E Global Companies Sell-Offs

This weekend Barron's writer Reshma Kapadia interviewed several fund managers for stock and fund ideas outside the US, in Europe, and Japan. Her headline called for “a global rebound”. Only one of the tipped companies has a US-listed American Depositary Receipts share, luxury car-maker Ferrari, spun off by Fiat Chrysler. Recommended by Tom Davis of PGIM Jennison Global Opportunities Fund, RACE also trades a price/earnings ratio of 41.1. This undermines the sub-head “Bargains Abroad”. Bargains did not arise as European markets fell 3.1% in the past year while US ones went stratospheric. Their cheapness now depends on ratios.

Her stock list of other companies includes a Germany only stock, Team Viewer, with an even higher p/e ratio, and no US listing, a competitor for Zoom recommended by Carl Kawaja of Euro-Pacific Growth Fund. Others mentioned were not listed with their p/e ratios: French LVMH which dropped its bid for Tiffany last week, or Ørsted of Denmark with no ADRs.

Another weird pick was Spanish Amadeus IT, a beaten-down travel and hotel tech company. A German firm without an ADR or any data is Sartorius, a lab supplier likely to gain from the race to cure COVID-19, tipped by T. Rowe Price Global Fund's David Eiswert, at a p/e ratio of 61.8.

At 33.4x earnings, Shimano (SMNNY), Japan's maker of fishing gear and bike products, was pick of Ally Chen of UBS. The main reason for these ultra-high ratios is not because Europe and Japan typically are so pricey. It is because the analyst interviewed aims to lure Barron's readers into funds whose shares USA investors can neither analyze nor buy easily.

For really cheap foreign stocks you need to hit the ADR universe, what we do. Read on. The tech wreck spreading overseas led some excellent global companies to sell-offs. Our home market index, the Dow Jones, is off 800 points. Here are some worth buying now:

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