Imagine a restaurant that is so unclean, health inspectors
wouldn't allow it to reside in the same shopping center as other
eateries. Well, this is just what investors have found when
searching for stocks listed in the "
." These stocks aren't allowed anywhere near mainstream stocks. Yet
in an increasing number of instances, this long-held dictum no
Most companies choose to play by the rules, filing detailed
financial statements, communicating with investors and generally
adhering to a high set of principles. But it's quite simple to
mislead and deceive investors: You merely avoid the New York Stock
Exchange, the Nasdaq and the American Stock Exchange, and instead
have your stock trade on the pink sheets. More than one-third of
companies on the Pink Sheets don't even bother providing investors
with any information, according to OTCmarkets.com.
Making matters worse, brokerage firms have a field day with these
stocks, as they have very little competition when it comes time to
offer a bid and
. The same stock can be sold to one investor at $5 a share and
acquired from another investor at $3 a share. This kind of spread
ensures huge profits for the broker/dealer and huge losses for you.
But in recent years, this low-rent corner of the market has been in
some classy company. Major global corporations are putting
theirshares on the Pink Sheets, in large part to avoid the
cumbersome paperwork required by the
Securities and Exchange Commission (SEC)
. Fear not. These companies are subject to rigorous regulatory
scrutiny back in their home markets and have little incentive to
What kind of companies are we talking about? How about
Nestle (Pink Sheets: NSRGY)
, the $200 billion (market value ) confectionary giant? The stock
has risen more than 75% in the last two years, though investors
avoiding pink sheet stocks wouldn't have even known about the move.
Here are three other pink sheet stocks you need to seriously
consider if you want exposure to the most dynamic regions and
industries around the globe...
1. Anglo American (Pink Sheets: AAUKY)
: $60 billion
This U.K.-based mining giant has a hand in platinum, diamonds coal
and iron. Outside of
Pepsi Co. (NYSE:
, it is the largest company in the world with a woman (Cynthia
Carroll) at the helm.
appear quite inexpensive, trading at less than seven times current
2. China Construction Bank (Pink Sheets: CICHY)
Market Value: $202 billion
With the Chineseeconomy showing possible signs of cooling and the
Chinese banking sector possibly on the hook for many bad loans,
this stock may not be timely, but it remains the single best way to
play the long-term China boom, from a financial services
perspective. I'd sit on this one and wait to see how the situation
plays out. You may find the stock to be a steal at just the right
time and be able to ride the shares up.
3. Volkswagen (Pink Sheets: VLKAY)
Market Value: $17 billion
In addition to the namesake brand, this German firm also controls
Audi, Lamborghini, Bentley and many others. On the heels of a
newly-opened manufacturing plant in Chattanooga, TN, management
aims to make VW as strong a brand in the United States as it is in
Europe and South America, where it is the top-selling brand. The
ultimate goal: to become the world's largest automaker, surpassing
Action to Take -->
As more global firms take up home on the Pink Sheets, you'll have
even more chances to invest in the global
. To be sure, it's easier to get lots of information on companies
Ford Motor Co. (NYSE:
than it is on a firm like Volkswagen, but that shouldn't deter you
from adding more international exposure to your portfolio. If
you've got more than 80% of your assets parked in stocks of U.S.
companies, then you're missing out on some of the most dynamic
global opportunities that will emerge in the years ahead.
-- David Sterman
P.S. -- If you're looking for quality stocks with high yields,
you should take a look at this one. It pays a 19.2% dividend yield.
It borrows cheap, gets paid handsomely and then pockets the spread.
You'll get the full story on this cash machine and others like it
in this video.
Disclosure: Neither David Sterman nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.
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