1 Stock for Peak Value (and Gains) Overseas

You thought the U.S. rally was good… [Turn Your Images On] [1 Stock for Peak Value (and Gains) Overseas]( [Turn Your Images On] [Matt Clark, Chief Research Analyst]( In doing research for [Mike Carr’s trade room]( this week, I stumbled across an interesting article. A Goldman Sachs study showed that European stocks have given U.S. equities a run for their money over the last 12 months. As investors based in the U.S., it’s easy to put up blinders and only focus on American equities. That’s fine, but broadening your horizons can reveal strong gains. Today, I’m going to dive into the Goldman Sachs report, pinpoint one of the best-performing European markets and use Adam O’Dell’s proprietary Green Zone Power Ratings system to locate one of the best stocks to capitalize on this trend overseas. The European Stock Discount One thing that stood out from Goldman Sachs’ [study]( was that European equities “continue to trade at a larger-than-normal” discount to their American counterparts. A big reason is that Europe‘s tech sector is much smaller — America’s listed tech sector is 10X larger than Europe’s. That means there aren’t nearly as many stocks on European indexes that are considered overvalued. The report noted that European stocks are trading at around 13 times forward consensus earnings versus 19 times for American stocks. That is the largest discount in almost 10 years! --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Banyan Hill Publishing. [The Next Wave of MLP Checks Is Set to Go Out October 2]( 30 Energy companies have been legally approved to payout $17.9 billion dollars to investors in the form of “MLP Checks” this year. [Click here for details.]( --------------------------------------------------------------- The German Stock Market Is Booming While its economy languishes, the German DAX Index continues to forge ahead. For reference, the German gross domestic product grew 0% in the second quarter compared to analysts’ expectation of a 0.3% bump. This further illustrates the ongoing fact that the stock market is not the economy. Just look at the growth of the DAX Index: [Turn Your Images On] [(Click here to view larger image.)]( Over the last 12 months, the DAX has gained 21%. That’s close to double the S&P 500 and 3X the STOXX Europe 600 performance. And while the DAX has had this impressive run, the stocks within it are still considered undervalued, meaning they have room to run even higher. A Green Zone Perspective of German Stocks One of the best-known exchange-traded funds (ETFs) to trade this trend is the iShares MSCI Germany ETF (NYSE: EWG). The ETF holds 65 of the largest German-based stocks. In order to see how a good chunk EWG rates on our Green Zone Power Ratings system, I took the top 26 stocks by weight and performed an ETF “X-ray.” I found the American-listed tickers for these stocks and filtered them through our system to see how they rate. Top Holdings in EWG Rate “Bullish” [Turn Your Images On] The average overall rating of these top German stocks was 61, or “Bullish.” Here are their factor averages: - Momentum — 72. - Size — 15. - Volatility — 84. - Value — 58. - Quality — 51. - Growth — 49. This tells me these stocks have “Bullish” momentum with little volatility. They also have above-average value and quality. I wanted to go a step further and find the best of the best in German-based stocks. And I found a familiar face: [Turn Your Images On] [(Click here to view larger image.)]( --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Banyan Hill Publishing. 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Fun fact: Every X model SUV you see on the road in the U.S. was built at BMW’s Spartanburg plant. As you can see, BMWYY rates in the green on five of our six factors that make up the Green Zone Power Ratings system — it gets dinged on Size with a $77.3 billion market cap. It rates in the top 2% of all stocks we rate on Value and in the top 3% on Volatility. Bottom line: The German DAX Index has outperformed its American and European counterparts over the last 12 months. With low valuations, there is plenty of room for German stocks to run from here. If you want broad exposure to German stocks, EWG is a great potential holding for your portfolio. But, our Green Zone Power Ratings system found BMWYY to be the cream of the crop of German stocks. Until next time… Safe trading, [Matt Clark signature] Matt Clark, CMSA® Chief Research Analyst, Money & Markets --------------------------------------------------------------- Check Out More From Stock Power Daily: - [WHAT TRADERS HAVE KNOWN FOR 120 YEARS]( - [LEARN, GROW AND TRADE IN OUR NEW LIVE ROOM]( - [WHEN FOLLOWING THE CROWD PAYS OFF]( Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: [( Legal Notice: This work is based on what we've learned as financial journalists. 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