Trading Canon's global footprint


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When looking for emerging markets exposure, keep an eye out for those companies that are based in America and other developed economies but do a lot of business in emerging markets.

The  currency wars  can actually benefit a company with global sales, depending on the market and position of the company it hurt.

Many of these derivative / downstream plays have the added value of being more stable companies operating in developed markets.

One of those companies to keep an eye on is Canon (CAJquote). Canon is based in  Japan  but trades here on the New York exchange as an ADR.

What is an ADR?

An ADR, or American Depository Receipt, is a negotiable certificate for shares of a foreign stock that can be bought and sold on a U.S. exchange. ADRs allow investors to buy shares in a foreign company and collect any dividends and capital gains in U.S. dollars.

Since hitting a low back in July, Canon has been making higher highs and higher lows, with a new 52-week high yesterday.

There are many reasons to consider looking at CAJ. Fundamentally, the company seems fairly valued with a PE value of 19.5073 -- in line with the computer peripherals industry -- and one of the strongest net margins in the industry.

One of the most impressive aspects of this stock is that it has little or no debt in its capital structure and may present less financial risk than the industry aggregate.

Canon is truly a global player in the plain paper copying machines, laser printers, inkjet printers, cameras and steppers with sales in Japan, the United States,  GermanyFranceTaiwanChinaMalaysiaThailand   and  Vietnam .

Consider the following two trades.

Option1:   Consider purchasing stock in a stair-stepping method each time the stock retraces back to the trend line.

For example if you wanted to buy 200 shares of CAJ:

Buy 75 shares on a pullback. Then, when the price pulls back another 3% to 4%, consider buying an additional 50 shares and so on…

If the price continues to run higher, look for the dividend pay dates in order to capture a lower price due to the dividend payout.

Option 2:   Consider looking at longer-dated call option to capture earnings after the holidays. Caution is warranted as options volume in CAJ is low. Please use limit orders to protect yourself!

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: News Headlines , Investing Ideas , Stocks
Referenced Stocks: CAJ

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