Best Stocks Outside the U.S.: Siemens

Our search for great stocks from around the world led us to this 169-year-old German conglomerate.

We went looking for the greatest companies outside the U.S. and came up with eight proven picks. Here's one of them: Siemens (symbol SIEGY (opens in new tab)). To make the list, the businesses had to have U.S.-traded shares and be industry leaders. They also had to possess substantial financial resources to weather rough economic times. Finally, we sought companies that had significant catalysts to drive the next phase of their growth.

Read more about the case for investing in Siemens below. Prices and related figures for U.S.-traded shares are as of August 23. Earnings estimates are for calendar 2016 and 2017, unless otherwise noted. Price-earnings ratios are based on estimated 2016 earnings, unless otherwise indicated. Also, take a look at seven more great stocks from around the world.


Headquarters: Munich, Germany

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Share price: $120.95

Market capitalization: $97.9 billion

Estimated earnings per share: 2016, $7.93; 2017, $8.71

Price-earnings ratio: 15

P/E ratio on 2017 estimate: 14

Dividend yield: 3.2%

The business: Siemens is a 169-year-old conglomerate that includes a host of manufacturing and technology businesses. Products include gas and steam turbines, wind-power systems, medical-imaging equipment, factory-automation systems and energy-management controls for buildings.

Track record: Like its U.S. rival General Electric, Siemens has struggled to grow amid the anemic global economy that has followed the financial crisis. From 2009 through 2015, annual revenue was mostly stuck at about 75 billion euros (about $85 billion at the current euro-dollar exchange rate). The company also had some missteps — such as buying a major oilfield equipment maker just before energy prices dived. In 2015, operating earnings rose just 1% from 2014, disappointing investors. Early this year, Siemens' shares fell to their lowest level since 2012.

Reasons to own it: The company's fortunes may be turning. Siemens posted surprisingly strong growth in orders in the April-June quarter. The value of total new orders rose 9% from a year earlier, excluding the effects of currency fluctuations. Siemens got a boost in part from demand for big-ticket power-plant and wind-farm equipment from customers in the U.S., the United Kingdom and Bolivia, among other countries. What's more, for the second time since December, the company raised its forecast for 2016 earnings. That lit a fire under the stock, which has surged 11.5% since August 2. S&P Capital IQ notes that in recent years Siemens has been selling weak business lines to invest in higher-growth industries. If that payoff is beginning, investors can buy the stock at a still-reasonable P/E and earn a tidy 3.2% dividend yield to boot.

Tom Petruno
Contributing Writer, Kiplinger's Personal Finance
Petruno, a former financial columnist for the Los Angeles Times, is an independent investor, writer and consultant. He lives in L.A.