Richard Moroney, Upside newsletter - Hurco (HURC) - Men's Wearhouse (MW) - Swift Energy (SFY) - Teledyne Technologies (TDY) -

Richard Moroney, editor of the Upside newsletter, explains that a growing number of small and midcap companies are capitalizing on opportunities abroad. Take a look at a sampling of a list of stocks that this featured expert has labeled as Overseas Sales Leaders. One of the overseas plays is a company that ranks among the top three providers of pawn loans in Mexico. Another is a maker of computerized machine systems for the metalworking industry. STOCK PICKS Seeking growth? Consider foreign exposure While U.S. economic growth is widely expected to slow in 2007, the outlook overseas is considerably brighter. In September, the International Monetary Fund trimmed expectations for U.S. growth to 2.7% in 2007, down from the 3.1% expected for 2006. But the IMF lifted slightly its expectations for the world economy, predicting global growth of 4.9% in 2007 versus 5.1% in 2006. Other forecasters expect the divergence to be even more extreme. Economists at Merrill Lynch predict U.S. growth will slow to 1.9% in 2007 from 3.4% in 2006, reflecting a correction in the housing market and weaker consumer spending. Because of growth in Asia and developing nations, however, Merrill expects growth outside the U.S. of 5.2% in 2007 — down from 5.7% in 2006 but still very healthy by historical standards. For investors in U.S. stocks, the important question is not whether overseas growth will be 4% or 6%. What matters is whether you can find opportunities to capitalize on likely pockets of growth. While U.S. investors typically look to large-company stocks for foreign exposure, a growing number of small and midcap companies are capitalizing on opportunities abroad. Because small companies usually have more focused product lines, they can provide more targeted plays on attractive growth niches. Reviewed in the following paragraphs are a few high-quality small companies with attractive overseas prospects. All companies seem positioned for healthy profit growth over the next 12 to 18 months, partly because of gains overseas. A Sampling of Overseas Sales Leaders First Cash Financial Services (FCFS), the third-largest provider of pawn loans in the U.S., also ranks among the top three providers of pawn loans in Mexico. Pawn loans, usually lasting about one month, are secured with personal property held as collateral. First Cash operates 147 pawn stores in Mexico and 97 in the U.S. It also has 126 payday-lending stores in the U.S. Most of the company's recent growth in pawn shops has been in Mexico. Many of its Mexican pawn shops are relatively new, so their contribution to profits should swell in 2007 as stores mature. Revenue and profit growth has been strong across First Cash's product lines and geographic markets. The August acquisition of Auto Master should broaden the company's product line and bolster near-terms sales and earnings growth. Hurco (HURC), a maker of computerized machine systems for the metalworking industry, has delivered strong sales and profit growth, driven by overseas operations. July-quarter sales and service fees jumped 35% in Europe and 36% in Asia. Demand in those regions, accounting for 69% of total sales in the quarter, has benefited from strong demand for expensive models. Order rates in the U.S. rose only slightly last quarter, but gains overseas fueled a 32% increase in total orders. Hurco serves a wide range of industries, including aerospace and defense, medical equipment, energy, transportation, and computer equipment. At nine times estimated year-ahead earnings of $2.68 per share, the stock seems undervalued considering its growth prospects. Other Overseas Sales Leaders include: Men's Wearhouse (MW) is one of the largest specialty retailers of menswear in the United States and Canada. Under the Men's Wearhouse brand, the company targets middle and upper middle income men by offering quality merchandise at everyday low prices. In addition to value, Men's Wearhouse, Inc. provides a superior level of customer service. Swift Energy (SFY) engages in the development, exploration, acquisition, and operation of oil and gas properties with a primary focus on U.S. onshore natural gas reserves located in Texas and Louisiana. The company currently focuses on development and exploration in four core areas: AWP Olmos in Southern Texas; Brookeland in Eastern Texas; Giddings in south-central Texas; and Master Creek in Western Louisiana. Teledyne Technologies (TDY) is a leading provider of sophisticated electronic and communication products, systems engineering solutions and information technology services, and aerospace engines and components. The company customers include aerospace prime contractors, general aviation companies, government agencies and major communications and other commercial companies. This article highlights the commentary of Richard Moroney for the Zacks.com audience. Richard Moroney provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "Upside" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "Upside" and 30-Day Free Trial. And get immediate access to current issues and special reports. Click here now. Here's How You Can Profit from the Pros Find out what other leading experts are saying about the market. And what stocks they are recommending. For free. Just sign up for our free email newsletter, Profit from the Pros, where we'll give you the commentary, advice, and insight from those rare few experts who consistently beat the market year in, year out. | Blog Home| VitalStocks Home