Fund Manager Finds Bargains in Foreign Stocks

The cash strapped U.S. consumer is taking a breather. But international fund manager Edwin Lugo has just begun to bargain shop.

"It's difficult for the global economy to grow without the U.S. consumer because everything is linked," says Lugo, portfolio manager of the four-star Franklin International Small Cap Growth Fund(FKSCX Quote - Cramer on FKSCX - Stock Picks). "The problems in the world's largest economy are quickly working their way down to even the smallest emerging markets."

The whole decoupling idea now looks firmly debunked. Chinese and Indian markets have been mercilessly hammered since last year. European companies are feeling the fallout from an overly strong Euro. Even Latin American bellwether Brazil, which could do no wrong as commodity prices soared, is seeing a pullback as shares of Petrobras(PBR Quote - Cramer on PBR - Stock Picks) and CVRD(RIO Quote - Cramer on RIO - Stock Picks) selloff.

The value-conscious Lugo is seeing increased buying opportunities amid the frenzied global selling as potentially profitable babies are expelled with the proverbial bathwater. Aside from an attractive valuation -- Lugo considers himself a GARP, or growth at a reasonable price manager -- he also hunts for companies with a sustainable competitive advantage, low debt and lots of cash generating power. The $25 million fund has returned 23% annually over the past five years, seven percentage points better than the benchmark MSCI EAFE index. Year-to-date the fund is down 13%, over a full percentage point better than its bogey.

One name recently added to his portfolio is British jewelry retailer Signet Group(SIG Quote - Cramer on SIG - Stock Picks), which saw its shares fall 54% over the last twelve months. Signet owns the top two jewelry chains in the U.K. and the number two player in the U.S Kay Jewelers.

« Previous Page

1 2 3

Next Page »