Any Bright Spots In The Greek Darkness?
Saxo Bank | Mar 07, 2013 07:36AM ET
Following a 90.7 percent decline (see chart below) in the leading Greek stock index from its peak on October 31, 2007, Greek stocks seem to have bottomed in May 2012, following the national elections and the bailout of Spanish banks. Since then, the index is up more than 100 percent but there might be more ahead for risk-seeking investors.
Despite the many Greek publically traded stocks available we have only found seven that are worth a look for investors. Requirements have been a minimum market capitalization of EUR 500 million including a positive and decent return on invested capital; this excludes all financial stocks. Based on our findings, the three best stocks in Greece are Opap (OPAP:AT), Metka (METKK:AT) and Jumbo (BELA:AT) which are all sound companies with a good return on total invested capital and shareholder equity. Even more importantly, their valuations are not high when you compare these three companies’ profitability with similar companies in Europe. We measure the valuation as the total value of equity and net debt (enterprise value) above total invested capital.
The three stocks mentioned have already returned around 20 percent this year (see table). Given the fair valuation and great business metrics in combination with an improving global economy, we believe these stocks could continue to rise throughout 2013.
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