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Missed Out on the New Property Boom? Here's What to Buy Instead

By Dr. Steve Sjuggerud
Monday, March 16, 2015

"What I've been doing with my money for the last four years is buying Florida real estate," I told Liz Claman on "The Closing Bell" show last week.
 
"I started buying four years ago because it was CHEAP, and because investor sentiment was TERRIBLE."
 
But what should you do now?
 
It has been four years since the bottom.
 
U.S. real estate isn't as cheap as it was... and investor sentiment isn't as terrible as it was...
 
After a few years of being essentially dead, our local property market in Florida is now humming along like we didn't even have a crisis. People are optimistic again.
 
The thing is, I don't want to see too much of this when I'm buying...
 
The right time to buy an investment is when investor sentiment is terrible and when that investment is cheap. Where in the world can we find that today?
 
I told Liz Claman on TV: "The best place on the planet to see that right now is actually in China. Chinese stocks are showing terrible investor sentiment and they are incredibly cheap... so that's where I'm putting my money."
 
"Chinese-traded companies in Hong Kong – and some of these are the world's largest companies – they're trading at 5, 6, or 7 times earnings," I explained.
 
"This is really that U.S. real estate opportunity of four years ago," I said. "You have incredible value, and meanwhile investor sentiment is terrible. The conditions are ripe, [China is easing policy] so it's a really perfect scenario for Chinese stocks."
 
So, what Chinese companies am I talking about specifically?
 
According to Forbes, the world's three largest companies are all Chinese. They're bigger than ExxonMobil... and bigger than Apple… and they're all Chinese banks.
 
They are incredibly cheap. For you number-crunchers out there, they're trading at less than 6 times earnings – and they're delivering ROEs (return on equity) in the 20% range. Those are both outstanding numbers. They're all trading right around book value (a rough estimation of liquidation value), and they're paying close-to-6% dividends. Try and beat that!!!
 
Take a look at a few examples...
 
Company
P/E
ROE
P/B
Dividend Yield
Bank of China-H
5.8
17.7
1.0
5.6
CCB-H
5.6
20.4
1.1
5.9
ICBC-H
5.6
20.9
1.1
5.9
Averages
5.7
19.7
1.0
5.8

These three banks are the top three holdings in one of my True Wealth recommendations – the Global X China Financials Fund (CHIX). These three banks make up nearly 30% of this fund.
 
Do I have any concerns here? Absolutely – you're buying CHINESE BANKS!
 
The thing is, the value here is simply too compelling to pass up. If you're looking for an area where investor sentiment is terrible and it's dirt cheap, like real estate was four years ago, then you need to look at Chinese stocks that trade in Hong Kong – and Chinese banks, in particular.
 
Again, yes, you are taking a risk here – again, YOU ARE BUYING CHINESE BANKS. But right now, with such low prices, it is a risk worth taking...
 
Your upside is triple-digit percentage gains here... I urge you to consider it...
 
Good investing,
 
Steve




Further Reading:

Steve still likes U.S. stocks right now, too. Here are his two latest reasons why:
 
Why Rising Rates Won't Kill This Bull Market
Rising interest rates do NOT mean that stock prices have to fall...
 
Why Stocks Can STILL Soar Higher Than You Can Imagine
Stocks aren't nearly as expensive – compared with recent history – as many stock market bears like to think...

Market Notes


NEW HIGHS OF NOTE LAST WEEK
 
E-Trade (ETFC)... online broker
eBay (EBAY)... online market
NVIDIA (NVDA)... semiconductors
Best Buy (BBY)... electronics
Walt Disney (DIS)... entertainment
Time Warner Cable (TWC)... cable TV
Comcast (CMCSA)... cable TV
Bristol-Myers Squibb (BMY)... Big Pharma
Walgreens (WBA)... pharmacy
DaVita (DVA)... dialysis centers
Dollar General (DG)... dollar stores
Dollar Tree (DLTR)... dollar stores
American Eagle Outfitters (AEO)... clothes
Target (TGT)... department stores
DuPont Co. (DD)... chemicals
Scotts Miracle-Gro (SMG)... fertilizer
General Motors (GM)... auto maker
Fiat Chrysler (FCAU)... auto maker

NEW LOWS OF NOTE LAST WEEK
 
ExxonMobil (XOM)... Big Oil
Royal Dutch Shell (RDS)... Big Oil
Chesapeake Energy (CHK)... natural gas
Ensco (ESV)... offshore drilling
Transocean (RIG)... offshore drilling
Peabody Energy (BTU)... coal
Consol Energy (CNX)... coal
Walter Energy (WLT)... coal
Cliffs Natural Resources (CLF)... coal and iron ore
Pan American Silver (PAAS)... silver miner
Yamana Gold (AUY)... gold miner
Vale (VALE)... mining giant
Cameco (CCJ)... World's largest uranium miner
Joy Global (JOY)... heavy machinery
Lumber Liquidators (LL)... wood
Tiffany & Co. (TIF)... expensive jewelry
Wynn Resorts (WYNN)... casinos
Five Below (FIVE)... dollar stores
Mattel (MAT)... toys
Weight Watchers (WTW)... diets
Ambev (ABEV)... Brazilian beverage giant
Yandex (YNDX)... Google of Russia
Pandora Media (P)... streaming music

premium teaser

Local Chinese stocks are up big... but it's not too late...
 
Local Chinese stocks have soared...
 

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