In Scott Bleier’s latest post, he notes:
My advice in buying the great European companies with big yields still holds true. And owning cheap and unique franchises does too. But don’t be a sheep for they will be slaughtered.
I agree that, for your long-term portfolios, there may very well be some excellent bargains over in Europe. Even for long-term holdings, I still believe in having a sensible risk management strategy. One stock that has my interest as a long-term idea here is TOTAL S.A., a major French energy firm. The stock has a very low P/E, yields over 6%, and is back down to its 2008 bear market lows. That said, I would definitely have a stop-loss below $40, as you do not want to get caught trapped in a breakdown below that significant bottom. Note that this is not a swing trading, momentum idea. I am strictly talking about an investment idea for your long-term portfolio. I have no position in TOT yet, and do not discuss my long-term portfolio very much in this tab at the risk of having it confused with my swing trading process. However, I think that years from now many of the QUALITY European firms will be much, much higher than where they are currently trading.
_________________________________
Makes sense as a long term strategy. SNY looks interesting too.
I love the longer term ideas Chess. Question though. You have identified support, but then there is still the ‘mattress factor’ how does one go about establish a stop in this situation. My concern is that all the monthly MAs < 100 are all turning down. Maybe that is better answered in 12631? I leave it up to you. Thanks
That is more for swing trading, Bernie. This is a long-term investing, value proposition playing for a major support buy. The huge yield is there as well. $40 is a logical support zone. I don’t see much of a mattress factor at this point.
Thanks Chess
here here. This is the beginning of 2008 for the Europeans…
I’ve looked at it myself many times but have never bought because of the 30% withholding tax(used to be 25%) – just doesn’t make much sense and the option premiums are not compelling.
I love the company otherwise
TEF, 55$B Spanish telecom. 14% yield, trading @ an 8 p/e, 1.6xbook. trading @ 2003 levels. Trades $60M a day avg, so no liquidity issues. Depending on how the weekly finishes out, you have a safe exit, 8% +/- below cost. No position yet, so not talking my book.