When looking for "the next big thing," it's imperative to cast a
Consider this: In 2011 the world's growth domestic product (GDP
) totaled $69.9 trillion. Of that only about $15.1 trillion came
from the U.Smarket . That means close to $55 trillion in economic
activity took place outside the United States.
Unfortunately, most investors only pay attention to U.S.
companies. But while the majority of the investment community is
focused solely on the United States, I see a lot of otherwise
overlooked countries that are bringing in a ton of
Take Israel for example. You might never have considered it, but
Israel is one of the fastest-growing countries in the world.
Israel, with a $242.9 billion GDP in 2011, consistently posts
higher growth numbers than the United States. In fact, since the
beginning of 2005, Israel's quarterly growth rate has slipped
beneath the United States' only twice, and it has exceeded it by
more than a full percentage point every quarter without fail since
the end of 2007.
Long-term, these results show up in the stock market. The
Israeli market is best measured by the TA-25, which tracks the
largest 25 companies on the Israeli stock exchange.
In the past 10 years, the total return on the TA-25 has been an
incredible 225.3%. This works out to 12.6% compounded annually, far
and away above the 7.8% annualized return for the S&P 500
during the same period.
The difference in performance during this period is striking:
$100,000 invested in the S&P 500 turned into $211,731. That
same investment in the Israeli market would have yielded $328,212,
a difference of more than the initial investment.
Of course, a country's stock exchange is only as good as the
companies that are listed on it, and right now I want to take a
look at one of my favorite Israeli-based companies:
SodaStream is effectively a soft-drink company with a twist.
Instead of yeast, the company uses carbon dioxide cartridges to
give soda pop its fizz. A special countertop machine the size of a
blender mixes concentrate in special reusable bottles.
Unsurprisingly, the machines and the flavorings are flying off
the shelf. I like the device because it has a variety of sugar-free
options. And the stuff is actually cost-effective versus name
brands such as
, after the cost of the machine has been recouped.
For families that drink a lot of soda, these savings can be
appreciable -- or at least perceived as appreciable -- which might
push a consumer into the roughly $100 purchase.
The thing that I like most about this company is that it has a
long history of profitability. Even during the financial crisis,
the company made money. And most recently, in 2011, it turned a
roughly 10%net profit on $289 million in revenue.
Yet despite a good performance year-to-date, theseshares are
still priced cheaply, at only 24 timesearnings . For a company with
such growth potential, this strikes me as unduly
Given its sales and earnings this year alone, I think the shares
have afair value of $1.2 billion (30 times anticipated 2012net
earnings of $40 million). That's 50% upside for this year's
results, which are already largely achieved.
The best part is, even though the company is based in Israel,
you can invest in it without even leaving the U.S. stock market. As
you might have noticed from the Nasdaq ticker symbol, you can buy
shares of SodaStream just as easily as you would shares of
General Electric (NYSE:
Risks to Consider: Of course with investing, nothing is 100%
certain. International stocks are subject to the same volatility as
stocks that trade in the United States.
Action to Take -->
But that said, if you're ignoring what can be found in foreign
markets like Israel, then you could be missing out on some of the
... including companies like SodaStream.
P.S. -- My focus here at StreetAuthority is to find the next big
thing... the game-shangers. But all too often it's impossible to
invest in these companies because they're not traded on an
exchange. But my research team and I have come up with a backdoor
into this world of private investing. This is the same way Mitt
Romney got extraordinarily rich. Rockstar Bono made a killing
investing privately too. As did many other notable millionaires. To
learn more, click here.
Andy Obermueller does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.