The World’s Cheapest Stock Market
by Dr. Steve Sjuggerud
April 10, 2006
In the last few months, I’ve visited Sydney, Auckland, and Shanghai. And would you believe it – not once was I passed on the street by a guy on an elephant.
O.K. I don’t expect to see elephants in the streets of major cities…. but that happened to me the last time I was in Thailand.
Thailand is not like the rest of the world. It’s one place that has significantly kept its identity and culture, and it’s a fantastic place to visit. But it hasn’t been a great place to invest…
If you’d invested in The Thai Fund (TTF) when it started nearly 20 years ago and held it until today, quite frankly, you wouldn’t have made much money. In that same time the S&P 500 is up about 400%.
Thailand is off everybody’s radar as an investment. But if you know me at all, you know I like that… It may be time to sell some U.S. stocks and buy some Thai ones.
Right now, uncertainty reigns in Thailand… the country’s leader resigned just recently, and a new leader hasn’t been chosen yet. It’s times like this that are usually good times to buy.
It turns out that Thai stocks are super cheap… In today’s Financial Times, it appears that Thailand is just about the world’s cheapest stock market. Thai stocks are trading at a P/E of 7.5, and pay out 4% a year in dividends. It doesn’t get much cheaper than that.
Even better, the main index of Thai stocks has just broken out to two-year highs:
Our DailyWealth mantra for what we’re looking for in investment is this: cheap, hated, and in an uptrend…
Thailand is cheap… thanks to the uncertainty nobody’s interested… and it’s just broken out to new highs – so the uptrend is in place. It’s time to check it out.
Unfortunately, it’s not easy to play… There’s only one liquid (over $100 million in market cap) way to play it from the States, the Thai Fund (TTF). This fund trades at a 25% premium to it’s underlying value – so it’s a bad deal.
The other way to play it is to buy individual stocks in Thailand. It’s not that hard, and U.S. brokers like my father’s firm (Dave Sjuggerud: 877-539-1004 dsjuggerud@lasallest.com) and International Assets (Jeff Winn 800-432-4402 jwinn@iaac.com) can buy them.
There are some big, great businesses in Thailand. Massive Siam Cement is typical… It pays a 6% dividend. It trades at a single digit P/E. Yet the business has a 25% return on equity… sales have doubled since 2002 to $6 billion last year... and earnings have doubled too. Debt has been cut by more than half since 1997.
If you’re looking for the world’s cheapest stocks, Thai stocks are definitely worth checking out. They’re also ignored, and in a nice uptrend.
When you combine those three things, you’ve got all the makings for a bull market.
Good investing,
Steve
Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
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