Investible Emerging Market Momentum

As I pointed out in my emerging markets 2010 outlook, we’ve come a long way off the 08′ bottom.  Many names have or are moving in a parabolic fashion.  Patience will be key in finding good entries to many high flying stocks.  Use the 20 day moving average as your gauge, you don’t want to be buying stocks above it.  Look to take positions at the 20 day, or as stocks move up off the 50 day moving average.  Pay attention to momentum indicators like stochastics, they have been extremely reliable during this rally at identifying excellent entry points.

Below you will find a list of the international names that I believe are investable going into 2010.  There are plenty of tradeable stocks throughout the year, stocks that I couldn’t care less about the fundamentals.  But if you’re an investor looking for solid companies that show earnings growth, here is your list.  All of these companies also exhibit technical relative strength, that’s my style, I don’t do value.

Energy: Petroleo Brasileiro $PBR (Brazil), A-Power Energy $APWR (China), Trina Solar $TSL (China),

Materials: Gerdau S.A. $GGB (Brazil), China Green Agriculture $CGA (China), Yanzhou Coal Mining $YZC (China), Compania de Minas Buenaventura SA $BVN (Peru), AngloGold Ashanti $AU (South Africa), Gold Fields $GFI (South Africa),

Technology: VanceInfo Technologies $VIT (China), Ctrip.com $CRP (China), Baidu $BIDU (China), Sina Corp. $SINA (China), AsiaInfo Holdings $ASIA (China), Longtop Financial Technologies $LFT (China), Wipro $WIT (India), Infosys Technologies $INFY (India), Check Point Software Technologies $CHKP (Israel), Taiwan Semiconductor Manufacturing $TSM (Taiwan),

Consumer: Ambev $ABV (Brazil), Cosan $CZZ (Brazil), China Automotive Systems $CAAS (China), New Oriental Education $EDU (China), Tata Motors $TTM (India),

Industrials: Gafisa S.A. $GFA (Brazil), RINO International Corporation $RINO (China), SmartHeat $HEAT (China),

Telecom: Vivo Participacoes S.A. $VIV (Brazil), PT Telekomunikasi Indonesia $TLK (Indonesia), Turkcell Iletisim Hizmetleri $TKC (Turkey), Millicom International $MICC (Africa)

Financial: Itaú Unibanco $ITUB (Brazil), Banco Santander-Chile $SAN (Chile), Cninsure Inc. $CISG (China), ICICI Bank $IBN (India),

Services: GOL Linhas Aéreas Inteligentes S.A. $GOL (Brazil), Home Inns & Hotels Management $HMIN (China), Grupo Aeroportuario $PAC (Mexico),

Utilities: Companhia Energetica de Minas Gerais $CIG (Brazil), Companhia Paranaense de Energia $ELP (Brazil), CPFL Energia S.A. $CPL (Brazil), Enersis S.A. $ENI (Chile)

Healthcare: Dr. Reddy’s Laboratories $RDY (India), Teva Pharmaceuticals $TEVA (Israel),

I can’t recommend any individual companies in Russia, there is just too much political risk in owning any individual name.  You can own the index $RSX for sure, but Russia is the wild wild west of capitalism, if you can even call it that, it’s more like a thuggary system.

Some highlights in the list above.  Trina Solar $TSL looks to be the winner in Chinese solar stocks.  The solar industry is in its infancy and picking winners from losers now is a monumental task.  You must rely on the technicals to guide you, and right now they say $TSL is the winner.  I don’t love investing in foreign oil companies, there are enough in the developed world to pick from, my favorite being $BP.  Petroleo Brasileiro $PBR, better known as Petrobas, is the one emerging markets energy company I would be invested in.  Look overseas for materials plays, Gerdau $GGB is an excellent Brazilian company and will lead Brazil into the new decade.  The South African gold miners are great plays as well, I highly recommend having a generous exposure to the gold miners.  Although I believe far better technology plays are found right here in the US, there are a few out there worth investing in.  $CTRP is killing it, Chinese people are traveling all over the world and using the service.  Not only are the Chinese traveling, but they are learning English at a break neck pace.  New Oriental Education $EDU is the leader in this space.  Indians are buying cars, it’s that simple, ride that train with Tata Motors $TTM.  RINO International $RINO treats waste water in China, water treatment is going to be a huge theme the world over for the next decade.  As the Chinese become more wealthy they will demand better services from their government.  Clean drinking water and no sewage in the streets is step one.  I love the African telecom play Millicom International $MICC.  Africa has no infrastructure, so instead of building telephone lines everything will be cellular.  In my mind, this company may be the most important to the growth and development of Africa.  The Brazilian banks are excellent and avoided the mess that the United States caused in the financial sector.  Instead of wasting your money owning a dead company like Citibank $C, buy a few emerging market banks.  People are flying into little airports in Mexico on vacation, Grupo Aeroportuario $PAC owns them, enough said.  Why would you even invest in a domestic utility when there is little growth and a lot of regulation here in the US.  Take your pick from these emerging market utilities, a few have excellent dividends to boot.  I don’t love emerging market healthcare, but if you must, $TEVA is a safe play.

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