It's no secret that China's phenomenal growth has been driving
the global recovery. China's first-quarter GDP grew at an 11.9%
annual pace despite three significant increases to reserve
requirements that were designed to cool lending and growth. That's
why in much of 2009 and early 2010 I was bullish on China and
overweighted my global portfolios in favor of this country. Some
favorite picks of mine included
) among others.
But all good things must come to an end and right now it's time
to get selective about which China stocks you buy. That's why I
recommend investors cut back their China holdings and look for new
opportunities in emerging markets.
To be clear, there is no "China bubble." I still actually
recommend some Chinese stocks in my paid newsletters - including
) and Chinese agriculture companies
). But the B word is one of the most terrifying things Wall Street
can hear, and the word has followed China's every move of late. As
a result, Chinese stocks have become quite volatile and the market
has become much more selective. That means your portfolio should
get selective on China stocks, too.
Again, I'm not bearish on the country, but there is reason to be
cautious in this region and there's no need to take on the risk of
having a portfolio overweighted in China when there are so many
other countries that are delivering solid profit opportunities.
Here are a few up and coming emerging markets to watch:
Israel Stocks to Buy
The first non-U.S. country I'm targeting for market-beating
gains in the year ahead is Israel. With a strong "currency
tailwind" from a strong shekel and favorable exchange rates,
Israel's economy is doing well. Additionally, this nation is
formally moving from emerging to established status for
institutional investors, we're at the beginning of what should be a
fantastic growth run for Israel.
My top Israel stock right now is
Internet Gold-Golden Lines
). This communications stock is one of Israel's largest Internet
service providers. IGLD provides Internet access to more than
960,000 home subscribers and about 90,000 business customers
through its Smile.com subsidiary. The company's other services
include virtual private networking and Web hosting. Its Smile.Media
subsidiary manages Internet portals and e-commerce services, while
its Internet Gold International branch handles these activities
outside of Israel. The stock is up more than 35% year to date, and
his been a member of my
newsletter since January.
Brazil Stocks to Buy
Another booming emerging market is Latin America. In years past,
investors have largely cashed in on natural resource plays or
utilities, but this market is opening up as a booming middle class
increases spending and more Western businesses reach out to the
region. Consider that Brazil auto sales hit an all-time high in
2009 even as U.S. auto sales were collapsing.
Ford Motor Co.
) alone saw 2009 Brazil sales jump 11.35% from the previous year to
3.14 million units -- a third straight annual record.
Global blue chip stocks like Ford are always a good way to play
emerging markets, but if you really want to roll up your sleeves
and get into Brazil I recommend
Companhia de Bebidas das Americas
). Translated to "the American Beverage Company," and commonly
known simply as AmBev, this stock company dominates the Brazilian
beer market with brands such as Antarctica, Brahma and Skol.
Additionally, the company sells Pepsi brands, Lipton iced tea and
other beverages that include mineral water and sports drinks. Along
with Brazil, AmBev sells its products in some 13 other countries,
including the South and Central American countries of Argentina,
Peru, Ecuador, Uruguay and Venezuela.
As of this writing, Louis Navellier owned BIDU, YUII, YONG,
IGLD, F and ABV in personal or client portfolios.