My recommendation is a diversified global bank that just happens to be based in Spain, Carl Delfeld, a long-standing global investing expert who has just taken over as editor of Cabot Emerging Markets Investor.
Spain has had its banking issues with a property bubble akin to our own debacle but now that the the cleanup process is done, banks will be in better shape to provide loans and help stimulate the economy.
This is why forward-looking markets are driving European stocks upward outperforming U.S. stocks. Another reason that Europe may very well outperform America is that the European Central Bank (ECB) has signaled that it will keep rates steady for at least 12 months.
A conservative way to play these trends is through a proxy for an economic recovery, Europe’s largest bank, Banco Santander (SAN).
Over the last decade, this Spanish bank has struggled a bit even as it has expanded its capital base and is a global bank in growth markets similar to HSBC.
It sure seems to me quite a bargain. The stock is down 33% in the last year and is trading at only 65% of book value.
Since 2010, it has averaged a price to book value ratio of 2.4 over the past decade. The stock could more than double from here to around $8 as it returns to its historical average.
