Try their suppliers or cheaper counterparts offshore: stocks with exposure to high-growth markets without the hefty price tag. That's the message from fund managers, as U.S. indices move sideways, earnings growth stays tepid and many strategists see more promising returns overseas. Among their stock picks: a Korean auto manufacturer, a Swiss pharmaceutical company, a French gaming group and Taiwanese supplier to Apple and Dell.
Consider these ideas: Kia, Hyundai or Toyota instead of Ford or General Motors.
Ford (F) and General Motors (GM) are trading on 10 and 9.5 times forward earnings while Toyota - the world's largest car manufacturer - can be bought at a slight discount to these levels and has 28% of sales in North America, where it is gaining share. Principal Global Investors portfolio manager Juliet Cohn also notes that the automaker has capital expenditure under control, and greater exposure to growth markets such as China and Europe. She likes Korea's Kia Motors for similar reasons, noting it is expanding aggressively in Europe. "They are moving from the low end to mid market consumer and their latest model targets the top end of the mid market," Cohn said. Allianz portfolio manager Kunal Ghosh notes Kia is trading on 6 times forward earnings - a discount to many large peers - and has greater exposure than several rivals to the biggest auto-growth markets of China and India.