David Herro: The International Market Guru

Author's Avatar
Nov 25, 2014
Article's Main Image

If you're looking to start buying stocks in the international market, David Herro (Trades, Portfolio) would be the perfect person to learn how to do it successfully. In 2010, he was named the International Stock Fund Manager of the decade by Morningstar.

Herro recently purchased four new stocks, increasing his portfolio to 60 with a total value of $28.919 billion. His newest stock picks include: Melco Crown Entertainment Ltd from Hong Kong, EXOR Spa (MIL:EXO, Financial) from Italy and Swedish Match AB (SWMA, Financial)

Melco Crown Entertainment Ltd develops, owns and operates casino gaming and entertainment resorts. Due to the Chinese crackdown on gamblers, prompting them to take it easier on the "extravagance," the casino industry is looking at months of falling revenue.

03May20171247031493833623.png

Here is the company's net income in relation to revenue.

The current price of this stock is HK $67.

Although the casino crackdown may make investors believe a grey cloud has been cast over any and every Chinese casino, we have reason to believe this stock is something you may want to consider.

For starters, the Chinese market has one of the highest percentages in emerging markets, coming in at 31.7%.

03May20171247031493833623.png

We also came up with five other reasons why this is a good company to invest in:

  • The Piotroski Score is a 7 out of 7
  • Price is close to 1-year low
  • P/E ratio of 19.30 is close to 2-year low
  • P/B ratio of 3.2 is close to 1-year low of 3.11
  • P/S ratio of 2.81 is close to 1-year low of 2.73

Exor Spa is an investment company that focuses on the auto, agricultural and construction equipment industries. The company is owned by the Agnelli family.

The Agnelli family will own a quarter of Ferarri since 80% of the company's shares are going to FCA's existing shareholders. Ferrari is worth approximately €9 billion, meaning Exor's holding is about €2.25 billion.

The current price of this stock is €35.08. We believe this is a good investment because the Altman Z-score is 23.94, which is a strong score and also becuse the Piotroski F-Score is 7 out of 7, also a strong score. There are a couple of things we believe you should be cautious of, however, as an investor. First, the gross margin has been at steady negative decline of 24%. Also, the company has issued €16.2 billion of debt within 3 years and continues to issue new debt.

03May20171247041493833624.png

This chart shows the comapny's revenue in relation to net income.

Swedish Match ABÂ sells, markets and develops tobacco products, including snus, lighters, cigars and chewing tobacco.

The company is looking to convince the U.S. market to expand the selling of snus, a smokeless tobacoo and alternative to smoking cigarettes. The smoking alternative is popular in Sweden and Norway and has grown from 0 to selling around 50 million cans in the U.S. just last year; however, the concern for mouth cancer leaves it out of the European Union.

The current price os this stock is kr243.50. We believe this is a good investment because the company has shown predictable revenue and earnings growth, the operating margin is expanding, and its dividend yield is close to a 5-year high. Two reasons investors should be cautious, however, is the stock price is close to a 2-year high, and the P/S ratio of 3.72 is close to 2-year high of 4.

03May20171247041493833624.png

Here's a look at the company's P/S ratio. This stock has been traded between the P/S ratio of 1.777 and 9.168. If the stock had continued to trade at 1.777, the prices would have been where the lower red line is. On the contrary, if the stock continued to trade at 9.168, then the prices would have been where the upper red line is.