Last week I reported on U.K. stocks, because I had just spent time in London. From London I went to Paris. There I encountered a bevy of luxury retailers, including Bulgari, Hermes, Dior, Michael Kors (KORS), Gucci, Burberry and Armani.
I checked my guru strategies, which are computerized strategies I based on the methods that well-known investors use to identify stocks to buy and stocks to ignore, to see if any earned their approval. None did.
I noticed in Paris the extensive presence of U.S. food firms, including Starbucks (SBUX), McDonald's (MCD) and even Subway. Again, I checked to see if any earned high grades from my guru strategies so I could report about them to you. None did.
But further research revealed three multinationals based in France that are definitely worth your attention. All are favored by my James P. O'Shaughnessy strategy. O'Shaughnessy has been an important thinker and strategist on Wall Street for years, as well as being a mutual fund manager.
To earn the highest grade from this strategy, a company first must meet four criteria: a market cap over $1 billion, cash flow per share greater than the market's mean cash flow per share (which today is $1.72), outstanding shares in excess of the market's average (615 million) and trailing 12-month sales that are 1.5 times greater than the market's mean ($21.1 billion).
For the final test, the strategy looks at companies that get over the four hurdles I just discussed, and chooses the top 50 on the basis of their dividend yield.
The three French winners are Sanofi (SNY), AXA (AXAHY) and Total (TOT). Sanofi is one of the world's largest pharmaceutical companies. AXA is among the world's largest insurance companies. Total is one of the major integrated oil and gas companies. In their respective industries, these are important players with solid track records of success. Each easily exceeds the minimums required by the O'Shaughnessy strategy. Their yields are: Sanofi at 3.58%, AXA at 4.58% and Total at 4.65%.
Paris is a wonderful city to visit, but if you do not feel the urge to go there, at least invest in one of these companies, which are among the best France has to offer.