A Hidden Gem

delfeldLast week I outlined how and why some of the world’s largest and best companies have migrated away from the New York Stock Exchange and Nasdaq. These stocks represent the bluest of international blue chips – sterling companies like Rolls Royce and Nestle.

Not long ago, a listing on the NYSE was the ultimate sign of quality, respect and prestige. But over the last few years, there has been an exodus of these global blue chips from America’s major exchanges. More than 110 prestigious foreign firms have delisted from the NYSE since 2007.

Why Target Hidden Blue Chips?

Today, I’m going to explain why Value Bounce will be sifting through these stocks looking for high quality bargains. Then I’ll give you one hidden blue chip company that is on the move.

Reason #1: Ignored by Wall Street Analyst & Brokers

Merrill… Goldman…JPMorgan. They analyze companies inside and out every day! As a result, it’s almost impossible to find NYSE and Nasdaq stocks at bargain prices. Not so with hidden blue chips.

Reason #2: Unattractive Pink Sheet Address

These stocks “pink sheet” address scare away many investors not willing to take the time to do the required research.

Reason #3: Quality & Growth

These global blue chips offer you a combination great balance sheets, quality management and growth.

Reason #4: Great Arbitrage Opportunities

Because these global blue chips stocks trade unevenly and “below the radar” – they oftentimes trade at prices lower than they do in their home stock market! This leads to some very interesting arbitrage opportunities that I track and exploit.

Looking Down the Road with BMW (BAMXY)

It may surprise you that the largest luxury carmaker BMW is not listed on the NYSE or Nasdaq.

When BMW came out of the 2008 financial crisis, the company targeted five fast growing markets: Brazil, Russia, India, South Korea and Turkey.  It now leads in every one of them (OK, it’s a tie with Mercedes in Russia). You might be surprised to see Turkey on this list but the country now has twice as many billionaires as Japan and is the 16th largest economy in the world with a population exceeding 80 million.

This focus on new growth markets highlights a BMW trademark – looking ahead and what the Japanese refer to as “kaizen”  – constant and steady innovation.

Its BMW i Ventures $100 million investment fund support new partners and technologies in an effort to stay ahead of competitors and the growth curve.

A new BMW’s “Project i” is ready to hit the road with the launch of the electric i3 and the hybrid i8 scheduled for delivery in the second quarter of this year. It is making quite a media splash as these cars are made of aluminum and carbon fiber plastic giving them a range of 140 miles. The i3 is 1,300 lb. less than the all electric 1-series. Total weight is 2,700 pounds.

BMW lost the luxury best selling sweepstakes to Mercedes-Benz last year in part because its rival rolled out the CLA, a new class of sedan that starts at less than $30,000. In the few months these starter Benzes were available in 2013, North American drivers bought roughly 14,000, helping Daimler sales top BMW by 3,300 cars for the year.

BMW is striking back with a spanking new 2-Series priced at $33,000 – a move into a lower cost lane with a much bigger car than the 1-Series it will replace.

One reason that BMW is run with a sharp eye on the future is that 46% of its outstanding shares are in the steady hands of its strategic partners.

The stock has decent liquidity with an average daily volume of 50,000, is trading at only about eleven times trailing earnings despite being up 24% over the last six months. And despite all the talk of a global slowdown, BMW sales just power on up 11% year over year.

Keep an open mind and find the hidden blue chips to capture quality and growth.

Opportunity awaits,

Carl Delfeld.

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