As we move into the New Year, I have noticed a lot of the pundits and gurus suggesting that the Europe is the place to be in 2014.
Although many European markets had solid years in 2013, they did not keep pace with U.S. markets for the most part. The economy in Europe is just now starting to grind its way out of recession, and the European Central Bank is doing whatever it takes to get the continent moving again. A year-end poll of 350 strategist and analyst by Reuters found that most of them think that the European markets will be the best performer in the new year as the economy strengthens somewhat and the Euro falls against other leading currencies.
It is way too early for me to even consider what might be the best markets for the year — in Europe or elsewhere. But what I can tell is which stocks have the fundamental and quantitative characteristics that position them to be among the best performers no matter where on the globe they call home.
When I fire up Portfolio Grader and look at Europe, I see right away that the big stocks being talked about by the analysts like Deutsche Bank (DB) and Santander (SAN) receive poor grades from our ranking system and should be avoided by the majority of investors.
Core Labs NV (CLB) is an example of the type of company that is likely to lead any market rallies in Europe this year. The company is in the business of providing reservoir description, production enhancement, and reservoir management services to the oil and gas industry worldwide. This may sound complicated, but it simply means helping oil companies to enhance production and gain increased amounts of oil and gas from drilling locations.
Analysts have been raising their estimates for CLB earnings in the last quarter of 2013 as well as the full year 2014. Portfolio Grader spotted the strong fundamental performance of this company and upgraded the stock to an “A” back in October, and the Europe stock is still a “strong buy.”
Fleetmatics Group (FLTX) is another Europe stock with the characteristics needed to be a leader in the European markets this year. The company makes software that allows operators of commercial vehicle fleets to track vehicles and learn about vehicle location, fuel usage, speed and mileage. The Irish company has seen earnings explode this year with growth of more than 700% in bottom-line profit increases.
Earnings are expected to accelerate over the next five years after posting more than 30% average annual gains in the preceding five. This type of performance was not unnoticed by Portfolio Grader, and the minute the stock had a one-year trading history in October the shares debuted in the system with an “A” ranking. The stock remains a “strong buy” at the current price.
In my experience it is almost impossible to predict which markets will perform the best in any given year. Using Portfolio Grader, however, we can identify those stocks with the superior fundamentals needed to lead any market higher.