High-yield/macroeconomics (fka YIELD)

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40 Stocks for the Long Haul

http://finance.yahoo.com/special-edition/stocks-for-the-long-haul/not-so-average-bear

10 Large-Cap Stocks

You can rest easy knowing these companies will deliver consistent returns over the long haul.

When it comes to stocks, big isn't always better. But if you choose well, big companies are more likely than small ones to deliver consistent returns over the long haul. And they're far more likely to withstand the economic, political and technological shocks that can derail small companies.

Big-company stocks have hardly been immunized from the market's current turmoil. As of October 27, Standard & Poor's 500-stock index is down 46% from its record high, set on October 9, 2007. But lower prices today makes it more likely that stocks will match its historical long-term return of 10% year.

We here at Kiplinger's Personal Finance put our heads together in search of ten giants (which we defined as companies with a market value of at least $10 billion) that we think can better the market's long-term results over the next decade. We came up with an eclectic list that contains a number of names you'd expect to see and some that may surprise you. Below are our ten picks for the next ten years.

Procter & Gamble (PG). If you're a Procter & Gamble shareholder, it must feel nice when you to go to bed knowing that hundreds of millions of consumers around the world will use Gillette razors, Crest toothpaste and Head & Shoulders shampoo the next morning. People need to shave, bathe and brush their teeth in any economy, and P&G's brands are so powerful that it can pass on price increases in raw materials to its loyal customers.

This consistency has allowed P&G to compound earnings by 10% a year over the past ten years; Wall Street projects a like result over at least the next five years. Factor in a 3% yield and a rising dividend stream and it equals an attractive ten-year holding.

Electronic Arts (ERTS). Spore, the latest game from Electronic Arts, is a metaphor for the company itself. In the game, a single-celled organism evolves by eating other animals and eventually masters the universe. Electronic Arts has grown mainly by acquisition to become the biggest video-game software company; sales for the fiscal year that ends next March should top $5 billion.

Electronic Arts dominates a rapidly expanding universe. Sales from consoles and software together hit $18.8 billion in 2007, a 43% increase from 2006, says the NPD Group. Not even the torpid economy is likely to dent the industry's -- or EA's-rapid growth. Analysts see the company's earnings rising 21% annually over the next three to five years.

First Solar (FSLR). As the price of oil has retreated, investors have lost interest in alternative-energy stocks. But once global economies right themselves, demand for oil will rise and so will its price. The need for cheaper and cleaner fuel sources will once again become plain, and alternative-energy stocks will revive. One of the biggest beneficiaries is sure to be First Solar. Based in Tempe, Ariz., First Solar produces solar modules using a proprietary thin-film semiconductor technology that uses far less silicon than other production processes. The company sells the majority of its modules in Germany, which subsidizes solar energy, but First Solar has deals with utilities to build photovoltaic generating plants in California, Florida and Nevada.

Its growth has been breathtaking. In 2006, when First Solar went public, it earned 7 cents a share on $135 million in revenues. In 2008, analysts estimate, the company will earn $3.67 per share on sales of $1.2 billion. And analysts see earnings growing 56% annually over the next few years. The stock, which is up six-fold from the IPO, is risky, but it will deliver big rewards as long as oil prices recover and governments continue to subsidize solar power.

Gildead Sciences (GILD). Gilead Sciences has built a formidable franchise in drugs that treat HIV. They provide about 75% of the firm's revenue, which is expected to exceed $5 billion this year. Those drugs should provide the Foster City, Cal.-based biotech company with robust growth in the coming decade, even as it diversifies into other promising areas, such as medicines that treat hepatitis, hypertension and influenza. Gilead's portfolio of drugs faces little threat from generics, and the company can use its ample cash reserves ($3 billion as of midyear) to supplement its development pipeline via acquisitions and partnerships.

Google (GOOG). Google is the single most visited Web site in the U.S., a cultural phenomenon and a verb. And in just four years as a publicly traded company, it has achieved the status of Internet behemoth, with a market value in the neighborhood of $105 billion.

But as a business Google is an advertising firm; pay-per-click search-engine advertising represents 90% of revenues, and all advertising taken together brings in 97%. Enormous profits over the past five years have endowed Google with the cash to pursue such lofty goals as projecting interactive satellite images of the cosmos onto your computer screen and digitizing all books ever written.

Yet Google's strength in its basic ad business is reason enough to love it. As more ad dollars shift from old media to new media, Google's scale and formidable brain trust give it the strength to remain the market leader. And despite the company's immensity, analysts expect earnings to grow at a hefty 22% annual pace over the next few years. Ten years? Sure.

Monsanto (MON). Monsanto has emerged as one of the great growth stocks of this decade, returning an annualized 44% over the past five years. The world is hungry for grain, meat and ethanol. Monsanto's high-tech seeds, genomics and herbicides boost the productivity of corn, soybean, cotton and wheat farms. Monsanto's seed technology is years ahead of competitors', and its market penetration is expanding worldwide, to cropland in places such as Brazil and Argentina.

Yes, it has its critics, who complain of Monsanto's business practices. But earnings have compounded by 41% annually over the past five years. Wall Street thinks this rate of profit growth will exceed 30% annualized over the next three to five years. Its 10-year horizon looks bright.

Norfolk Southern (NSC). North American railroads are sitting in the sweet spot -- you'd hardly know a recession set in, and they can raise prices freely for the first time in many decades. Norfolk Southern occupies the sweetest spot of them all. Its forward-looking management has initiatives under way to greatly increase capacity and gain new customers -- particularly truckers operating between the Northeast and the South and between the mid-Atlantic ports and the Midwest.

Balancing Norfolk Southern's many partnerships with truckers is its thriving business hauling coal to power plants and to ships at the ports. And the company's network of routes that honeycomb the U.S. east of the Mississippi is run more efficiently than that of chief rival CSX. Put it all together, and it's hard to see how a long-term investment in this railroad could go wrong.

T. Rowe Price (TROW). The stock market's awful performance this year has shaken the faith of the investor class. But once the bear market ends and investors regain confidence in capitalism, they’re likely to resume saving like mad for retirements that look less and less secure. Fund manager T. Rowe Price, with some $345 billion in assets at last report, should benefit enormously from this trend. Its target-date retirement funds are already big hits with investors. By preaching a conservative, long-term investment approach and keeping costs low, Price has delivered above-average results at a majority of its funds. And the company has avoided scandals.

Asset management is a lucrative business -- Price's net profit margins are about 30%. The company has no debt and has raised its dividend every year since going public in 1986. Earnings are likely to be down in both 2008 and 2009 because of the weak stock market, which holds down asset growth. But analysts see profits growing 15% a year long term.

Schlumberger (SLB). Schlumberger is the ultimate global growth company. The world is desperate to renew depleted oil and gas reserves and find new sources, so producers are spending frenetically to discover oil and gas both on land and beneath the seas. This requires the wide technology of Schlumberger, the world's biggest provider of energy exploration and engineering services. Chief executive Andrew Gould says the big hunt for new sources—and work to extend the lives of known fields in the U.S., the North Sea and the Middle East—will go on for years, regardless of price fluctuations for oil and gas. Schlumberger shares have taken gas as oil prices and the stock market in general have cratered, but this is a case of the herd dumping anything it can sell.

Despite the Houston-based company's immensity (revenues should approach $28 billion this year), analysts expect earnings growth of 12% annually over the next few years.

Visa (V). Many companies are poised to benefit from globalization, but few do so as directly as Visa. After all, your Visa card is good everywhere from the supermarket down the street to a mom-and-pop shop in Nepal. When Visa went public in March 2008, it raised $17.9 billion, making it the largest initial public offering in U.S. history. The stock's market value now exceeds $50 billion.

Visa has the world's largest payment network, in which banks and businesses are eager to participate. And because Visa just processes payments, rather than act as a lender in transactions, it's nicely insulated from the credit crunch. Paperless payments are projected to surge from a bit more than 40% now to 70% of total payments in 2010. Visa is riding the crest of that wave.

10 Mid-Cap Stocks

There's no doubt that stocks in general and mid-caps in particular are feeling the pinch this fall after frozen credit markets and the slowing economy sent investors running to safety. The S&P MidCap 400 is off more than 44 percent this year, a bit more than its small- or large-cap partners.

That said, they should still be in your portfolio.
It may be tough to believe right now, but mid-caps occupy the often lucrative ground between multinational stalwarts and volatile small-cap upstarts. If you've got a long-term horizon, it's here that you'll catch fast-growing companies with newly established track records before they become tomorrow's household names.

The list below includes mid-cap companies with solid histories, room to grow, and (hopefully) the sort of business models that can keep them from stumbling under the worst excesses of the market's current malaise. They're focused on long-term trends--globalization, healthcare spending, defense, and energy demand--that should keep profits rising in the years to come.

Stericycle (SRCL). Stericycle cleans up after the medical industry, disposing of hazardous or infectious medical waste for doctors, dentists, and drug makers. Its expertise navigating the complex web of public safety rules, paperwork, and other services makes it vital to customers no matter how the rest of the economy is doing. Its already sizable 10 percent chunk of a fragmented $10 billion market is expected to grow as the firm expands overseas as it has in the United Kingdom and South America and through acquisitions (it has made 140 since 1993). Earnings look steady, growing at a 17 percent annual rate over the past five years, and analysts predict similar gains for at least the next two. Oppenheimer analysts note the firm "has perpetually grown its core med-waste business in the high single digits organically" and expects more of the same despite the "daunting economic outlook."

FTI Consulting (FCN). Want a company that prospers when times are tough? The mortgage and credit crunch sent troubled corporations scurrying for cover, and that means even faster growth for FTI Consulting. The Baltimore-based firm handles everything from restructuring to forensic accounting, but rising bankruptcies are what will keep revenue flowing over the next few years. Deutsche Bank sees that business speeding up in '09, with revenue growth peaking in 2010 or 2011. Wall Street predicts FTI's earnings will climb from a 10 percent five-year annual rate to 19 percent over the next several years. Plus, the consultant continues to snap up smaller rivals, and a recently announced spinoff of its technology business could net an extra $600 million to $700 million to pay down debt and fund new buys.

Waters Corp. (WAT). Waters Corp. makes liquid chromatography, mass spectrometers, and thermal analysis tools used in drug development and quality control, analyzing compounds for their chemical or molecular characteristics. Drug makers, its primary customers, may be having a tough year, but the firm is pushing into fast-growth markets like food and beverage and wastewater testing. Plus, Waters boasts a large base of installed equipment with its existing customers, and 40 percent of its revenue is recurring. "It's a pretty good, defensible moat," says Bob Millen, comanager of the Jensen portfolio, which owns Waters shares. Against that backstop, emerging market sales to India and China are still showing little sign of a slowdown despite the weakening economy.

Ecolab (ECL). Ecolab helps hotels, restaurants, and hospitals stay spick-and-span to the tune of more than $5.5 billion in annual sales. Analysts like its global reach (now 160 countries) and its predictable business for steady growth and highly stable earnings. The model is simple: When Ecolab installs soap dispensers in a chain of eateries, for example, it also supplies and services the equipment. Customers need the service, and are loath to switch suppliers. That makes it highly defensive. "People just can't cut back on their sanitation," Millen says. Return on equity has averaged 23 percent for the past decade. Earnings have grown a steady 13 percent over the past five years, and should remain in that range for at least the next two.

Northeast Utilities (NU). Infrastructure plays are heating up. As New England's largest utility, this Connecticut-based firm is another name profiting from more than three decades of underinvestment in the power grid. (Remember those blackouts?) Its transmission assets in Connecticut, New Hampshire, and Massachusetts are expected to drive earnings, with that part of the business forecast to grow 22 percent annually between 2006 and 2012. "It's a safe, secure return in an uncertain world," says Kevin Shacknofsky, coportfolio manager of the Alpine Dynamic Dividend Fund, which owns NU shares. Long-term dividend growth of around 3 percent coupled with earnings forecast to expand 8 to 12 percent from 2008-2012 make NU among the safer bets in the utility space today.

Flir Systems (FLIR). When military conflicts flare up, this Oregon-based infrared system maker can tell you exactly the sort of heat they're generating. As the industry's largest player, Flir continues to pull in sizable military contracts (most notably two recent deals with the Navy worth a combined $75 million, plus orders from the Coast Guard and Colombian military). Investors get good visibility thanks to a $650 million order backlog. Outside of military orders, the firm has fast-growing businesses in everything from systems used on luxury yachts to heat sensors used to detect gas leaks. Its five-year EPS growth rate is a solid 27 percent.

Jacobs Engineering Group (JEC). Shares of Jacobs, a sprawling engineering and construction firm with big business (about 40 percent) in the energy sector, are down almost 70 percent this year as oil prices moved off record highs and the economy global economy slows. If you don't think cheaper crude is here to stay, Jacob's backlog of work (up 66 percent from a year ago in the latest quarter) make the stock worth a look, especially at its current valuation. Uncertain timing of the sort of megaprojects that are Jacobs's specialty mean patient investors who can wait out a few up-and-down quarters might be rewarded if they're willing to buy and hold, as they've been for the past five years of 27 percent average annual earnings growth.

W.W. Grainger (GWW). Essentially the Sears, Roebuck of the facility maintenance business, Lake Forest, Ill.-based Grainger gets some relief from the slowing economy because its more than 870,000 products are bare-bones necessities at businesses ranging from lumber mills to your local post office. The company's catalog business and national network of 600 branches and 47 distribution centers can get most products to customers overnight. Healthy cash flow (including $364 million in cash on the balance sheet as of September 30) and relatively low debt will help the company weather this recession. Also, the North America-centric firm is branching out into Mexico, Panama, and China.

Lab Corp. (LH). Demographics are still solidly behind growth in the medical testing market, and Lab Corp. remains one of the industry's giants with 47 labs and 1,600 patient service centers across the United States. That part of the business is modestly recession-resistant, while its specialty testing business is also becoming an expanding source of revenue as higher-margin genetic screening becomes a larger part of the medical landscape. Plus, with an estimated $800 million in operating cash flow for 2008 and modest debt, the firm is poised to snap up smaller, less-capitalized rivals in the future. While earnings growth is set to slow a bit, Thomson Reuters sees earnings growing at 14 percent a year long term.

Church and Dwight Inc. (CHD). Analysts tout safe-haven consumer stocks like Procter & Gamble or Kraft, but where are mid-cap investors supposed to find their consumer staples fix? Think Arm & Hammer or its owner, Church and Dwight. The owner of the iconic baking soda has managed to keep its share price almost flat this year--even as the bear market sent nearly everything else crashing. It recently bought the Orajel analgesic line for $380 million, owns Trojan condoms (and, on the flip side, several lines of pregnancy kits), plus late-night infomercial stalwart OxiClean. Ten-year returns average 19.6 percent, CEO James Craigie said on a recent call. He also noted that nearly a third of the firm's revenue comes from value-conscious consumers and called the company a "great place to be in recessionary times."

10 Small-Cap Stocks

Finding small cap stocks with the potential to blossom into some of tomorrow’s household names has been a passion of mine for the last twenty years, and there are many different themes that have me believing the time to invest in smaller cap names is upon us.

One theme I have my eye on is the strong desire to clean up our planet and “go green.” Congress’ recent $700 billion economic rescue package has many earmarks in it, providing tax incentives to clean energy firms, which should help these companies compete with traditional forms of energy. Many investors have this trend on their radar screen, focusing on everything from ethanol to wind and solar energy companies. However, while I believe there are opportunities in wind and solar, my favorite being Energy Conversion (ENER), I prefer to focus on an often overlooked segment, the pollution control industry. Below are some ideas targeting that sector:

Calgon Carbon (CCC). Calgon Carbon is a global manufacturer and supplier of activated carbon and innovative treatment systems that provide value-added technologies and services for optimizing production processes and safely purifying the environment. Calgon Carbon has pioneered cutting-edge purification systems for drinking water, wastewater, odor control, pollution abatement, and a variety of industrial and commercial manufacturing processes.

Clean Harbors (CLHB). Clean Harbors is North America’s leading provider of environmental and hazardous waste management services servicing over 45,000 customers, including more than 325 Fortune 500 companies, thousands of smaller entities and numerous federal, state and local governmental agencies. With earnings expected to increase 22% this year and another 15% in 2009 to $3.00 a share, I expect to see this stock trade above $80 shortly.

American Ecology (ECOL). American Ecology has been providing radioactive, hazardous and industrial waste management services to commercial and government entities since 1968 and the company continues to average 15% earnings growth into the foreseeable future.

Team Inc. (TISI). When you and I have a leak in a pipe at home, our first call is most certainly to the local plumber, but imagine if that leak is in an underground oil pipeline or a hydro-electric power plant with temperatures ranging from cryogenic to 1700 degrees Fahrenheight and pressures from vacuum to 6000 psig. Those calls go to Team Inc, which provides field heat treatment, non-destructive testing, leak repair, hot tapping and other industrial repair services. What this company lacks in panache, it makes up for fundamentally, as revenues continue to rise in excess of 50% a year and earnings are expected to grow 30% in 2009 and another 20% in 2010 to $1.89 a share.

Tetra Tech (TTEK). One last company I want to highlight in this industry is Tetra Tech. They provide consulting, engineering, construction and technical services for resource management and infrastructure. Whether you need to build a nuclear power plant, install a tsunami warning system in the Indian Ocean or do a study on the contamination of groundwater, Tetra Tech is up to the task. As more and more companies look to explore ways to be more environmentally friendly, Tetra Tech stands to benefit.

If pollution control isn’t your cup of tea, and you would prefer to look at the alternative energy plays like nuclear, geothermal or natural gas, here are a couple of names I like and have invested in.

Nuclear power continues to be one of the cleanest, most efficient alternative energy plays. Unfortunately, we still have some headway to make in easing this nation’s concerns about its safety before we can adopt it completely and start building more facilities. I have my eye on two companies in this sector. EnergySolutions (ES) provides specialized, technology-based nuclear services to both government and commercial customers and continues to attempt to address global warming and energy dependence. USEC (USU) is a leading supplier of enriched Uranium fuel for commercial nuclear power plants. Operating the only Uranium enrichment facility in the United States, they are a provider to more than half of the U.S. market and more than a quarter of the world’s market. As more and more countries realize nuclear power’s benefits, I think USEC has a bright future.

Clean Energy Fuels (CLNE). Clean Energy Fuels provides natural gas as an alternative fuel to over 275 fleet customers in the United States and Canada. T. Boone Pickens is CLNE’s largest shareholder and he is joined by House Speaker Nancy Pelosi. In addition to natural gas, CLNE is also pioneering options in wind power, which could be an interesting play as T. Boone Pickens passionately attempts to blaze a trail in this sector. After three years of losing money, Clean Energy is expected to post a profit in 2009 of 0.28 cents a share.

Energy Recovery (ERII). Energy Recovery manufactures energy recovery devices for the sea water reverse osmosis segment of the water desalination industry. Leading the way in making desalination affordable worldwide, Energy Recovery focuses on reducing energy costs related to the desalination process with its PX Pressure Exchanger. They recently came public at $9 and after gapping up almost 50% higher on their first day of trading has slowly drifted lower, to an attractive entry level. Solid revenue growth along with earnings that are expected to rise 25% this year and another 67% in 2009 have us excited about this company's potential.

Darling International (DAR). Last but not least, consider a company like Darling International which combines two of the themes I’ve discussed, alternative energy and pollution control. Darling collects used cooking oil from restaurants and repurposes that oil to create everything from animal protein meals to biofuels. Darling is expected to increase revenues to over a BILLION this year and with a market cap of less than half a billion, it has become a favorite for mutual funds. This is evident by the number of mutual funds that have a position in DAR, which has tripled over the last year.

Although oil prices have fallen over 50% from their recent highs near $150 a barrel this summer and the global growth story has waned, countries like China and India continue to need fossil fuels in order to grow. This increase in demand should mean explosive growth for stocks in both the alternative energy and pollution control industries.

Dave Dispennette is the founder of The Stock Playbook, a do-it-yourself investment advisory service that boasts a 53% average gain for its annual portfolio. Dave’s professional career represents over 20 years of experience with some of the biggest firms on Wall Street. To see his latest stock recommendations visit http://www.thestockplaybook.com/.

10 International Stocks

If it’s good enough for Warren Buffett, it should be good enough for you. Or at least it should be if you are looking for an international stock that you can buy and hold for the long term, say from the time you get out of college till you retire.

"If you look at who really gets rich in the world it is usually people who purchase the right businesses and hold those businesses for many years," David Winters, manager of the three-year old Wintergreen Fund (WGRNX), told MorningstarAdvisor in June.

At $14 trillion, the U.S. market represented about 44% of the world's $32 trillion in stock-market value at the end of August, according to Russell Indexes. But that means the rest of the world's markets combined eclipse the U.S. stock market. And Winters -- whose fund does own stock in Buffett's Berkshire Hathaway Inc. (BRKA) -- is of the mind that the best investment opportunities are outside the U.S.

Indeed, after several years of standout performance, international stocks have taken a much tougher drubbing this year so far than their U.S. counterparts. The average world-stock mutual fund lost almost 19% through August, versus a 10% decline for diversified U.S. funds, according to fund researcher Lipper Inc. The downturn abroad, particularly in Europe, may have been one reason that Buffett -- the quintessential bargain buyer -- took a European "shopping tour" in May.

Most experts do not recommend that you invest more than half of your assets in non-U.S. stocks. But they do recommend investing a portion in such stocks. Alec Young, international equity strategist at Standard & Poor's, for instance, recommends investing 15 percentage points of a standard 60% stocks/40% bonds portfolio in international stocks. But which ones?

In talking with money managers and other experts, and in searching the Internet, here are 10 international stocks that trade on U.S. exchanges that hold promise for those with a long time horizon looking to invest in different parts of the world, in different industries:

Jardine Matheson Holdings (JMHLY). Jardine Matheson Holdings, which is based in Hong Kong, is among Wintergreen Fund’s largest holdings. Founded as a trading company in China in 1832, Jardine is a Fortune Global 500 company focused principally on Asia. According to the company, its businesses comprise a combination of “cash-generating activities and long-term property assets,” including Jardine Pacific, Jardine Motors Group, Jardine Lloyd Thompson, Mandarin Oriental, Jardine Cycle & Carriage and Astra International.

According to a gurufocus.com report, “Jardine is a good way to participate in the demographics boom of China and Asia. As the U.S., European, and Japanese workforce ages, the Chinese workforce is going to be in its peak producing years… Jardine offers a way to invest in China by a company that has been doing business there for about 170, run by British management.”

By the way, check out Wintergreen’s other holdings -- many of which are international but don’t trade on U.S. exchanges.

Sanofi-Aventis (SNY). Justin Fuller, manager of Morningstar's Ultimate Stock-Picker's Portfolio, recently examined which stocks held by Berkshire Hathaway are also highly rated by the Chicago rating firm. That parsing turned up 13 stocks, the only international stock being Sanofi-Aventis, which develops and markets pharmaceuticals for cancer, heart disease, central nervous system disorders and diabetes and makes vaccines. The company derives two-thirds of its revenues from outside the U.S. and its biggest revenue generator is Lovenox, which represents about 9% of total sales.

According to Morningstar analyst Damien Conover, Sanofi-Aventis has a strong lineup of new drugs in the pipeline that should offset weakness from its drugs that are losing patents. Most recently, the company reported that sales grew 5% year over year, led by growth in long-acting insulin Lantus. The company is in the midst of a restructuring initiative and is trading about $15 below what Morningstar views as its fair market value.

Nestle (NSRGY). John Dessauer, editor of Investor's World for more than three decades, knows a thing or two about long-term holdings. His top pick is Nestle SA, the world's largest food and drink company. Famous for its Nescafe instant coffee, Purina cat food, and KitKat candy bars, the company has about $100 billion in sales.

"This is one stock that you can buy now and hold till you retire or keep forever," he said. Long a Dessauer favorite, it's even more so now, he said.

The company recently discovered, quite by accident he says, a way to process food that would be permissible for Muslims, which number 1.4 billion worldwide. Members of the world's second largest religion have strict dietary laws that prohibit the use of lard and gelatin, for instance. "This could be a huge business for the company," he said.

Nestle recently reported a 3.4% increase in nine-month revenue and a strong rise in organic sales, and gave an upbeat full-year growth outlook. That upbeat report gives Dessauer even more reason to be fond of the company.

Philips Electronics (PHG). Another Dessauer favorite is riding the green wave. Based in Amsterdam, Philips Electronics N.V. is best known for selling electronics such as coffee machines and magnetic-resonance imaging systems.

Now, however, Dessauer says the company has designs on becoming the world's leading maker of energy efficient light bulbs. According to a Morningstar report, with its recent acquisition of The Genlyte Group, a provider of light-emitting diodes (LED), Philips became the biggest lighting firm in the United States. The firm aims to use Genlyte's relationship with U.S.-based distributors and retailers to increase sales of LED lighting, which use far less power than incandescent lights and last as long as 10 years, Morningstar says.

Dessauer also says Philips stands to benefit as the world's emerging middle class buys consumer electronics and personal-care products.

To be fair, the company has been hard hit since this report was first published. For instance, Morgan Stanley downgraded on Oct. 1 the firm to underweight from equal-weight, saying it expects it to report disappointing second-half and 2009 operating results. The broker told clients that while it believes management is pursuing the right long-term strategy, its analysis suggests the consumer lifestyle and lighting divisions will see their sales' growth slow and margins compress.

Dessauer agrees that the company will face strong headwinds in the short-term. Indeed, its stock is down about 45% since the original report, but as with Nokia, now might be the time to double down for the long haul. “People have stopped ordering its consumer products, but its basic business is sound,” he said.

Total SA (TOT). Brad Durham, managing director of Emerging Portfolio Fund Research, said one of his favorite international stocks to hold for the long-term is France-based oil giant Total SA .

"Though now is not the time to buy energy, over the longer term I suspect that upward pressure on oil will resume when global growth kicks back into gear," he said in an email. "Total is as good a long-term hold among international stocks as any."

The company's forecasting earnings per share growth of 9% this year, 10% next year and recently traded at a price-earnings ratio of 6.55. "It's also a core holding in many of the better regarded global/international equity funds that we track," Durham said.

Standard & Poor's has a "buy" recommendation on Total. According to S&P, Total is favored for its low-cost exploration and production capabilities, and for restructuring of its refining and distribution business. Total also recently entered a joint-venture with Russia's Gazprom to develop a major Russian gas field, and is investing substantially in new petrochemical plants in Qatar and South Korea.

Anglo American Plc (AAUK). S&P also has a “strong buy” recommendation on London-based mining giant Anglo American Plc. Anglo American is poised to benefit from consolidation in the mining industry and rising global demand for industrial metals, according to a recent S&P research report. “Economic growth in China and India will raise demand for durable goods and the metals used to manufacture them,” S&P said.

Anglo American intends to increase investment in iron ore, nickel, copper and metallurgical coal, which should boost sales and profits, S&P noted. The research firm in mid-August set a $41-a-share price target for the stock over the next 12 months, which hinges on the prices of coal and copper gaining in 2009. DeBeers, the world’s largest producers of rough diamonds, is 45% owned by Anglo American. That company stands to benefit as China’s middle class grows, Winters was recently quoted as saying.

Teva Pharmaceutical Industries Ltd. (TEVA). Another S&P “strong buy” recommendation is Teva Pharmaceutical, which manufactures generic drugs, an area of health care that S&P expects will boom as countries attempt to hold the line on drug spending. Teva has the largest generic lineup of its peers, with 149 generic drug applications awaiting U.S. Food and Drug Administration approval as of late July. S&P analysts also praise Teva’s “strengthening presence” in the U.S. and Eastern and Central Europe.

Nokia Corp. (NOK). Dessauer gives a strong buy rating to Nokia Corp., the world's largest maker of mobile phones. Plus he notes that a number of firms have upgraded their recommendation of Nokia in the weeks since this report was first published.

According to Dessauer, the Finland-based company is a "no brainer" investment. He says the company's share of the mobile phone market in countries such as China and India is growing rapidly, plus it's paying around a 3.5% dividend at the moment. “Nokia sells 50 times as many phones as Apple,” he said yesterday, noting that amounts to a half-billion phones worldwide.

What’s more he said Nokia is well-positioned to sell its phones to people who need internet access in countries, regions and continents where there won’t be hard-wire access to the internet through personal computers, such as remote parts of China and Africa. “A lot of people will use their cell phone to connect to the Internet,” he said.

Nokia does face headwinds from slow growth for handset telephone units and competition for high-end devices, according to an S&P research report published in mid-July research. But S&P also noted that the company had a "strong market share, a diverse portfolio and broad geographical exposure represent key strengths."

Pressures on the company's business are mounting in the short-term, however. Nokia reported earlier this month that its third-quarter profit fell 30%, though the margins on its devices held steady. And its stock is down about 40% since early September. Still, Dessauer says if you like the stock at $22, you’ll like it even more at $15. In fact, he says you might even want to double down.

GlaxoSmithKline PLC (GSK). Dessauer considers GlaxoSmithKline Plc, which recently appointed Andrew Witty as its chief executive, on the verge of a major turnaround. Witty, who maintains an office by the employee cafeteria, has set a new direction for the firm, focusing less on blockbuster drugs and more on developing an array of products that are "collectively more reliable than blockbusters," Dessauer said.

Equally important, he says Glaxo, which sells its products in 140 countries already, should benefit from selling its vaccines in emerging markets.

Dessauer says this company is attractive even though it posted a 21.5% decline in third-quarter profit this month. He expects Glaxo to begin acquiring biotech firms, which he believes could greatly improve its prospects over the long-term.

Potash Corp. of Saskatchewan Inc. (POT). Potash Corp., which is the world’s largest producer of the fertilizer potash, has been on a roller coaster ride of late what with the recent and dramatic rise and fall in crop prices. But Potash, which controls 22% of the world’s global capacity, stands to benefit handsomely over the long term as current trends play out.

Population growth in rapidly developing economies such as Asia, India and South America combined with the growing use of agricultural products for energy suggest increased demand for potash. “Proper fertilizer use will be critical to produce enough food for a growing global population from a finite land base,” Morningstar wrote in a recent report. What’s more, Morningstar suggested that Potash -- given its market leadership -- has the enviable ability to match supply to demand, in effect eliminating new competitors from entering the market.

Whew, that was a long one huh!