Trend: India's economy continues to grow and has less exposure to toxic debt than most other major countries.
Mike Caggeso at Money Morning says the India is positioned better than most countries for stable economic growth. HIs recommendations for investing in that stability are in the excerpt below.
Link: India's Economy Standing Firm Amid the Growing Global Financial Crisis
Next to China, India’s economy will grow four-to-five times faster than most of the world’s other major economies – many of which are stuck in recession.
For now, investors should target the companies in India that are internationally competitive and are active exporters. That’s because any budget or inflationary difficulties will probably be reflected in a weakening of the rupee, which will help countries exporting from India.
Infosys Technologies Ltd. (ADR: INFY) is India’s premier exporter of software. The company carries almost no debt, and its shares are trading at a current Price/Earnings (P/E) ratio of 12.6, with a dividend yield of 1.48%. That P/E is quite low for a company in a high-growth market such as software.
Dr. Reddy’s Laboratories Ltd. (ADR: RDY) is India’s premier manufacturer of generic pharmaceuticals, and is positioned to benefit in the 2008-2012 period as many popular drugs lose their patent protection and are opened to international competition. In the near term, too, as household and corporate budgets tighten around the world, people will more likely opt for generic prescription drugs, instead of high-price name brands.
Dr. Reddy’s has moderate debt (about 50% of equity), and is trading at 19 times forward earnings – not at all pricey, given the high promise of the generic-drug sector. The stock also features a modest dividend yield of right around 1.0%.
Both stocks are down nearly 50% from their 52-week highs, suggesting value.
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