Bullish on China, Russia: 3 Jim Rogers Picks - Analyst Blog

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In a recent interview, famed investor Jim Rogers offered insight into his investment strategy that appears to defy logic on the surface. However, a careful look into his investment idea offers a golden opportunity for investors seeking a higher ROI.

The author of Street Smarts: Adventures on the Road and in the Markets is more interested in 'beaten-up' stocks now. Instead of buying U.S. stocks when the Dow and the S&P 500 indices are trading near all-time highs, Rogers is aggressively shoring up shares in markets like China and Russia.

Why These Markets?

While justifying his decision to invest in a market that is down 65% from its zenith, Rogers argues that latest capital market reform guidelines in China make it a lucrative investment proposition in the long run. The new set of reforms aims to open up the tightly-controlled financial sector by developing a multi-layered equity market. There will be an improved share transfer system for small and medium-sized enterprises through a registration-based IPO system.

Local governments are likely to build regional equity-exchange markets, while its bonds connect the inter-bank bond market with stock exchanges. The proposed reforms are likely to protect the interests of investors and boost the beleaguered financial sector.

On his thoughts on the Russian market that is reportedly the "second-most hated stock market in the world," Rogers is candid in his confession to profit from a scenario when the stock market is down due to political crisis and is likely to move up in the long term. Although the stock market fell 10% in March, owing to the continued turmoil in Crimea and struggle for control of Ukraine, Rogers had invested heavily in Russian stocks. In fact, he even vows to continue doing so.

3 Stocks to Bet On

In order to profit from his strategic advice, we have picked three stocks from these markets that are likely to outperform the broader equity market. Along with a favorable Zacks Rank, these stocks belong to industries that have a 'Positive' Zacks Industry Rank. As a guideline, the outlook for industries with Zacks Industry Rank #88 and lower is 'Positive,' between #89 and #176 is 'Neutral' and #177 and higher is 'Negative.'

JA Solar Holdings Co., Ltd. ( JASO )

Headquartered in Shanghai, the People's Republic of China, JA Solar develops photovoltaic solar cells and solar power products based on crystalline silicon technologies. Earnings estimate revisions for this Zacks Rank #1 (Strong Buy) stock have moved up in the last 7 days, implying bullish sentiment for the long-term growth of the company. JA Solar belongs to the Solar Industry that carries a Zacks Industry Rank #37. The company had an earnings surprise of 300.0% in the last reported quarter.

Trina Solar Ltd. ( TSL )

Headquartered in Changzhou, the People's Republic of China, Trina Solar manufactures integrated solar-power products for use in residential, commercial, industrial and other solar power generation systems. Analysts have been moving their quarterly and full-year estimates higher of late, further suggesting a solid earnings momentum in the upcoming quarter. Trina Solar has a forward PE of 13.2x. It reported an earnings surprise of 225.0% in the last reported quarter. This Zacks Rank #1 (Strong Buy) stock belongs to the Solar Industry as well.

Qiwi plc ( QIWI )

Based in Moscow, Qiwi operates electronic online payment systems primarily in the Russian Federation, Kazakhstan, Moldova, Belarus, Romania, the United States and the United Arab Emirates. Over the last 7 days, earnings estimates did not show any upward or downward revisions for the year. Despite a lack of estimate revisions, we see an uptrend for the stock backed by its strong growth potential. With a forward PE of 22.6x, PEG ratio of 1.1x and a year-over-year return of 97.4%, this Zacks Rank #3 (Hold) stock is a solid pick. Qiwi belongs to Financial Transaction Services Industry, which has a Zacks Industry Rank #85.

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

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

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