Using the measure that the Oracle of Omaha himself, considered as the best single measure of valuation at any given moment, GuruFocus uses the percentage of total market cap relative to the U.S. gross national product to make an estimated projection of the stock market in the long term. (Also view the other factors taken into consideration to determine the results at Where Are We with Market Valuations?)
Currently, Singapore is displayed as the market with the largest anticipated annual return for the developed markets group. With 17.3 percent in projected annual return, its gross domestic product has grown at the annual rate of 7.94 percent over the past eight years. Its current annual GDP is $255 billion in U.S. dollars.
In Why the Singapore Stock Market May Deliver Better Returns with Less Risk, GuruFocus pointed out that Singapore appears to have a more attractive market than the U.S., in terms of historical valuation and dividend-paying stocks.
Below are three Singaporean stocks that some of the world’s best investing Gurus have bet on in most recent quarters.
Avago Technologies Ltd. (AVGO)
Avago Technologies is a large supplier of analog semiconductor devices, and has grown a portfolio of 6,500 products in three primary markets: wireless communications, wired infrastructure, and industrial and automotive electronics.
After acquiring the stock in the fourth quarter of 2010, Steven Cohen has continuously increased his holding over the years, making only one reduction thus far, which was during the end of 2011. Last September, Cohen reported to increasing his stake by 48.34 percent. He currently has 871,000 shares of Avago.
Other Gurus, such as Lee Ainslie and Jim Simons have larger holdings; Ainslie reported 8.5 million shares of Avago as of the third quarter of 2012, while Simons reported 2 million shares.
As a Singaporean entity, Avago’s tax structure is attractive and provides flexibility regarding movement of cash, according to Avago’s stock presentation. Its shareholders equity in the middle of 2012 was $2.1 million, which increased from the previous quarter, when the amount totaled $2 million.
Avago has a payout ratio of 0.249 and a yield of 1.9 percent. Its five-year EBITDA growth rate is 50 percent, and its cash flow per share is $2.7 million. Its stock is trading at $32.11.
View Avago’s 10-Year Financials.
China Yuchai International Ltd. (CYD)
China Yuchai International is the automotive branch of industrial conglomerate, Hong Leong Group. It manufactures and produces diesel and natural gas for light, medium and heavy-duty vehicles, generator sets, marine and other industrial applications. It also supplies aftermarket diesel engine parts and remanufacturing services.
China Yuchai’s parent company, Hong Leong Asia, started off as a single building materials supplier in Singapore, but has since then expanded to a great deal of other segments, such as consumer appliances, climate control and packaging, in addition to the automotive branch mentioned. It has dominated in the markets in not only Singapore, but also Malaysia and China. More than 80 percent of its businesses span beyond Singapore.
Last June, investing Guru Jean-Marie Eveillard introduced China Yuchai to his stock portfolio with 26,000 shares. He later grew his holding in the following quarter by 111.54 percent.
Also in the third quarter, Charles Brandes reported a stake increase of 20.72 percent, and Francis Chou reported a holding of 25,537 shares.
China Yuchai has a dividend yield of 3.2 percent and a payout ratio of 0.16. It has an EBITDA growth rate of 12.5 percent in the last 10 years, and 12.5 percent in the last 5 years. Its stock is trading at ¥17.12.
View China Yuchai’s 10-Year Financials.
Flextronics International Ltd. (FLEX)
Flextronics International is an electronic manufacturing services provider to various industries including aerospace and defense, automotive, medical, energy, mobile and computing, to name a few. Headquartered in Singapore, it has facilities in 30 countries in four continents.
Flextronics has captured the likes of several investing Gurus, such as Ray Dalio, Steven Cohen and Jim Simons.
Both Larry Robbins and PRIMECAP Management own over 45 million shares of Flextronics, the top holders of the stock on GuruFocus. Flextronics remains Robbins’ seventh largest holding.
Flextronics has a five-year EBITDA growth rate of 19.1 percent, and a cash flow per share of $1.6 million. It is currently trading at $6.27.
View Flextronics International’s 10-Year Financials.