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Editors' Note

The editors of Fidelity Interactive Content Services (FICS) selected this content because it offers valuable information for investors.

International trading opportunities

Despite some geopolitical turbulence, you might consider a few global stock and ETF ideas.

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China might be slowing down. Energy markets could be disrupted by the crisis in Ukraine. The emerging-market growth engine is lagging developed economies.

You may have heard these cautionary forecasts over the past several weeks and months. Of course, these are real risks that have slowed stocks’ powerful 2013 momentum. Yet most global markets continue to advance; MSCI The World Index is trading near all-time highs (see chart below).

If you think stocks will continue to push forward in the face of headwinds, consider a few of the following opportunities from around the world.

Value candidates

With stocks trading at these levels, value may be an even more important objective for the active investor considering new positions.

Several international securities show up at the top of the list in the Deep Value ETFs screen provided by Morningstar. As of April 11, the top results of this screen are iShares MSCI Far East Financials ETF (FEFN), First Trust Hong Kong AlphaDEX Fund (FHK), and Guggenheim China Real Estate ETF (TAO).

Asia seems to be a popular region for value buyers. Jed Weiss, co-manager of Fidelity® Total International Equity Fund (FTIEX) thinks some European commercial lighting companies and financials are undervalued, along with certain small-cap Japanese stocks, despite the big 2013 rally.

Growth candidates

Of course, investors with a longer outlook might want to place a greater emphasis on those international equities with value and strong growth prospects.

As of April 11, 2014, large-cap depository receipts1 with the lowest price-to-earnings growth (PEG) ratio are Russian telecommunications provider Mobile Telesystems OJSC (MBT), Japanese bank Mizuho Financial Group (MFG), and London-based biopharma company Astrazeneca (AZN).

In addition, the International Growth screen (provided by Morningstar)—which seeks to find ETFs that exhibited significant sales and cash flow growth over the past year—offers up some opportunities. As of April 11, 2014, Guggenheim BRIC ETF (EEB), SPDR S&P Emerging Latin America ETF (GML), and Powershares Emerging Markets Infrastructure ETF (PXR) are the top results.

Equity Summary Score

The Equity Summary Score by Starmine provides a consolidated view of the ratings from a number of independent research providers on Fidelity.com. It uses the providers' relative historical recommendation performance along with other factors to give you an aggregate, accuracy-weighted indication of the independent research firms' stock sentiment. The higher the score, the better.

Not only do these ETFs show up at the top of this screen, they also have high Equity Summary Scores—all at 100 (see sidebar).

High-yield candidates

Looking for current income? There’s currently no shortage of large-cap, high-yield stocks that are headquartered outside the U.S.

As of April 11, 2014, Netherlands-based telecom company Koninklijke KPN NV (KKPNY), Brazilian bank Banco Santander Brasil SA (BSBR), and Bermuda-based offshore oil services firm Seadrill (SDRL) offered dividend yields of 26%, 18%, and 12%, respectively.

High yield can be very attractive to those seeking income. However, chasing yield can be risky if there aren’t sound fundamentals behind the investment. The High Yielding Stocks screen offered by S&P Capital IQ looks for current dividend yields of 3% or higher, as well as the prospective earnings growth to sustain or increase payouts to shareholders.

Several international opportunities show up in the top ten of this screen, as of April 11, 2014, including U.K. offshore driller Noble Corp (NE), offering a 5% yield, Brazilian oil firm Petroleo Brasileiro SA Petrobra Petr (PBR/A), paying a 10.8% yield, Monaco-based transportation services provider Navios Maritime Acquisition Corp (NNA), featuring a 5.6% yield, Netherlands-based financial services firm Aegon NV (AEG), paying out a 3.3% yield.

Investing implications

The international landscape has certainly improved over the past several years. Nevertheless, risks remain, and when considering global investing opportunities, a careful analysis of several key regions should be conducted before making any decision.

In addition to the crisis in Ukraine, Dirk Hofschire, senior vice president of Asset Allocation Research at Fidelity, is monitoring the situation in China. In particular, he’s looking at any potential warnings signs associated with late-stage business cycle conditions. “I see potential warning signs in China, the largest emerging market, which has had a huge credit buildup over the past several years and has a lot of excess capacity in areas like real estate,” Hofschire notes.

As a result, there could be some more volatility in the markets in 2014. Yet international pockets of opportunity can provide investors with vehicles to find value, growth, and income.

Learn more

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Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Views and opinions expressed may not reflect those of Fidelity Investments. These comments should not be viewed as a recommendation for or against any particular security or trading strategy. Views and opinions are subject to change at any time based on market and other conditions.
The Fidelity Stock, Preferred Security, ETF/ETP, and Closed End Fund Screeners (Screeners) are research tools provided to help self-directed investors evaluate these types of securities. The criteria and inputs entered are solely at the discretion of the user, and all screens or strategies with preselected criteria (including expert ones) are solely for the convenience of the user. Expert Screens are provided by independent companies not affiliated with Fidelity. Information supplied or obtained from these Screeners is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell securities, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy or approach to screening or evaluating stocks, preferred securities, exchange-traded products, or closed-end funds. Fidelity makes no guarantees that the information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation, and other individual factors, and reevaluate them on a periodic basis.
The Equity Summary Score is provided for informational purposes only, does not constitute advice or guidance, and is not an endorsement or recommendation for any particular security or trading strategy. The Equity Summary Score is provided by StarMine, an independent company not affiliated with Fidelity Investments. For more information and details, go to Fidelity.com.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
1. An American depository receipt (ADR) is a domestically traded security that represents a claim to shares of a foreign stock held in the vault of a U.S. commercial bank. Essentially, they represent ordinary shares of a foreign company.
Foreign markets can be more volatile than U.S. markets due to increased risks of adverse issuer, political, market or economic developments, all of which are magnified in emerging markets. These risks are particularly significant for funds that focus on a single country or region.
MSCI The World Index is a free-float-adjusted, market-capitalization-weighted index that is designed to measure the equity performance of developed markets.
The securities of smaller, less well known companies can be more volatile than those of larger companies.
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