These Blue Chip Stocks Are Cheap

It’s hard to believe we’re going on six years since the stock market bottomed in March 2009…

U.S. stocks are up more than 200% since then… thanks to the U.S. Federal Reserve cutting interest rates to zero and printing money at its fastest pace ever.

[ad#Google Adsense 336×280-IA]Many countries around the world have followed in America’s footsteps.

And their stock markets have soared as well.

So it’s hard to find investments that are cheaper today than they were in March 2009.

But there is one out there…

The table below shows the valuations of U.S. stocks versus today’s idea. As you can see, these stocks were nearly identical at the market bottom in March 2009.

topBut now, the story has changed dramatically…

U.S. valuations have gone up dramatically, as you might expect. Meanwhile, the valuations for today’s idea are down dramatically.

Importantly, for these two investments to be equal again, today’s idea would have to rise by an astounding 108%.

botToday’s idea isn’t some bizarre sector or tiny market. We’re actually looking at the world’s biggest and most powerful companies… Chinese companies traded on the Hong Kong Stock Exchange.

You see, the largest and third-largest companies in the world (based on sales) are Chinese companies that are listed on Hong Kong’s stock market. (If you’re curious, giant American retailer Wal-Mart is the second-largest company in the world, based on sales.)

When you size up the “world’s biggest” companies in a more comprehensive way than sales, then three different Chinese companies listed on Hong Kong’s stock market come out as the world’s three largest companies. (You can see the full list right here.)

These five Chinese companies are among the top dozen holdings of the iShares China Large Cap Fund (FXI). FXI holds China’s 50 biggest and best companies trading in Hong Kong.

These companies are giant blue chips. For example, mobile-phone provider China Mobile has 800 million subscribers. That’s more than twice the number of people in America!

That’s why I recommended buying FXI to subscribers of my True Wealth newsletter. FXI closely tracks the Hong Kong China Enterprises Index. It holds China’s 50 biggest and best companies that trade in Hong Kong.

And when this fund goes up, it can really soar. For example, FXI went up 279% during China’s bull market from 2005 to 2007.

And today, China’s blue chips are cheaper than they were in March 2009.

It’s hard to find many legitimate stock markets that are this cheap relative to March 2009. For Chinese blue chips to equal U.S. blue chips today (like they did in March 2009), they’d have to rise by 108%.

A rise like that is not out of the question… These stocks traded for much higher values than that back in 2007. When a great China bull market gets underway, the sky is the limit. And my friend, a great China bull market is now underway!

Check out FXI today…

Good investing,

Steve

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Source: Daily Wealth