Turkcell (NYSE: $TKC), my pick for the InvestorPlace “10 Best Stocks for 2012” contest, is off to a great start. Through February 1, the stock was up 12 percent for the year, compared to the 5.5 percent gains in the S&P 500.
With the January rally in industrials and materials firms, Caterpillar (NYSE: $CAT) and Alcoa (NYSE: $AA) jumped out to an early start, up 22 percent and 18 percent, respectively. Long-time Sizemore Investment Letter recommendation Microsoft (Nasdaq: $MSFT) has also enjoyed a nice bounce this year, up 15 percent. But the real winner so far has been medical device maker Mako Pharmaceutical (Nasdaq: $MAKO), up a remarkable 44 percent.
The best performing stocks on the list are some of the most cyclical, and I am quite happy to see that. It means that investor risk appetites are returning. Barring a major blowup coming out of Europe, I expect this to continue and I recommend that investors maintain over-weighted positions in the beaten-down markets of Europe and emerging markets.
2011 was a bad year for emerging markets in general and Turkish stocks in particular, and the strong start to 2012 leads me to believe the rout is officially over. All things in life are fleeting, and perhaps nothing more so than stock market gains. Still, buying shares of world-class companies when their prices are temporarily depressed is as close to a fool-proof investment strategy as I have ever seen, and the 2011 emerging market bear market has given us a great opportunity in Turkcell.
Apparently, republican presidential candidate Mitt Romney agrees. Upon releasing his tax returns to public scrutiny, it was revealed that the former Massachusetts governor is a Turkcell shareholder.
In past articles, I written about the virtues of following the trades of other investors (see “When in Doubt, Follow the Greats”). I’m not so sure Mr. Romney qualifies, but his ownership of the shares certainly raises their profile.
In other news, Turkcell confirmed recent media reports saying it is interested in acquiring Bulgarian telecom operator Vivacom. An expanded presence in Bulgaria would be a natural growth strategy for Turkcell. In addition to expanding in its home market, which is still far from saturated, Turkcell continues to establish itself as a leading telecom provider in Eastern Europe and the Middle East. Turkcell faces stiff competition for assets and new consumers in these markets from Britain’s Vodafone (NYSE: $VOD), among others, though the company has repeatedly proven that it can compete against its much larger rivals.
2012 is off to a great start, and I expect it to be a very profitable year for emerging market investors.