NEW YORK (The Street) -- If you're searching for holiday bargains, European and Asian stocks are on sale.
Both markets have been pounded recently while U.S. stocks have been rallying, so price-to-earnings ratios are some 20% below American stocks. There are several conservative, low-cost European and Asian large-cap exchange-traded funds that offer a relatively cheap way to diversify and grab some upside potential.
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Certainly, investor sentiment is in their favor. The Euro Area Sentix Investors Sentiment index made its biggest leap of the year this month -- to minus 2.5 from minus 11.9 in November -- near the positive ground where foreign stocks were rising earlier in the year. There is already instant financial gratification. Dividend yields abroad are nearly twice those of the U.S., roughly 4% versus 2%.
Philip J. DeAngelo, managing director of Focused Wealth Management, sees half of a modest 10% foreign allotment coming from one issue that has a basic blue-chip hue to it: iShares International Select Dividend ETF (IDV) . The shares suffered a smackdown over the summer after a good two-year run, but he sees a lot of potential for the shares to recover the spring in their step.
Not that he's in a rush. It's a European-centric basket of 100 of the highest dividend-paying foreign multinationals that offer a robust 6% yield. IDV is also relatively undervalued by comparison to similar U.S. corporations. Its price to earnings, book and sales ratios, are from 10% to 50% lower. In all, he sees a relatively safe long-term holding where "you're being paid to wait" for the recovery.