As pointed out by Warren Buffett, the percentage of total market cap relative to the U.S. GNP is “probably the best single measure of where valuations stand at any given moment.” GuruFocus has taken this comment a step farther and applied it to the global markets. Including the United States, 20 different global markets were analyzed. More information on the valuations can be found at the following link: Global Market Valuations. An interesting aspect of the global valuations is that the U.S. markets have the lowest projected annual returns over the next 8 years, with an implied annual return of 0.9 percent including dividends.
With this information, I decided to scan the global markets in the search for better value. Using the investing gurus for guidance, I used the GuruFocus All-In-One Screener to find the most widely held stocks by the gurus on the global exchanges. Access to data from stocks trading on the global exchanges is available through a Global Membership at GuruFocus. A 7-day free trial is available for new and existing subscribers to GuruFocus. While screening for international stocks I searched for stocks on both the European and Asian exchanges. The European results are displayed in the article: Widely Held Guru Stocks Trading In Europe. Here are the results for the most widely held guru stocks trading on the Asian exchanges:
Toyota Motor Corp (TSE:7203)
Market Cap ¥20.59 Trillion ($189.22 Billion), P/E: 11.10
Business Predictability: 1/5, Financial Strength: 8/10, Profitability & Growth: 7/10
Toyota Motor is headquartered in Toyota City, Japan and trades on the Tokyo Stock Exchange. The stock also trades on the NYSE in the United States under the symbol TM. The company primarily conducts business in the automotive industry. Its operations include the design, manufacture, assembly and sale of passenger cars, minivans and commercial vehicles such as trucks and related parts and accessories. The stock is priced at ¥6,492.0 ($118.96) and is up 3 percent year-to-date. It is undervalued according to its Graham Number of ¥8,127.6 and Peter Lynch Value of ¥14,574.3. It also has a low P/E of 11.10 and would only need to grow its earnings at a rate of 5.63 percent to justify its current price according to the GuruFocus DCF Calculator. The stock is held by 6 gurus we follow with David Herro of the Oakmark International Fund holding the largest position of 17.5 million shares, representing 0.55 percent of the shares outstanding.
The Graham Number is a conservative valuation based on tangible book value and earnings, but does not factor in growth. Graham Number = Square Root (22.5 x Tangible Book Value per Share x EPS)
The Peter Lynch Fair Value is a measurement based on earnings growth.
Peter Lynch Fair Value = 5-year EBITDA Growth Rate x EPS
Samsung Electronics Co Ltd (XKRX:005930)
Market Cap â‚©178.23 Trillion ($170.98 Billion), P/E: 4.90
Business Predictability: Not Rated, Financial Strength: 8/10, Profitability & Growth: 8/10
Samsung Electronics is headquartered in Suwon, South Korea and trades on the KRX Korea Exchange. Samsung is engaged in consumer electronics, information technology and mobile communications, and device solutions businesses worldwide. In the United States, the company is most well-known for its smart phones, tablets and consumer appliances. The stock is currently priced at â‚©1,188,000 ($1,141.31) and is down 9 percent year-to-date. The stock is undervalued according to its Graham Number of â‚©2,174,832. The stock is also trading at a low P/B ratio of 1.12 and its book value per share has been increasing at an annual rate of 18.87 percent over the past 5 years. The stock is held by 6 gurus we follow with David Herro of the Oakmark International Fund holding the largest position of 527,000 shares, representing 0.36 percent of the shares outstanding.
Honda Motor Co Ltd (TSE:7267)
Market Cap ¥6.77 Trillion ($62.22 Billion), P/E: 11.30
Business Predictability: 1/5, Financial Strength: 7/10, Profitability & Growth: 7/10
Honda Motor is headquartered in Tokyo, Japan and trades on the Tokyo Stock Exchange. The stock also trades on the NYSE in the United States under the symbol HMC. Honda manufactures and sells motorcycles, automobiles, and power products. The largest percentage of its revenue comes from it automobile business in North America. The stock is currently priced at ¥3773.5 ($34.68) and is down 12 percent year-to-date. It is undervalued according to its Graham Number of ¥5,113.2 and Peter Lynch Value of ¥4,214.8. The P/S ratio of 0.56 is almost at its 10-year median ratio of 0.55. The stock is held by 5 gurus we follow with David Herro of the Oakmark International Fund holding the largest position of 30.8 million shares, representing 1.71 percent of the shares outstanding.
Astellas Pharma Inc (TSE:4503)
Market Cap ¥3.53 Trillion ($32.44 Billion), P/E: 13.00
Business Predictability: Not Rated, Financial Strength: 9/10, Profitability & Growth: 6/10
Astellas Pharma is headquartered in Tokyo, Japan and trades on the Tokyo Stock Exchange. The stock trades OTC in the United States under the symbol ALPMY. Astellas Pharma manufactures, markets and imports/exports pharmaceutical products worldwide. The company focuses on the therapeutic areas of urology, immunology and infectious diseases, oncology, neuroscience, and diabetes mellitus complications and kidney diseases. The stock is currently priced at ¥1,596.0 ($14.67) and is up 31 percent year-to-date. It is overvalued on a number of measures such as Projected FCF, Median P/S Value, and its Graham Number. The company has plenty of promise with its product pipeline. Its oncology sales increased 87 percent last year with the launch of the drug XTANDI. Its forward P/E is estimated to be 22.35. It is a difficult value play, but has growth potential. The stock is held by 4 gurus we follow with the Vanguard Healthcare Fund holding the largest position of 62.9 million shares, representing 2.85 percent of the shares outstanding.
Hang Lung Group Ltd (HKSE:00010)
Market Cap HK$57.58 Billion ($7.43 Billion), P/E: 12.70
Business Predictability: 1/5, Financial Strength: 6/10, Profitability & Growth: 5/10
Hang Lung is headquartered in Central, Hong Kong and trades on the Hong Kong Stock Exchange. The stock trades OTC in the United States under the symbol HNLGF. Hang Lung Group is an investment holding company that operates in the property development market in Hong Kong and Mainland China. It is engaged in property development for sale and lease, including large-scale commercial, office, serviced apartment, and residential developments. The stock is currently priced at HK$41.10 ($5.30) and is up 4 percent year-to-date. It is currently undervalued with a P/B ratio of 0.78 and an increasing book value per share making the stock undervalued by at least 28 percent. Book value per share is not only stable, but has been increasing at an annual rate 6.53 percent. The stock is held by 4 gurus we follow with the Matthews Pacific Tiger Fund holding the largest position of 32.6 million shares, representing 2.42 percent of the shares outstanding.
With the U.S. markets being shown as overvalued according to Market-Cap/GDP Valuation and the Shiller P/E, it is a good idea to also look to the global markets to find value. The following article provides more information on international investing: Why Investing Internationally Can Help Your Portfolio. GuruFocus provides the tools to screen for and analyze stocks trading on the exchanges in Canada, UK & Ireland, Europe, Asia and Oceania. The ability to research stocks trading on the exchanges in India, Pakistan, Indonesia, South America, and Africa is on its way.
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