It's been a while since I looked for bargain stocks outside of the United States, as I've been really focused on what I see as good opportunities in U.S. community banks and smaller REITs. But I decided to go around the world looking for cheap stocks that might make attractive investments, and here are three that I found.
I wasn't very fancy in my screen. I just looked for foreign companies that sell for below book value, have Piotroski F-scores of 5.0 or higher and trade in the United States. I figured that would isolate foreign stocks that were not only cheap, but offered some measure of safety in terms of accurate financial statements.
This simple search produced 29 stocks, including a few that seem particularly worthy of possible purchases by aggressive but patient investors. Let's check them out:
Tsakos Energy Navigation (TNP)
I've long been a stockholder and fan of Greek shipping company Tsakos, one of the world's largest publicly traded oil-tanker firms.
Tsakos operates a mix of 65 oil tankers, product tankers and LNG carriers. Business is pretty good, as the fleet is operating at about 98% capacity utilization.
Charter rates have also risen 17.3% year over year, while TNP's net income grew fivefold in 2015. The firm posted $1.69 in earnings per share last year vs. $0.32 in 2014. Tsakos also has more than $300 million of cash, while its debt levels are at historic lows.
At the same time, TNP has hiked its dividend by a third, so its shares currently yield about 5.15%. And they trade at just 40% of book value, while the company enjoys a 7.0 F-score.
Lastly, Tsakos should benefit from higher shipping rates going forward as energy producers and speculators continue to use tankers for storage.
Nomura Holdings (NMR)
This Japanese brokerage firm's shares have tumbled nearly 35% since July as earnings disappointed over the past year and Nomura failed to announce any new stock buybacks.
But CEO Koji Nagai recently hinted that NMR is rethinking the idea of buying back more shares, telling Bloomberg: "We're considering returning profit appropriately. There's no doubt that it's better for us to do it when [Nomura shares] are cheap."
In the meantime, the firm is cutting costs, laying off employees and exiting some businesses. The stock currently trades at just 66% of book value, while its 6.0 F-score indicates that Nomura's outlook might not be as bad as investors seem to think.
Gazit-Globe Ltd. (GZT)
This Israeli company develops and operates supermarket-anchored shopping centers in Israel, North America, Europe and Brazil. It also owns U.S. medical-office buildings and builds residential real estate in Israel and Eastern Europe.
Gazit-Globe is currently simplifying its complicated ownership structure, which I think will help investors realize just what a bargain the company's portfolio is. GZT is also selling non-core holdings in smaller cities to focus on redeveloping core parcels and acquiring important additional properties in large city centers.
All told, I believe Gazit-Globe offers investors a very attractive portfolio of worldwide properties at cheap prices. The company has a 6.0 F-score, meaning that GZT's fundamentals are solid and improving.
The stock also trades at just 71% of book value, while Gazit-Globe has been steadily reducing leverage to the point where debt now stands at just 51% of total assets. Additionally, GZT offers a decent 5.1% dividend yield. That means you'll get paid to wait for the market to recognize the company's underlying value.
The Bottom Line
I'm still not wild about international stocks, and my simple screen shows that the pickings are slim among safe, cheap ones.
But there are a few bargains out there. I think the three stocks above all have the potential to provide large rewards for patient, long-term investors.
