Global blue chip stocks are thriving

October 1, 2009

Global blue chips are crucial to your portfolio

There's no doubt that China is a huge engine of worldwide economic growth right now. Officially, Beijing says the nation's economy grew at nearly an 8% annual rate in the second quarter of this year–but if you go into some of their biggest provinces, they say business is booming and growth is even faster.

The result has been a surge in Chinese stocks. The average China holding doubled from December 31 to August 1 of this year. And I expect a lot of future growth from Chinese blue chips in the coming months.

But China isn't alone in its economic strength. The nation's explosive growth will be duplicated in other emerging markets in the coming months. That's why I want to encourage investors right now to start thinking about other emerging markets and get in on the ground floor of the surge. The future of blue chips is going to have a distinct international flavor. You'll be seeing big money-makers not just in China, but throughout Latin America and the rest of Asia.

For instance, I'm very bullish on Sociedad Quimica y Minera (SQM). This Chilean chemical company is one of the world's top lithium suppliers. Lithium is used in electronics like laptops and cell phones, but most importantly is a component of the fast-charging batteries in hybrid autos. My Blue Chip Growth subscribers have made a hefty 40% profit in just a few months in SQM, and the stock is one of my Top 5 Buys for October. This is a perfect example of how to find the opportunity in international blue chips.

Money continues to flow into stocks like SQM as investors look overseas for big profit makers. Institutional funds in particular continue to flow into international companies at the present time.  Consider a recent Financial Times report that stated U.S. stock mutual funds have experienced an outflow of $6.3 billion, while international stock mutual funds have attracted nearly $20 billion! Clearly investors are looking overseas.

So the future of blue chip stocks will be distinctly international. Make sure you have some foreign holdings in your portfolio to take advantage of this trend. And I'm not just talking China stocks–I want you invested in Brazil, Chile, India, Israel, even in Germany. That will allow you to really make the most of the global recovery.