Europe seems to have passed the stress test this time, as France and Germany managed to come up with a debt restructuring plan for Greece that will give the country more time to move on with the restructuring of its own economy.
Though most of the time, plans of this sort failed to produce meaningful solutions that will calm credit markets, this time around prospects are better, as countries with the most severe debt issues like Greece, Portugal, Ireland, and Italy have already taken drastic short-term and long-term measures to cut their national debts. Last week, for instance, Greece took measures to cut abuses to its welfare system, and to eliminate excessive regulations that constrain entrepreneurship. Italy moved forward by taking its own measures to cut government waste. What does it mean for investors?
On Friday, Athens Exchange rebounded by 2.60 percent, with banking stocks performing better than the General Index; and given the precipitous decline of the index— Slightly above 1200, Greek stocks are trading close to 80 percent below its 2000 highs, and may be a good short term buy for contrarian investors.
Here we list four stocks, trading in US exchanges—larger companies with a dominant position in the Greek and the Balkan markets, and in some cases world industry leaders like Greek shipping companies (yes, Greeks are still dominant in shipping!):
National Bank of Greece (NYSE:NBG; $1.38): The largest bank of Greece with an extensive presence in the Balkan region, Turkey, and Egypt (its Turkey subsidiary has a market capitalization larger than the parent company). With a P-E of 23, an operating margin of 22%, and $4.83 billion cash flow, the bank is in the same, if not at a better financial situation than Bank of America (NYSE: BAC) and Citibank (NYSE: C).—NBG is among the banks that passed the EU stress test.
Tsakos Navigation (NYSE:TNP; $9.46): A large oil tanker owner and operator with solid financials and an experience management team. The company has $262 million in cash and $91million free cash flow and pays 6.5 percent dividend.
Diana Shipping (NYSE:DSX; $10.52): A leader in dry bulk shipping with a P-E of 6.59, an operating profit of near 50, and 373 million in cash, and a major beneficiary of the rising Chinese economy.
Navios Maritime Partners (NYSE:NMM; $17.38): A diverse shipping company with a P-E of 12.19, a profit margin of 30 percent, and a dividend of 9.90 percent.
Disclosure: I am long on NBG and TNP
- profit margin
- free cash flow
- market capitalization
- operating margin
- Greek shipping companies
- debt restructuring
- oil tanker