International equities
>> the low carb craze has been crushing a number of companies. shares of krispy kreme are down 45% just this year. american italian pasta has lost 28% of its value. darden restaurants is another company that could be hit. hasn’t yet. its growth engine has been the olive garden chain. but the company’s chief executive is not worried.
>> if you are on a low carb diet you can go into olive garden and very easily eat the mixed grill or some of the other items and just hold the pasta and get broccoli on the side. so olive garden is making it very easy for people who are on a low carb diet to continue eating there and for their friends who want to be more indulgent to have their great pasta, too.
>> and just say no the garlic bread. shares of darden restaurants were lower today. the company said tuesday that fourth quarter sales at their primary chains came in a bit short of analysts’ expectations. darden also owns red lobster and profit topped estimates by two cents a share. the c.e.o. talked to bloomberg about the full-year forecast for darden.
>> we are going to grow next year in the 8% to 12% rain think and in future years -- range and in future years we’d like the street to look at us as a double digit grower which could include some years with the 15% and also some years a little under that.
>> darden says profit this year will rise to $1.68 a share, four cents below the average analyst’s estimate. we continue with our special markets at mid year series this time looking abroad. earlier brian sullivan spoke with the head of international equities and he says investors should set their sights on turkey, a country that wants to join the european union.
>> on its own turkey is very cheap, like 10 times p.e., but usually we don’t go into these markets unless there is a very substantial profit to be made. so for the real bang to the buck, the home run is to make it to the e.u. and it’s a grand slam home run. if there is no e.u. then it’s like a double to use a baseball analogy.
>> so even if turkey does not gain entrance―now you expect that turkey will gain entrance into the e.u., correct?
>> yes. it is not going to be easy but i think at the end they will make it yes.
>> some requirements were set out. looks like turkey has accomplished most of those.
>> exactly.
>> when would that happen?
>> that’s the good thing about it. you have to look at it short-term so you don’t need to be very patient to make money on this investment. one is in october there is going to be a progress report from the e.u. on how turkey has done and then in december hopefully the e.u. then will seat date for them to start negotiations and we expect it to be around july of 2005 so you don’t need to be very patient. just wait until the year end and then you’ll find out how things are going.
>> but even if turkey does not gain entrance into the e.u. next year you still believe it is a good market and the market will go higher but it does gain it’ll soar.
>> forget it.
>> i like it. let’s talk about turky and how to play it. do a lot of turkish stocks trade at level one or --
>> very few, very few. i think the best way for a u.s. investor is to buy through a closed end fund and the turkey investment funds run by morgan stanley is one of the, in our opinion, one of the best turkish funds around. the only trick is for your viewers to make sure that it’s not trading at a very high premium --
>> how much of a premium would you allow it to go above net asset value and still be a bargain?
>> ideally within 10%.
>> no more than 10% over it.
>> on general terms.
>> we’ve talked about eastern europe as well. let’s move from turkey and go even further east into russia.
>> yes.
>> you do like the russian market .
>> yes. again, this is a medium-term play. we believe like as turkey is planning to become the 51st state of europe we believe russia will end up being the canada of europe. it’s a huge market with huge mineral resources and huge natural resources.
>> and it’s cold.
>> that’s a good one. what you need in russia is reform to continue and they are continuing at a very strong pace. and then you have to fuel oligarch control of the economy vladimir putin is doing something about it in a heavy-handed way but at least he is doing something about it. russia is a great growth story and will be done slow paced but the investment is very cheap and the possibilities are very bright.
>> coming up next we’ll get head start on asian markets . head to our hong kong bureau for a preview. now for a free view of tomorrow’s action in europe.
