Cappiello: Frankly Speaking...
02/13/2004 12:00 am EST
Frank Cappiello is a graduate of Notre Dame, a Harvard MBA, an author of four books, a long-standing panelist on Louis Rukeyser's Wall Street, and now managing director of Montgomery Brothers, Cappiello, LLC. He is also one of The Money Show's most popular speakers. Here are his favorite international plays.
"We are in a bull market and that bull market will continue," says Frank Cappiello. "The temperament of the investor is still very bullish, the money is out there–you can see that pouring into mutual funds–and there is a lot of other money pouring into businesses. The Federal Reserve is being very lenient with money supply and interest rates and the cost of money, and the deficits are very, very stimulating. And add to that the dollar. The decline in the dollar has been the equivalent of another ¼ percent reduction in interest rates. So the dollar is working for us. Given that, it looks like this economy will be pretty good until at least through the first half of the year. Earnings were just reported up 28% for the fourth quarter, and we think they will remain on that track for the year. So for now the skies are clear.
"American International Group (AIG NYSE) is a huge insurance company, which also owns 10% of a Chinese property and casualty company. So that’s an interesting low p/e insurance play as well as a play on China. This stock has been lying dead in the water for some time, but with new, younger management, we could really get something going again on this company. Flextronics (FLEX NASDAQ) is an international play that is headquartered in Singapore. It’s a supplier of sub-contracting services to electronics companies. Baxter International (BAX NYSEW) is a healthcare company that operates all over the world. It’s been beaten up. It now has new management, which is our catalyst to move on this stock. A French company we like is Total (TOT NYSE), which is like a mini-Exxon. It also happens to own 20% of Sanofi, which is a foreign pharmaceutical company. My other international play would be Japan, the second largest economy in the world. I’ve been watching this market for years waiting for a time to get in. I think the best way to do this is through the iShares Japan (EWJ ASE), an exchange traded fund that gives you exposure to the overall Japanese market. The risk to reward on this particular investment is pretty good."