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Argentina lost to Germany in the World Cup. Oh my. The country of Argentina was being shaken down by mean nasty hedge fund dudes who bought up their debt at a discount and now insist on making them pay. Don’t cry for me Argentina, they say they can’t pay. Lions and Tigers and Bears…oh my!
Yawn. Global markets are already showing that this isn’t being seen as a global-economic blow. There are still ongoing discussions with banks with the owners of the Argentine debt to shore up the situation. Citigroup and other banks are in discussions to buy the defaulted debt from Elliott Management, paving the way for a resumption of payments. I’ll say it here first. This is just a speed bump. Buy straw hats in the winter, because summer always surely comes.
Remember, the debt situation is something which is haunting Argentina from days gone by. However what is happening today in Argentina is a completely different story. The economic opportunities are robust, and the bank which handles the money for these opportunities will go along for the ride. Financial institutions are the first to feel a systemic shock such as a credit default. However, if a bank has strong fundamentals, it will still be needed as a conduit for commerce.
The Argentine stock market is up ~40% in local-currency terms so far in 2014, although the relative devaluation of its currency against the U.S. dollar has limited gains for U.S. investors to just 15%. Still, Argentina has kept up its positive momentum and Argentina has worked hard to regain access to the sovereign debt markets, and success on that score could point to better times ahead for the South American nation. Once this debt situation resolves itself. And it will resolve itself.
Today I bought stock in BFR (which is the ADR for BBVA Banco Frances) at 12.37. I will sell it in 4 to 6 weeks at 14.28. This bank is doing great:
BFR stock is up 198% in the last 52 weeks, yet its PE is only 6, which means that this stock still has a good ways to go. Almost all of the other LATAM banks are showing PE multiples of between 11 and 12. So this stock has room to run basis PE expansion alone.
Look at the revenue and earnings growth progression:
Year Revenue, $MM EPS
2009 249 1.19
2010 291 1.71
2011 1,232 1.36
2012 1,627 1.56
2013 1,898 2.08
The most recent quarter saw revenues of $571 million and EPS of 1.00 per share.
That’s the kind of growth I like to see. Here are some other metric which illuminate the value of BFR:
· PE Ratio: 6 vs industry average of 16
· Price / Sales: 1.2 vs. industry average of 2.5
· Price / Cash Flow: 5.1 vs. industry average of 14.8
· Return on Sales: 23% vs. industry average of 15%
· Return on Assets: 4.6% vs. industry average of 0.7
· Return on Equity: 38% vs. industry average of 9%
· Revenue Growth TTM: 9.3% vs. industry average of -3.0%
· EPS Growth TTM : 53.6% vs. industry average of 0.9%
BBVA Banco Francés S.A., together with its subsidiaries, provides various financial services to corporations, medium and small companies, and individual customers in the Republic of Argentina. The company offers checking and savings accounts, time deposits, and investment accounts. It also provides loans to the public sector, loans to local financial institutions, short-term loans to companies and overdraft lines of credit, discounted instruments, real estate mortgage loans, collateral loans, consumer loans, credit card loans, and short-term placements in foreign banks. In addition, the company offers fire, household, civil liability, theft, personal accidents, group life, and other insurance coverage products; payroll services; asset management services; and insurance advisory services to customers in the areas of coverage of risks related to life, personal accidents, as well as home insurance, and automated teller machine (ATM) robbery insurance. It operates 245 branches, as well as 13 on-site banks, 2 points of sales, 657 ATMs, and 732 inquiry display terminal. The company was formerly known as Banco Francés S.A. and changed its name to BBVA Banco Francés S.A. in October 2000. The company was founded in 1886 and is based in Buenos Aires, the Republic of Argentina. BBVA Banco Francés S.A. is a subsidiary of Banco Bilbao Vizcaya Argentaria, S.A.
Argentina represents one of the best-calculated bets that one can make in global investment today. There is virtually no leverage in real estate, and in recent history, very little foreign investment. As a result, asset prices are some of the cheapest in the world. Those asset values can go no where else but up, especially when the latecomers storm in. The debt problem is an OLD problem.
The government is making great strides in demonstrating clearer economic policies that are investor friendly. The prospect of business friendly politics is enticing investors in sectors such as energy, industry, infrastructure and natural resources including billions from Chevron and SHELL who are now exploring Vaca Muerta’s second-largest reserves of shale gas and fourth-largest reserves of shale oil in the world. These companies have carefully evaluated Argentina’s economic and political climate, and as well as its investment risk potential, and have resolved to commit significant long-term capital investments because of the strong potential for future growth and investment returns. With interest rates at historic lows in the United States, money has been flowing into emerging markets as investors look for growth opportunities. A diversified and well-balanced economy, high investments by both government and private investors, and a strong export based economy are also reasons why this country is attracting the attention of the international investing community. In 2014, the country's GDP will grow 3.2 percent thanks to a favorable international trade climate.
The consumer confidence index rose 10.0% over the previous month to 41.9 points in June. The reading marked the fourth consecutive increase and the highest level so far this year. . The relative stabilization of the peso following its devaluation in February bodes well for an improvement in consumer spending and contributed to the aforementioned increases.
BBVA plans to invest 1.2 billion pesos ($221.4 million) in the construction of its new headquarters in Buenos Aires. The new BBVA Tower will be located in the Catalinas business complex, and construction would be completed by the end of 2015. You don’t spend that much money on new headquarters unless you were bullish about the future cash flows. It’s a great way to look stupid if you’re wrong about your company’s prospects. BBVA Banco Frances CEO Ricardo Moreno said the construction of the new tower shows the bank’s commitment to the country and its “absolute confidence in Argentina’s future.”
Tourism is flourishing in Argentina as a result of the 70% devaluation, which has made visiting Argentina very affordable. In addition, Argentines are no longer vacationing abroad because of increased costs in peso terms. Chevron Corp. , the world’s third-largest oil company, signed an accord with Argentina’s YPF SA to invest $1.6 billion this year in shale development and become the country’s largest foreign producer of shale oil and natural gas.
Chevron and state-run YPF plan to drill 170 wells in a 96,000-acre area this year in Argentina’s Vaca Muerta formation, the world’s second-largest shale gas deposit and fourth-largest shale oil reservoir.
Argentina aims to make it easier and more profitable for companies to invest in its oil and gas industry in hopes this will boost production and reduce energy imports.
Asia’s rising demand for food has pushed up the price of exports of soya beans and other products from the fertile pampas. That’s boosted tax revenues and reserves, thanks to a healthy trade surplus.
Argentina is still here, boys and girls and I love buying stocks with growing revenues and earnings which have a PE of 6. At the end of the day there is nothing but blue skies ahead, and I am banking on Argentina and BFR.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Yawn. Global markets are already showing that this isn’t being seen as a global-economic blow. There are still ongoing discussions with banks with the owners of the Argentine debt to shore up the situation. Citigroup and other banks are in discussions to buy the defaulted debt from Elliott Management, paving the way for a resumption of payments. I’ll say it here first. This is just a speed bump. Buy straw hats in the winter, because summer always surely comes.
Remember, the debt situation is something which is haunting Argentina from days gone by. However what is happening today in Argentina is a completely different story. The economic opportunities are robust, and the bank which handles the money for these opportunities will go along for the ride. Financial institutions are the first to feel a systemic shock such as a credit default. However, if a bank has strong fundamentals, it will still be needed as a conduit for commerce.
The Argentine stock market is up ~40% in local-currency terms so far in 2014, although the relative devaluation of its currency against the U.S. dollar has limited gains for U.S. investors to just 15%. Still, Argentina has kept up its positive momentum and Argentina has worked hard to regain access to the sovereign debt markets, and success on that score could point to better times ahead for the South American nation. Once this debt situation resolves itself. And it will resolve itself.
Today I bought stock in BFR (which is the ADR for BBVA Banco Frances) at 12.37. I will sell it in 4 to 6 weeks at 14.28. This bank is doing great:
BFR stock is up 198% in the last 52 weeks, yet its PE is only 6, which means that this stock still has a good ways to go. Almost all of the other LATAM banks are showing PE multiples of between 11 and 12. So this stock has room to run basis PE expansion alone.
Look at the revenue and earnings growth progression:
Year Revenue, $MM EPS
2009 249 1.19
2010 291 1.71
2011 1,232 1.36
2012 1,627 1.56
2013 1,898 2.08
The most recent quarter saw revenues of $571 million and EPS of 1.00 per share.
That’s the kind of growth I like to see. Here are some other metric which illuminate the value of BFR:
· PE Ratio: 6 vs industry average of 16
· Price / Sales: 1.2 vs. industry average of 2.5
· Price / Cash Flow: 5.1 vs. industry average of 14.8
· Return on Sales: 23% vs. industry average of 15%
· Return on Assets: 4.6% vs. industry average of 0.7
· Return on Equity: 38% vs. industry average of 9%
· Revenue Growth TTM: 9.3% vs. industry average of -3.0%
· EPS Growth TTM : 53.6% vs. industry average of 0.9%
BBVA Banco Francés S.A., together with its subsidiaries, provides various financial services to corporations, medium and small companies, and individual customers in the Republic of Argentina. The company offers checking and savings accounts, time deposits, and investment accounts. It also provides loans to the public sector, loans to local financial institutions, short-term loans to companies and overdraft lines of credit, discounted instruments, real estate mortgage loans, collateral loans, consumer loans, credit card loans, and short-term placements in foreign banks. In addition, the company offers fire, household, civil liability, theft, personal accidents, group life, and other insurance coverage products; payroll services; asset management services; and insurance advisory services to customers in the areas of coverage of risks related to life, personal accidents, as well as home insurance, and automated teller machine (ATM) robbery insurance. It operates 245 branches, as well as 13 on-site banks, 2 points of sales, 657 ATMs, and 732 inquiry display terminal. The company was formerly known as Banco Francés S.A. and changed its name to BBVA Banco Francés S.A. in October 2000. The company was founded in 1886 and is based in Buenos Aires, the Republic of Argentina. BBVA Banco Francés S.A. is a subsidiary of Banco Bilbao Vizcaya Argentaria, S.A.
Argentina represents one of the best-calculated bets that one can make in global investment today. There is virtually no leverage in real estate, and in recent history, very little foreign investment. As a result, asset prices are some of the cheapest in the world. Those asset values can go no where else but up, especially when the latecomers storm in. The debt problem is an OLD problem.
The government is making great strides in demonstrating clearer economic policies that are investor friendly. The prospect of business friendly politics is enticing investors in sectors such as energy, industry, infrastructure and natural resources including billions from Chevron and SHELL who are now exploring Vaca Muerta’s second-largest reserves of shale gas and fourth-largest reserves of shale oil in the world. These companies have carefully evaluated Argentina’s economic and political climate, and as well as its investment risk potential, and have resolved to commit significant long-term capital investments because of the strong potential for future growth and investment returns. With interest rates at historic lows in the United States, money has been flowing into emerging markets as investors look for growth opportunities. A diversified and well-balanced economy, high investments by both government and private investors, and a strong export based economy are also reasons why this country is attracting the attention of the international investing community. In 2014, the country's GDP will grow 3.2 percent thanks to a favorable international trade climate.
The consumer confidence index rose 10.0% over the previous month to 41.9 points in June. The reading marked the fourth consecutive increase and the highest level so far this year. . The relative stabilization of the peso following its devaluation in February bodes well for an improvement in consumer spending and contributed to the aforementioned increases.
BBVA plans to invest 1.2 billion pesos ($221.4 million) in the construction of its new headquarters in Buenos Aires. The new BBVA Tower will be located in the Catalinas business complex, and construction would be completed by the end of 2015. You don’t spend that much money on new headquarters unless you were bullish about the future cash flows. It’s a great way to look stupid if you’re wrong about your company’s prospects. BBVA Banco Frances CEO Ricardo Moreno said the construction of the new tower shows the bank’s commitment to the country and its “absolute confidence in Argentina’s future.”
Tourism is flourishing in Argentina as a result of the 70% devaluation, which has made visiting Argentina very affordable. In addition, Argentines are no longer vacationing abroad because of increased costs in peso terms. Chevron Corp. , the world’s third-largest oil company, signed an accord with Argentina’s YPF SA to invest $1.6 billion this year in shale development and become the country’s largest foreign producer of shale oil and natural gas.
Chevron and state-run YPF plan to drill 170 wells in a 96,000-acre area this year in Argentina’s Vaca Muerta formation, the world’s second-largest shale gas deposit and fourth-largest shale oil reservoir.
Argentina aims to make it easier and more profitable for companies to invest in its oil and gas industry in hopes this will boost production and reduce energy imports.
Asia’s rising demand for food has pushed up the price of exports of soya beans and other products from the fertile pampas. That’s boosted tax revenues and reserves, thanks to a healthy trade surplus.
Argentina is still here, boys and girls and I love buying stocks with growing revenues and earnings which have a PE of 6. At the end of the day there is nothing but blue skies ahead, and I am banking on Argentina and BFR.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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