Zacks Investment Ideas feature highlights: Navigator Holdings,iShares MSCI United Kingdom and iShares MSCI United Kingdom Small-Cap
CHICAGO, July 1, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Navigator Holdings (NYSE:NVGS-Free Report), iShares MSCI United Kingdom (AMEX:EWU-Free Report) and iShares MSCI United Kingdom Small-Cap (AMEX:EWUS-Free Report).
Investing Across the Pond
I know the Fourth of July is right around the corner, and the United States will celebrate its victory over the British with fireworks and apple pie. I think this gives a hungry investor a chance to look across the pond for investment ideas.
Working Foundation
I wanted to start off this article with why I am looking at the UK for an investment idea. The reason is simple: unemployment in the UK. It doesn't take a rocket scientist to see that the rate has fallen dramatically not only over the last two years, but there has also been a big drop over the last six months.
This tells me that their economy is chugging along and I rarely read a headline about problems with the UK economy. Not to say there are no problems there, it's just that when I glance over the headlines, I rarely see a story of a UK company laying off half its workforce or calls for a recession.
Don't Bet the House
Now just because the unemployment rate is moving lower doesn't mean that we should just indiscriminately buy any denominated in Pounds Sterling.
Mortgage approvals in the UK spiked to 51K in February this year, but have since come back down to 41.8K on the most recent reading. This tells me that while the consumer is getting stronger, the softness in mortgage approvals means their housing sector might remain under pressure.
Screened Out
I did a recent screen for companies based out of the UK that had a good Zacks Rank, but the list was quite small. At the time the energy sector was bubbling up as middle east turmoil pushed those stocks higher.
Navigator Holdings (NYSE:NVGS-Free Report) sort of fit perfect in to the storm of middle east turmoil (which could have been any time over the last, say 5,000 years) and a company that is UK based.
NVGS ships Liquefied Petroleum Gases (propane & butane), Petrochemical Gases and Ammonia. So there is energy and chemical exposure here, but the idea here is that NVGS is growing its fleet of ships.
NVGS has 24 modern vessels with 7 new builds on the way this year and next. 2016 should also see more vessel deliveries.
The stock is currently a Zacks Rank #3 (Hold) but it has a good valuation at 20x forward earnings and a price to book of 2.2x compared to a 2.8x industry average. I like to look at projected revenue growth, and NVGS is showing 15% this year and 17% next year. That is also well above the 6% and 6.8% the industry average is expecting.
Maybe ETF Exposure
Along with this stock idea, I thought I would throw two ETF's your way as well. This helps tremendously on the diversification front, as the ETF will hold stocks across several different sectors. iShares has a large cap ETF that follows the UK, its ticker is (AMEX:EWU-Free Report). There is also a small cap focused ETF by iShares, AMEX:EWUS-Free Report. EWU has a Zacks Rank #2 (Buy) so the broader investment play here might be the best.
Conclusion
As we look forward to celebrating the victory over the British on July 4, remember that it is always good to look around the world for interesting investment opportunities.
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