Tenaris (TS NYSE), of Luxembourg. This is a maker of seamless pipe, mainly used in oilfields. It is essentially run from Argentina and Italy, but it sells its pipe mainly in Latin and North America.

"ICICI Bank (IBN NYSE) is a backdoor to India. This is a bank for India’s rising middle class, offering credit cards, discount stock brokerage, and Internet banking. India is an independent growth story; it has become the world’s back-office of choice. Being a private sector bank, IBN is a favored financial partner. It recently did deals with Tishman Speyer, the New York real-estate firm, to invest $600 million in Indian property; with Lloyds TSB, a leading British bank, to offer Britain's large non-resident Indian population rupee transfers and mortgages; with Britain's huge Prudential plc group for life insurance and asset management; and with Indian generics firm Dr. Reddy to finance drug discovery. Its nine-month earnings were more than double those of its prior fiscal year.

"Corporación GEO (CVGEF Other OTC), the Mexican homebuilder, saw first quarter revenues rise 18.2%. Net profit came in 59.1% higher at $176.4 million. The financials also improved vastly. Cash rose 123.7% from the prior year first quarter and accounts receivable were down 5.4%. Because Mexicans are desperate for affordable homes and thanks to enhanced financing now available, GEO should ride out any cross-border weakness in housing in the US. While this stock trades on the pink sheets in the US, it is easy for most brokers to buy in Mexico City.

"France is the home of Sanofi-Aventis (SNY NYSE), whose Rimonabant helps dieters shed pounds and inches, according to The Lancet , a well-regarded medical magazine. People taking the drug and attempting to cut 600 calories per day from their intake lost an average of three inches from their waists and 18.9 pounds. Over 39% of those taking 20 milligram (the highest dose tested) lost over 10% of their body weight and over 11 pounds. All participants were obese or seriously overweight. Rimonabant works by blocking the endocannabinoid system, which regulates hunger, just as cannabis cuts hunger pangs.

"Tesco (TSCDY Other OTC), the UK food retailer, is adding 30 new supermarkets in Eastern Europe, bringing the total to 234 stores. Tesco is third in the world stakes, after Wal-Mart and France's Carrefour. It became the first UK retailer to break the £2 billion profits ceiling. Apart from internationalizing, the UK supermarket chain is also building up its non-food lines, such as clothing. (Please note, this is not the Tesco listed on the NASDAQ; that is an oil-services company. While traded over the counter, our Tesco is a member of the top British indexes and does not behave like a pink-sheet stock.)

"Finally, you have to have technology plays. Amdocs (DOX NYSE) is run out of St. Louis by a group of Israelis, but incorporated in the Channel Islands. The company makes customer relations management systems for telephone companies. Its second quarter earnings were 34 cents per share, up 17% from prior year levels. Revenue was up 10%. The shares gained after Goldman Sachs lifted its rating on the software firm to outperform from neutral. Meanwhile, Israel is the home of  M-Systems Flash Disk Pioneers (FLSH NASDAQ). First quarter revenues were up 50%. FLSH will offer OEM customers the ability to bundle the award-winning Migo software applications on their product lines. With this, consumer can plug a DiskOnKey into a Windows-based computer to instantly create a virtual PC copy. When you plug the device into another host computer, such as at a cyber café, Outlook e-mail, data files, Internet Explorer favorites, and desktop wallpaper will appear on the new host machine. When the user is done, no trace of the information is left behind and all changes are automatically synchronized on the user’s main PC."

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