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Aegon, ArcelorMittal Among Europe's Investing Opportunities

Stocks in this article: AEG VE MT LNC WM NUE GS GE

Based in Luxembourg, ArcelorMittal is the world's largest steel company.

It embarked on a costly expansion campaign before the onslaught of the most recent recession. Its shareholders have been paying the price since as the stock has fallen more than 80%. The price-to-book ratio is 0.62 and the price-to-sales ratio is 0.38. By comparison, Nucor Steel (NUE) has a price-to-book ratio of 2.17 and a price-to-sales ratio of 0.89. The next five years of earnings-per-share growth for Nucor Steel is estimated to be 8.5%. For ArcelorMittal, earnings per share are expected to increase over the next half decade by 51.8% annually.

Updating the Sir John Templeton score, on October 16, 2008, Warren Buffett wrote an op-ed for The New York Times with the title Buy American: I Am.

In that piece, "The Oracle of Omaha" advised investors that "bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price. Over the long term, the stock market news will be good."

He followed that with investments in Goldman Sachs (GS) and General Electric (GE) that did very well.

Meanwhile, back in Europe, there is still plenty of upside for the shareholders of Aegon, ArcelorMittal, and Veolia Environment. While the Dow Jones Industrial Average has more than recovered from the Great Recession in crashing through the 16,000 barrier, Aegon was over $20 in late 2007 and is under $9 a share now. ArcelorMittal was well over $100 a share in June 2008 and now around $16 a share. In late 2008, Veolia Environment was near $100 a share. At present, it trades around $16.40.  All have dividends that pay investors to wait; and will add to the total return as each stock recovers.

There are many other publicly traded companies in Europe ripe for investment, too. The overall economic situation is bleak but the world is the market for many of those firms. It does not take a Warren Buffett or a Sir John Templeton to see the potential in these stocks.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Yates is a financial writer who has had thousands of articles appear in periodicals and Web sites such as TheStreet, Newsweek, The Washington Post and many others. Much of his career was spent working on Capitol Hill for Members of Congress in both the House and Senate, on both committee and personal staff.  He was also General Counsel for a publicly traded corporation.  He has degrees from Harvard University, Georgetown University Law Center and The Johns Hopkins University.
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