pink sheets stocksWith few exceptions, investors should run screaming from any stock quoted on the Pink Sheets. This over-the-counter electronic quotation system (which used to print share prices on pink sheets of paper) has no listing or regulatory requirements. That's helped make it a haven for companies that are thinly traded or closely held, perhaps in bankruptcy, and, of course, penny-stock pump-and-dump frauds.

And that's being charitable. The Securities and Exchange Commission, which has no oversight of Pink Sheets stocks, warns investors that companies listed there can be "among the most risky investments." So it comes as something of a surprise that some of the biggest, best-known foreign firms chose to list on the Pink Sheets exclusively in the the U.S.

Take Nestle (NSRGY), for example, the world's largest food and beverage company. Sure, you could buy shares on Nestle's home exchange, but then you'd be subject to currency risk converting dollars to Swiss francs. So that leaves you with Nestle American Depositary Receipts (or ADRs, a vehicle foreign companies use to trade in the U.S.). Nestle purposely eschews listing its ADR on a major exchange such as the Nasdaq because it would have to prepare two sets of financial statements -- one in accordance with international standards and another adhering to U.S. standards.

The bottom line is that the absence of regulatory requirements in the over-the-counter market makes life easier and cheaper for Nestle and scores of other legitimate companies -- even as that lack of oversight provides a breeding ground for some seriously sketchy equities.

Using data from Capital IQ and Thomson Reuters, we screened for well-known, large-cap foreign companies (minimum market cap of $50 billion) listed only on the Pink Sheets in the U.S. that are outperforming the S&P 500 so far this year. We also looked at trailing price-earnings ratios to see whether these stocks look cheap or expensive relative to the broader market.

Here, then, are ten blue chips on the Pink Sheets that may be worth further scrutiny for your portfolio.

Industrial and Commercial Bank of China (IDCBY)
Market Cap: $282 billion
2010 Price Performance: +17% (since Jan. 20)
+/- S&P 500: +8%
Shares in the world's biggest bank by market cap offer a 30% discount to the broader market on a trailing earnings basis.

China Construction Bank (
CICHY)
Market Cap: $249 billion
2010 Price Performance: +24%
+/- S&P 500: +15
Shares in the world's second biggest bank by market cap trade at a 25% discount to the broader market by trailing earnings.

Nestle (NSRGY)
Market Cap: $192 billion
2010 Price Performance: +21%
+/- S&P 500: +12
Trading in-line with the S&P 500 on a trailing earnings basis, shares in the world's biggest food and beverage company don't look like a deep bargain, but they hardly look pricey, either.

LVMH Moet Hennessy Louis Vuitton (LVMHF)
Market Cap: $78 billion
2010 Price Performance: +36%
+/- S&P 500: +27%
Shares in the French luxury powerhouse look richly priced, trading at a sevenfold premium to the S&P 500, but then the recovery in high-end discretionary spending appears to be accelerating.

Daimler (DDAIF)
Market Cap: $74 billion
2010 Price Performance: +28%
+/- S&P 500: +19%
Best-known for manufacturing the Mercedes-Benz, shares in the German automaker offer a modest 6% discount to the broader market.

BASF (
BASFY)
Market Cap: $71 billion
2010 Price Performance: +29%
+/- S&P 500: +20%
Shares in the Germany's answer to DuPont offers a compelling 26% discount to the broader market on a trailing earnings basis.

Xstrata (XSRAY)
Market Cap: $63 billion
2010 Price Performance: +16% (since Jan. 5)
+/- S&P 500: +7%
Shares in the Swiss mining giant trade at nearly a 50% premium to the broader market by trailing earnings, but then the global commodities boom shows no signs of slowing down.

Anglo American (AAUKY)
Market Cap: $57 billion
2010 Price Performance: +11%
+/- S&P 500: +2%
Another play on the global commodities boom, the British mining company's stock trades at a whopping 100% premium to the S&P 500 on a trailing earnings basis.

Hennes & Mauritz (HNNMY)

Market Cap: $56 billion
2010 Price Performance: +25%
+/- S&P 500: +16%
The Swedish fashion retailer's shares look marked down, sporting a discount of more than 100% to the broader market by trailing earnings.

SABMiller (SBMRY)
Market Cap: $51 billion
2010 Price Performance: +13%
+/- S&P 500: +4%
Shares in the British beer company fetch a pricey 53% premium to the broader market by trailing earnings.

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21 Comments

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savemycountry911

Dumbercraps are melting,..... melting,....... melting...............

November 14 2010 at 8:01 PM Report abuse +2 rate up rate down Reply
savemycountry911

Obummer has gotten an international shellacking. He is an embarrassment to the country. Oh well, he will be gone in 2012.

November 14 2010 at 7:32 PM Report abuse -1 rate up rate down Reply
2 replies to savemycountry911's comment
savemycountry911

President Bush was great. He got the respect of world leaders.

November 14 2010 at 8:00 PM Report abuse rate up rate down Reply
visitor3250

He is not am embarrsment to the country. The ignorant race baiting tea partiers are an embarrassment. It was not Obama that received a shellacking (use your own words not those of the media). It was not a hooray for Republicans but more of a dissatisfaction with House Democrats. If you notice the Democrats retained control of the Senate. Also I think he will be re-elected in 2012. Reagan has lower ratings than Obama in his first term and he went on to be re-elected.

November 15 2010 at 10:00 PM Report abuse +1 rate up rate down Reply
billpro0

Give 'em some more tax breaks!

November 14 2010 at 7:09 PM Report abuse +3 rate up rate down Reply
1 reply to billpro0's comment
savemycountry911

What do welfare bums know about taxes?

November 14 2010 at 7:33 PM Report abuse +2 rate up rate down Reply
billpro0

LOL! Who didn't know THIS was going on??????

November 14 2010 at 7:08 PM Report abuse +3 rate up rate down Reply
blessed

Fiberals fib

November 14 2010 at 10:06 AM Report abuse +2 rate up rate down Reply
Iselin007

It is all going to crash soon anyway there is only so much spinning before the truth unwhinds.

November 13 2010 at 7:48 PM Report abuse +8 rate up rate down Reply
blueheron

To believe that buying ADR's helps an investor to avoid the currency risk is rather naive, to put it mildly. Changes in the currency exchange rate (in the case of Nestle between the dollar and the Swiss franc) will rather directly reflect the price of the ADR. How else is this supposed to work? There is only one company and only one stock. If one buys the ADRs with dollars and the Swiss franc goes up, the ADRs go up as well - the same as would have happened if one had exchanged the dollars for Swiss francs and then bought the original shares in Switzerland.

November 13 2010 at 6:42 PM Report abuse +5 rate up rate down Reply
cartra

WOW, I CAN'T BELIEVE CORPORATIONS WOULD HIDE IN THE PINK SHEETS. IT'S PROBABLY AN OVERSIGHT. THEY DON'T KNOW THEY CAN BE ON THE BIG BOARD!

November 13 2010 at 2:04 PM Report abuse -2 rate up rate down Reply
Robert & Lisa

Unknowingly Bush started this mess with the Demoncrat Congress. Knowingly, George Soros's Puppets, Obama and thugs proliferated the mess. Sadly, we the people have to clean it up. Good luck on that fellow Americans.

November 13 2010 at 10:47 AM Report abuse rate up rate down Reply
1 reply to Robert & Lisa's comment
visitor3250

Ah how blind you are? What do you mean that Bush unknowingly started this mess. He and his parnter in crime Cheney started this mess with their eyes wide open. I have a brooklyn bridge to sell you.

November 15 2010 at 10:01 PM Report abuse +1 rate up rate down Reply
Stephen

You are far better off to put your money into the scam that is Nasdaq or NYSE.

November 13 2010 at 10:39 AM Report abuse rate up rate down Reply