Joseph Battipaglia, Chief Investment Strategist for Gruntal & Company, notes that pundits are very poor at predicting the future and how the market will judge the value of business. For example, many Internet companies in the late 1990s said that profits didn’t matter and were unnecessary and that revenues were the key measure to the value of their enterprises. Later these parties found that earnings do matter.

The reason we have to rethink our economic and investment strategy is because globalization is occurring at a rapid pace and technologies are increasing efficiency and replacing inefficient labor. Globalization may become the “next new thing in the economy and markets” even though this trend has been going on for more than a hundred years. But Battipaglia notes that World War I, World War II and the Cold War slowed globalization for the last 80 years.


Technology aids the globalization of the economy. The cost of computing power and telecommunication costs have been declining at an incredible rate and parties can communicate freely today across borders using the Internet.

Manufacturing has also moved across borders. Electronic components might be made in Asia, shipped to Mexico to be assembled, and the products finished and sold in the United States. The adoption of NAFTA and the establishment of the Euro only aids the globalization trend.

Pension fund assets also increase the globalization of the economy as they look for increasing returns on investment and are “stateless” assets that can be moved across borders in search of attractive investments. Europe is in the early stages of developing investment strategies where pension funds might be invested in the market.

We agree with Mr. Battipaglia that the globalization of the economy will present many interesting opportunities for investors. One firm that we like at the LSGI Technology Market Letter is Radyne Comstream (RADN), a firm that generates 60 percent of its revenues overseas. The company, which manufactures equipment needed to receive satellite data feeds, has interesting products that deliver high-bandwidth capacity to areas of the world that have no access to broadband connections. Selling at a price/earnings ratio below 15, based on this year’s estimated earnings, we expect the firm to grow in excess of 25 percent per year.

ALCN Ltd. (ACLNF) is an international distributor and shipper of automobiles from Europe to Africa. Growing revenues in excess of 70 percent per year and selling at a trailing price/earnings ratio of 7, the firm has developed a tremendous niche market that they serve well.

Based in the United Kingdom, Amarin Corporation (AMRN) has developed a worldwide strategy marketing pharmaceutical products ignored by larger drug companies. Amarin also has drug delivery expertise and develops products for third parties. With an excellent management, many from drug powerhouse Elan Corporation (ELN) (which is also an equity investor), the firm is selling at a forward price/earnings ratio of less than 12.

Trinity Biotechnology (TRIB) sells biotechnology supplies and testing kits to the European market. Selling at a trailing price/earnings ratio of 15, this company is well-positioned to take advantage of the growing interest in biotechnology in Europe. The company also has a new HIV test that is being marketed in Africa.

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