This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Across the Atlantic, Stocks Look Cheap

Every day that the Dow jumps another 100 points and some random Internet stock goes through the roof, it gets harder to find a bargain in the U.S. stock market.

So if you're trying to rustle up some cheap stocks, you're going to have to head overseas.

Many international markets have trailed the U.S. this year. The S&P 500 is up 9.5% this year, and the Nasdaq has gained almost 20%. Meanwhile, European stocks are down. Asia has been weak from SARS, and Japan is still Japan.

Value manager David Herro of the (OAKIX) Oakmark International fund is a good guide for investing abroad -- his fund's three, five and 10-year returns rank in the top 5% of all overseas offerings. In today's column, Herro weighs in on where he's shopping and what he's avoiding.


On the surface, Europe doesn't look like such a great place to invest your money. The economies of Germany, Italy and the Netherlands appear headed for recessions. The European Central Bank has been slow to cut interest rates. And some countries -- particularly Germany -- are slow in reforming their rigid labor and social policies that make it tough for companies to lay off workers and cut costs during tough times.

But all these worries make this region of the world prime hunting ground for inexpensive stocks. And Oakmark's Herro is taking advantage of the market weakness. "Today we're much heavier in Europe than we were two or three years ago," he says. "Three or four years ago, European blue-chips were prohibitively expensive. But today these stocks are cheap, especially given low inflation. Just look at the top 10 holdings in the fund."

Indeed, Oakmark's largest holdings are some of the best-known names in the U.K. and Europe: Ericsson (ERICY), Vivendi Universal (V), GlaxoSmithKline (GSK) and Diageo (DEO).

Some of these stocks are sporting dividend yields of 3% and over -- about double the yield on the S&P 500 right now. And if a foreign company's stock also trades here in the U.S., then its dividend is eligible for the new 15% dividend tax rate. That's another thing that makes those yields enticing.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs