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World of Opportunity

Domestic funds tasting sour? Try some international flavor.

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This story appears in the February 2003 issue of Entrepreneur. Subscribe »

Just as the Big Grizzly has hit our markets hard, it's donethe same to many around the world. But if you're a fundamentalbottom-up research analyst, like those at the MFS International NewDiscovery Fund (MIDAX), that's good news. "There's alot of value to be gained from that," says Betsy Palmer, oneof the fund's managers. "The valuation levels ofinternational stocks compared to U.S. stocks are cheaper right now,whether you look at the price-to-earnings ratio, the price to cashflow, the price to book value or price to sales."

And, because the international smaller-cap stocks don'tperform as large-cap U.S. ones do, that could mean investmentopportunity. How so? Palmer says international small- and mid-capstocks are more dependent on local economies than large-cap U.S.stocks. "If you're a French retailer, for instance, itdoesn't matter what's going on with the globaleconomy--what's important is what's going onlocally."

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