Criteria for Choosing Emerging Markets Stocks

Cabot Global Stocks Explorer (formerly Cabot Emerging Markets Investor) looks for promising companies benefiting from the rapid growth in the economies of emerging market countries. These firms may be headquartered overseas, but they can also be from America, Europe or any other part of the world. What they must have in common is:

(1) a large part of their growth must be the result of emerging market countries’ growth and

(2) their stock must trade on a U.S. exchange.

But it’s not enough just to buy companies benefiting from their countries’ growth. Companies featured in the Cabot Global Stocks Explorer also meet our strict criteria regarding fundamentals and technicals. Our recommended companies have healthy balance sheets and show solid growth.

Most important of all, the stocks of our companies are in solid uptrends. This is because stocks tend to trade on what the future holds. If a stock is exhibiting strength, it’s an indication that business will continue to be healthy for the company.

Once Cabot Global Stocks Explorer owns a stock, it will be held for as long as the stock performs well. Our goal is to hold stocks for the long-term. But we let the stocks tell us when they should be sold. This is accomplished by paying close attention to chart patterns. Is the stock in a solid uptrend? Does trading volume show accumulation? Are corrections brief and shallow? We judge a stock’s health using traditional technical analysis tools (trendlines, support/resistance, etc.), relative performance and volume analysis. In the event a loss develops, it will be limited to no more than 20% at the close of any trading day.

To recap, many emerging market countries are experiencing growth waves that will persist for many years to come. Investing in the growing companies benefiting from that trend can bring you profits that are beyond belief!

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