Wednesday, July 02, 2008

Seven Cheap Global Stock Picks

Raymond Mills can't talk about the job he held before signing on to T. Rowe Price. Literally. With a doctorate in aerospace engineering from Stanford University, he worked on some sort of national security-related program until a decade ago. "It was classified," is all he'll say.

Less spooky is the way the manager of T. Rowe Price's $1.5 billion (assets) Overseas Stock Fund picks stocks. Some of Mills' selections are household names. Others are practically unpronounceable. All, in his view, offer above-average earnings growth--thanks to superior products, market dominance or exposure to fast-growing economies--at reasonable prices. For investors, that adds up to a way to ride out and profit from the market's current volatility.

Toyota Motor (nyse: TM - news - people ), a Mills favorite, is a good example. "Honda and Toyota are leaders in hybrid technology and fuel efficiency," he says. "They're going to be winners over time."

Long-term promise aside, Toyota shares are down 20% from a 52-week high amid the malaise in the global auto business. That has left the stock selling at nine times latest-12-month earnings, versus a five-year average of 13.

"Maybe we don't think it's going to be a great stock for the next year," he says of many of the shares he tucks away, "but we think it's going to be a great story over the next two to three or five years."

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