Friday , 21 June 2024

It’s Time to Invest In Europe – Here’s Why & How

The Eurozone economy (and currency) – which was once on the brink of complete european_union_flags_1and utter disaster – is finally on the road to recovery….[Here is] a safe way for skittish investors (i.e. – the non-contrarians) to take advantage of the opportunity in Europe before it disappears. Words: 503; Charts: 1

So writes Louis Basenese, Chief Investment Strategist ( in edited excerpts from his original article* entitled The Safest Way to Bet on a Rebound in Europe.

[The following article is presented by  Lorimer Wilson, editor of and and the FREE Market Intelligence Report newsletter (sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Basenese goes on to say in further edited, and in places paraphrased, excerpts:

GDP Growth UP

…Make no mistake, we’re witnessing a data-driven – and therefore, legitimate – change of heart on the part of Wall Street analysts when it comes to Europe….Case in point: the latest reading of the Eurozone PMI Composite Output Index just checked in at 50.4 in July – the highest reading in 18 months – and any reading above 50 indicates expansion. The data underscores the European Commission’s expectation that the Eurozone economies will return to growth in the fourth quarter.

I’ll concede that a GDP growth estimate of 1.4% in 2014 isn’t China-esque but growth is growth and it’s a definitive sign that Europe isn’t going to fade to black.

Stock Markets UP

Of course, as I’ve long contested, we only need conditions to transition from “bad” to “less bad” for equity markets to respond. That’s happening and stocks are responding right on cue. Over the last month, European stocks are up 8.2% – nearly doubling the return of U.S. stocks – and European bank stocks are performing even better. After hitting a series of higher lows in late June, the iShares MSCI Europe Financials ETF rallied 9.9% in July.

Built Ford Tough

Now, if you’re still too scared to dip your toes in Europe via one of these ETFs, you can still benefit from the imminent turnaround… With a homegrown opportunity, no less.

Back in May, I introduced a…stock indicator based on Ford (F) F-150 trucks [which suggests that] since small business owners account for a large portion of pickup sales, by gauging sales of F-Series trucks, we can track the health of the overall economy.

Ford is firing on all cylinders in the United States [with] pickup sales, in particular, climbing higher. All told, Ford is going to enjoy its best sales year in the United States since the recession hit.

Conditions in Europe haven’t been so rosy but, again, the data points to an imminent turnaround.

  • The company’s quarterly report last week noted that while European operations still incurred a loss, results improved quarter-over-quarter and year-over-year. In other words, the bottom is in.
  • More importantly, Ford has been able to increase its market share in Europe through the downturn so as the recovery takes root – and its European operations return to profitability – the company should rake in even more revenue.

Bottom line:

Ford represents a unique, safe and cheap way (shares trade for less than 12 times earnings) to profit from a continued recovery in the United States – and the imminent rebound in Europe….You might be a redneck if you drive a pickup but you’d be a pretty darn smart redneck if you also owned a few hundred shares of Ford!

Ahead of the tape,

Louis Basenese

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

* (© 2013 Wall Street Daily, LLC. All rights reserved.)

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