Insights: Bullish International Stocks
• Today's report is a bottom-up compilation of technically attractive emerging market stocks, with one fundamental kicker: each name is accompanied by positive momentum in their FY EPS estimates... see screen on pages 2-4• We screened for stocks whose latest EPS estimate is higher than last week's, which in turn is greater than the prior month's estimate. From this list, which was rich in relative leaders, we picked out the names that were either (1) breaking out from, or (2) pulling back to base support levels... see charts on pages 5-15
• Group themes present in this screen:
o Materials Sector: Materials is leadership within EM (alongside Energy, Financials, and Tech). Attractive names in this week's screen range from Vale (VALE3-BR) to Southern Copper (SCCO).
o Tech Sector: Tech still stands as a long-term relative leader in the EM segment. Technically attractive names benefitting from rising EPS estimates include Delta Electronics (2308-TW) and Advantech (2395-TW).
o Chinese Coal Stocks: China Shenhua Energy (1088-HK) & Yanzhou Coal Mining (1171-HK), both which reversed long-term declines last year, depict pullback opportunities. Coal is a leadership Group in the U.S. too.
o Chinese Auto Stocks: Geely (175-HK) is the extended leader. We recommend Great Wall Motor (2333-HK), China's largest SUV producer, which is nearing a breakout from an 18-month rounding bottom.
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Geely Automobile Holdings is an investment holding company. Through its subsidiaries, Co. is engaged in the investment holding and export of sedans outside the People's Republic of China (PRC); research, production, marketing and sales of automobile parts and related components and the research and development of electric hybrid engines in the PRC; procurement of automobile parts and components in the PRC; and marketing and sales of sedans in Russia and South America. In addition, through its associated companies, Co. is also engaged in the manufacturing of traffic facilities; provision of webpage design and related technology support services; manufacturing of emission control systems.
Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.
Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.
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