Buy This Stock as America Dominates Global Markets

The United States has dominated the global market for years now. Since COVID, US markets against the world has looked like last weekend’s Detroit Lions versus Jacksonville Jaguars game. It was not just a win. It was a beating of epic proportions.

The United States has gotten almost everything right regarding fiscal and monetary policy as far as the market is concerned. History may have a different verdict, but we can talk about that further down the road.

Meanwhile, Europe seems to have been one step behind at every turn. Europe tossed a few bucks at the problems caused by the pandemic. The United States money-whipped that sucker. We used direct payments, interest rate adjustments, loan forbearance and forgiveness, and anything else those clever little minds on Wall Street and Constitution Avenue could dream up.

As a result, the U.S. economy rebounded relatively quickly, with GDP recovering to pre-pandemic levels by mid-2021. Most of the recovery resulted from all the money we passed out and how quickly American consumers did what they do best – spent it.

The Russian invasion of Ukraine right in the middle of recovery efforts did not help Europe, and this has been reflected in stock prices. Over the past decade, European stocks have returned about 7%. The S&P 500 has vaulted ahead by a huge margin, returning about 12% annually. US stocks are now approaching 70% of total global market capitalization.

One-third of that is comprised of a handful of tech stocks. This is now the highest global concentration in US stocks since the heyday of the 1970s.

Everyone thinks it will continue, and everyone projects US stocks to remain the best-performing market. Thanks to Donald Trump’s election, everyone expects Europe to collapse into disarray and panic, with the economy impeding and stock prices falling even further.

My contrarian brain automatically assumes that, given the optimism about the United States and the pessimism about Europe, it is time to buy European stocks. Rest assured, I do not expect to come close to finding the bottom in the markets.

The only time I came close was in 2009 when the sheer number of companies trading at ridiculous prices relative to asset value pretty much forced me to be bullish.

However, even if I am inevitably early, buying great companies at great prices has always been a winning recipe for patient, aggressive investors.

We are not quite at those levels in Europe, but we are getting close. It is time to start buying solid European companies trading below book value, which can be expected to deliver huge returns when the Old World begins to get its act together and comes back into favor with global investors. In theory, we are paying prices below what we could calmly and rationally liquidate the company for over a reasonable period.

At the top of the list must be Mercedes-Benz Group (MBGYY). Germany is in rough shape. The economy is weak, and politics are so messy that the United States looks calm and demure. The car business is in a state of flux, and tariffs, if the new administration implements them, will initially hurt European manufacturers.

Business has been slow, but Mercedes has been very resilient. The company reported revenues of approximately $37.1 billion, a 7% decline compared to last year, indicating macroeconomic pressures and a softer market environment, particularly in China.

Despite this, the company demonstrated robust free cash flow from industrial business activities, reaching about $2.6 billion, underscoring solid efficiency and effective cash management operationally.

With approximately $4.6 billion in share repurchases year-to-date, Mercedes-Benz’s share buyback program reflects management’s confidence in the business’s intrinsic value. The company’s substantial net industrial liquidity of about $30.9 billion provides a strong foundation for weathering market volatility and supporting strategic initiatives.

The stock trades at about 75% of tangible book value and around 7 times free cash flow. If the annual dividend paid in late May 2025 is even half of this year’s, the stock will yield over 5%. Mercedes has survived far worse global uncertainty and will do so this time as well.

From this level, it is hard for me not to see an opportunity to double my money at least.

At the moment, the list of quality European companies trading well below book value is full of banks, energy companies, and shipping concerns.

That is consistent with a market still worrying about slow economic growth.

I have no idea how long it will take the Eurozone to begin to recover, but I do know that the market always swings too far before it reverses course, and I think that is what we are seeing happen today.

We can buy some of the world’s greatest companies at ridiculously cheap valuations and collect fantastic dividends until the global over-concentration in the United States reverses course.

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