When the going gets tough ... the tough go to Switzerland? That may not be entirely (or even mostly) accurate, but it certainly seems true that in periods of economic turbulence and in times where other governments seem profligate or inept, investors look back to Switzerland as something of a safe haven. Switzerland has a well-earned reputation for conservatism and consistency, and there are valid arguments for investors to look to hedge some of their exposure to North American or Eurozone economies with some allocation to Swiss assets.
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Swiss Companies to Consider
Consider, then, some of the following Swiss companies. Keep in mind, though, that as Switzerland is such a small country, most successful Swiss companies have become successful by becoming global. So it is a bit of a straw man to think that simply being a Swiss company is a shield against the ups and downs of the global economy.
ABB is a good example of a Swiss company that has little to do with what is going on in Switzerland. This global leader in power and automation has been testing 52-week lows as investors' fears of slowing orders outweigh their optimism regarding the company's cost-cutting initiatives and late-cycle positioning. Automation is here to stay, though, and power infrastructure upgrades are a "when, not if" decision, so this looks like an interesting play at it hits lows.
Credit Suisse (NYSE:CS)
When is a bank not really a bank? Credit Suisse delivered on a long-earned reputation for conservatism during the crisis as it did not need a bailout, nor did it suffer major deposit flight. Credit Suisse has a huge private banking business that could be threatened by softening Swiss rules on bank secrecy, and it gets a large percentage of its profits from investment banking. Retail banking is actually a very small part of Credit Suisse's operations today - arguably a major positive in a world where most Western banks are still hobbled with bad debts and poor loan demand. While investors may also be interested in fellow Swiss bank UBS (NYSE:UBS), this bank has suffered a great deal more through the subprime debacle and has a larger retail banking presence. (For related reading, see The Rise Of The Modern Investment Bank.)
Major packaged food companies like Unilever (NYSE:UL) and Kellogg (NYSE:K) have well-earned reputations as quality global players, but nobody does it quite like Nestle. Nestle is the largest in the world and has sizable shares in markets like bottled water and infant formula - the latter being a controversial but very nearly recession-proof business. Nestle is almost always expensive, so trading near fair value may be the closest to "cheap" that investors should expect. While Nestle is not likely to be a major grower in the future (simply because of the size of the revenue base already), it is a very good stock to hold in a nervous market.
Drug stocks used to be obvious candidates whenever it was time to assemble a list of "In case of emergency, break glass and buy these stocks." Nowadays, though, many major drug companies languish with poor pipelines, severe generic pressure and a prickly FDA - to say nothing of dramatically lower patient visit counts and increasing push-back on branded drug pricing.
Novartis is a little different, though. The company actually has a pretty robust late-stage pipeline. What's more, the vaccine and generics business offer up quite a bit of stable and defensive revenue. Novartis management is an interesting one; they are not afraid to do deals with a long-term horizon on the payoff, and they seem capable of staying patient and on-plan despite Wall Street criticism. (For related reading, see How To Do Qualitative Analysis On Biotech Companies.)
Syngenta is often criticized as a number three "me too" player in advanced crop seeds, but this misses the fact that it is also the No.1 or No.2 seller of crop protection (herbicides and pesticides) in most of the world's markets. Moreover, the company is closing the gap on DuPont (NYSE:DD), and its modified seeds are getting better. Syngenta is arguably the least-cheap name on the list, but agriculture is still a sector in favor, and Syngenta offers that added kick of being Swiss-domiciled.
Transocean may be the most absurd case of "legally Swiss". It makes perfect sense that many of the world's subsea construction and offshore drilling companies are from Norway; it makes no real sense that the world's largest offshore drilling company is headquartered in a landlocked alpine nation. That said, the offshore market seems to be picking up, and Transocean has been an active acquirer. Another global recession will be bad news for oil prices (and drilling rates), but offshore exploration will not go away, and Transocean is in place to reap the benefits. (For related reading, see Peak Oil: What To Do When The Wells Run Dry.)
The Bottom Line
It's almost always better to buy the best companies at the best prices and then hang on for long-term gains. That said, investors who want to offset some of the turbulence and uncertainty in the world today might want to consider some of the higher-quality and underpriced Swiss names that trade in significant volume on U.S. exchanges.
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