Two Good Plays on Overseas Growth

04/28/2008 12:00 am EST

Focus: COMMODITIES

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

Louis Navellier, editor of Blue-Chip Growth, finds one US-based and one Swiss-headquartered company tied to international growth and the commodities boom.

Approximately 48% of the Standard & Poor’s 500’s earnings are from multinational stocks that operate around the world. These stocks naturally profit from a weak US dollar due to positive currency exchange rates. In addition to these multinational companies, rising commodity prices are helping to boost [some] stocks. 

Clearly, multinational and commodity-related companies remain an oasis amidst the [market] chaos. We’ll continue to benefit from this strength and add to our international exposure through our new buys.

Fluor (NYSE: FLR) is one of the leading international engineering and construction firms. The company oversees construction projects for a large range of industrial sectors worldwide. Fluor’s projects include designing and building manufacturing facilities, refineries, pharmaceutical [and health care] facilities, power plants, and transportation infrastructure.

The company’s fourth-quarter earnings more than tripled, lifted by strong demand from the oil and gas industry and an extraordinary gain from a tax settlement. Specifically, Fluor’s fourth-quarter earnings rose 313.3% to $259 million, or $2.82 per share, compared with 90 cents in the same quarter a year ago. Sales rose 30% to $4.71 billion. Analysts had forecast earnings of $1.18 per share on sales of $4.58 billion, so Fluor posted a whopping 139% earnings surprise and a 2.8% sales surprise.

The company also raised its 2008 earnings outlook to $5.10 to $5.50 per share from its prior range of $4.90 to $5.30 per share. It expects continued strength in demand from the energy and mining industries, which will further improve earnings. Fluor is a great buy. Buy below $174.  (It closed Friday at around $161.50—Editor.)

Syngenta AG (NYSE: SYT) is tied with Bayer Crop-Science as the world’s largest agrochemical company. It produces crop-protection products (insecticides, herbicides, fungicides), field crop seeds, vegetable seeds, and flowers. Syngenta and Myriad Genetics have mapped the rice genome, which could make rice crops more resistant to disease and lead to the genetic mapping of other cereals like wheat and corn.

In 2007, Syngenta posted a 75% rise in earnings boosted by strong demand as well as high commodity prices. The Swiss company said net profit rose to $1.11 billion compared $634 million in the same period a year earlier. This beat analysts’ estimates of around $1 billion. Sales rose 15% to $9.24 billion.

As crop protection currently generates about 75% of Syngenta’s sales, the company’s crop-protection division is well-positioned to [help] farmers boost yield per acre for food and biofuels.

[Chief executive officer Michael] Mack says continued high demand for agricultural
commodities would enable Syngenta “to target double-digit growth in earnings per share through 2010.” The stock is a good buy below $69. (The American Depository Shares closed below $62 Friday—Editor.)

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