GuruFocus publishes the implied future returns for the 18 largest stock markets in the world, which can be found on the Global Market Valuation page under the Market tab.
These market valuations are measured by the ratio of total market cap to GDP. As of Nov. 5, of the 14 markets listed in the valuations of developed countries, the projected annual return for the U.S. market is 0.6%, beating only Japan at 0.5%.
Italy and Netherlands take the third and fourth spots for projected annual return, at 7.6% and 7.1%, respectively. Looking at the rankings, it’s apparent that several European markets are projected to have much higher returns than the U.S.
Taking an international position could be a good way to diversify a portfolio. Using the All-In-One Screener, I filtered the stocks to include only UK/Ireland and Europe stocks that are held by at least two gurus. The following companies are the top five international stocks that are held by the gurus as of the third quarter.
Three gurus currently hold positions in Sanofi, with the Vanguard Health Care Fund (Trades, Portfolio) in the largest holding with 3,250,900 shares.
Sanofi is a healthcare company incorporated in France, and develops and manufactures a variety of healthcare products. Its main activities are pharmaceuticals, human vaccines, and animal health.
The company’s gross margin has been in decline at -2.57% over the past five years.
The following graph depicts Sanofi’s revenue and net income over time.
The current dividend yield is 3.69%, which is close to the five-year low.
David Herro (Trades, Portfolio) of the Oakmark International Fund also holds shares in Sanofi, while Bestinfond (Trades, Portfolio) sold out of its holding during the third quarter.
Roche Holding (XSWX:ROG, Financial)
As of the third quarter, three gurus held shares in Roche Holding; PRIMECAP Management (Trades, Portfolio) held the largest percentage of shares outstanding at 1.22% or 10,387,101 shares.
Roche Holding researches and produces medicine in oncology, infectious diseases, immunology, metabolism, and neuroscience.
The company’s diluted earnings per share have been increasing steadily, and was â‚£12.93 in FY 2013.
Roche’s dividend yield is 2.69%, close to its three-year high. The company has paid an annual dividend every year since 2006, with the exception of 2008.
The stock has been up 15% since the beginning of the year, and may be overvalued when compared to the Peter Lynch earnings line.
Tweedy Browne (Trades, Portfolio) Global Value and the Vanguard Healthcare Fund also hold positions in Roche.
GlaxoSmithKline (LSE:GSK, Financial)
David Herro (Trades, Portfolio) holds 22,552,000 shares in GlaxoSmithKline as of the third quarter, which represents 0.47% of shares outstanding.
GSK is a pharmaceutical company whose primary areas of focus include respiratory, anti-virals, anti-bacterials, vaccines, and dermatology.
In FY 2012, total current liabilities outweighed total current assets; however, the situation improved the following fiscal year, though the margin is still narrow.
The dividend yield is 5.4%, close to the company’s 10-year high. The five-year growth rate is 6.5%, which is higher than 82% of the companies in the drug manufacturing industry.
Brian Rogers (Trades, Portfolio) of the T. Rowe Price Equity Income Fund and Tweedy Browne (Trades, Portfolio) Global Value also held positions in GSK as of the third quarter. Bestinfond (Trades, Portfolio) sold out of its holding during the quarter.
Herro holds the largest holding in Tesco as of the third quarter with 72,090,000 shares. He reduced his holding by almost 60% from the previous quarter.
The British supermarket chain took a hit last month when it was revealed that accounting discrepancies at Tesco had overestimated profits by about £250 million. The stock has been down 42% since the beginning of the year and is currently £1.93.
Total current liabilities have outpaced current assets every year since 2005, a precarious position to be in during tough times.
Tesco’s operating margin has also been in decline, at -12.27% over the past five years.
Bestinfond (Trades, Portfolio), one of the funds of Spanish value investing firm Bestinver, is also a Tesco shareholder with 19,448,708 shares.
Christian Dior S.A. (XPAR:CDI, Financial)
Of the gurus, Herro holds the largest stake in the French luxury goods maker with 1,093,000 shares, or 0.61% of shares outstanding.
Christian Dior designs and retails a variety of luxury goods including clothing, accessories, leather goods, fragrance, and cosmetics. The company holds a 40.9% stake in LVMH Moet Hennessey, the world’s largest luxury goods conglomerate.
GuruFocus rates Christian Dior as a four-star company based on its revenue and earnings predictability. Diluted earnings per share has been increasing and recorded at €7.09 in FY 2011.
The DCF model estimates a margin of safety of 36%, suggesting the company may be undervalued. Its current dividend yield is 1.98%, while the five-year dividend growth rate is 41.8%. This is higher than 97% of companies in the luxury goods industry.
Bernard Horn (Trades, Portfolio) of the Polaris Global Value Fund holds 19,265 shares in Christian Dior.
To view the portfolios of additional gurus, visit the List of Gurus page. Use the All-In-One Screener to find stocks with about 120 filters. Not a premium member of GuruFocus? Try it free for 7 days.
