Investors: Take Europe in Stride
The following video is part of our "Motley Fool Conversations" series, in which consumer goods editor and analyst Austin Smith discusses topics across the investing world.
In today's edition, Austin takes a bit of a contrarian stance on the European crisis. While the economic crisis is very much a reality and investors need to be cautious about a company's exposure to Europe, sometimes being too nervous can scare investors away from what are otherwise very strong companies. For instance, quality companies such as Ford, McDonald's, Philip Morris, Coca-Cola, and General Electric all have enormous exposure to Europe. Coca-Cola is on the low end with 22%, and Philip Morris is on the high end with 65%. Yet, over the last year a market-cap-weighted portfolio of these stocks would have returned 14.5% to the market-cap-weighted S&P 500's return of exactly zero. This isn't to say that investors should dismiss or belittle European exposure, only that you should be cognizant of how it plays into a company's bottom line and not let it scare you away from quality stocks.
These companies are one way to play international markets in 2012, but we think there is an even better one: an emerging-market company that's poised to become the Costco of Latin America. We are so excited about this company that we've named it our top stock for 2012. The Motley Fool has compiled a special FREE report outlining this company. In it, you'll discover the company handpicked by our analysts that's positioned to be a titan of retail in the future. You can access the report -- 100% free of charge -- by clicking here. Fool on!
At the time this article was published Austin Smithowns shares of McDonald's, Coca-Cola, and Philip Morris International.The Motley Fool owns shares of Ford and Coca-Cola.Motley Fool newsletter services recommendFord, McDonald's, Philip Morris International, and Coca-Cola. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.