9 Stocks to Buy for a European Recovery
BOSTON (TheStreet) -- With the prospect of a resolution to the long-running European sovereign debt crisis in the offing, and the continent's market starting to show signs of life, investors could do well buying stocks of some of its healthiest companies.
As for the crisis, there were two big positives on Wednesday, as a German court said the country can ratify the eurozone's new rescue fund, which is seen as a key to a recovery plan, while separately, Spain said it might not need more aid.
That should have investors thinking about the opportunity of a quick recovery for some stocks, even though the region's economies will likely to continue to struggle.For gun-shy retail investors who missed out on the post-recession market rally, S&P Capital IQ said in a Sept. 12 research note that "lingering European concerns could provide U.S. investors with a second chance for long-term upside as Europe recovers from crisis pricing." With that in mind, S&P Capital IQ cited three actively managed European-focused mutual funds as quality performers worth considering, including the $1.6 billion Causeway International Value Fund (CIVVX), the $454 million Federated International Leaders Fund (FGFAX) and the $150 million Putnam European Equity Fund (PEUGX). Causeway International Value Fund, which is top-rated by S&P at five stars, is 72% invested in European developed markets and 26% in Asia developed markets. It has a return of 17.5% this year, including 14.7% in the past three months. Its 2012 gain puts it in the top 1% of funds in its category, per Morningstar. The four-star Federated International Leaders Fund has a return of 19.2% this year, including 15% in the past three months. It also has a top 1% performance in 2012 and has outperformed its peer average based on the one-, three-, five- and 10-year periods based on total return. The Federated fund is 74% invested in European developed markets, 9% in Asia developed, 6% in the U.S., 2% in Latin America, 2% in Canada and 7% elsewhere. The four star Putnam European Equity Fund has a return of 17.2% this year, including 15.7% in the past three months. Its year-to-date performance puts it in the top 22% of funds in its category. The fund is 96% invested in Europe, mostly developed markets. I reviewed those three funds' top stock holdings and summarized them below. Big multinationals are the top picks of these funds, and their diversity should protect them from any economic shocks at home while offering strong long-term potential. Here are nine stocks that are the top holdings of three highly-rated, Europe-focused mutual funds, arranged in inverse order of the number of "buy" ratings they have from analysts:
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