I recently reconsidered my stance on Nokia Corp (ADR) (NYSE:NOK) after taking a closer look at three numbers — $10.7 billion in cash being the most convincing — which suggest Nokia stock isn’t the low-priced dog I thought it was.
This got me thinking about other low-priced, large-cap foreign stocks (Nokia has a $31 billion market cap) that aggressive investors might be interested in owning, so I did a stock screen to narrow the field. Here’s what I found.
The Finviz.com universe of large-cap stocks (market cap > $10 billion) domiciled outside the U.S. but trading on a U.S. exchange came to 181. From that group, 24 stocks trade at $10 or less; Nokia stock being one of them.
Interestingly, if you do the same screen for U.S.-based large-caps the list to choose from widens from 181 to 458 with only two choices at $10 or less — Sirius XM Holdings Inc (NASDAQ:SIRI) and Sprint Corp (NYSE:S) — suggesting U.S.-based stocks are overvalued relative to their foreign counterparts, but that’s a subject for another day.
Right now, I want to determine if Nokia stock is the best foreign large-cap stock under $10. To do that, I’ve identified three alternatives. At the end, I’ll decide which of the four stocks, including Nokia, is the best to own — and more importantly, why.
Ambev SA (ADR) (ABEV)
Operating in 18 countries including Canada and Brazil, Ambev SA (ADR) (NYSE:ABEV) is the largest beverage company in Latin America. Formed in 2000 by the merger of two Brazilian breweries — Brahma and Antarctica — it’s now 61%-owned by Anheuser Busch Inbev NV (ADR) (NYSE:BUD).
As a controlled company, not much happens without the consent of its majority owner, which tends to make ABEV trade in a very tight range. Over the past three years, for instance, it’s traded between traded between $4-$7, and narrowly between $5-$6 over the last 12 months.
Income investors will be interested in Ambev’s 3% dividend yield. However, Brazil has been a serious challenge for the company, and that has hurt the overall business. Everywhere else, business is strong.
Year-to-date, ABEV stock is up 13% as investors bet Brazil will rebound. I think that’s a smart bet.
Cencosud SA (CNCO)
The contrarian in me just loves the idea of betting on retail — in Latin America. How crazy is that? But the truth is, while retail might suck in North America, it’s very much in a growth phase in places like Chile where retail conglomerate Cencosud SA (NYSE:CNCO) is based.
Cencosud operates department stores, grocery stores and home improvement stores in Chile, Peru, Argentina, Brazil and Colombia. It also owns shopping centers and a financial services business, making it a vertically integrated retail conglomerate.