Trading Turkey Part IV: The Best of the Rest

by: Nicholas Pardini

In the first three segments of this series, I analyzed the macroeconomy of Turkey, along with the best stocks in the energy and heavy industry sectors. In this final segment I will cover three leading companies that are found in the rest of the sectors of the Turkish economy. Below I mention one financial company, one steel company, and one consumer staple company that can help investors profit off of Turkish economic growth

Turkiye Garanti Bankasi (OTCQX:TKGBF) - Garanti Bank is the second largest private bank in Turkey with over $78 billion in assets. It is a commercial bank that deals with personal, small business, and corporate banking. The bank is well run with a 22.4% return on equity while winning Euromoney's 2010 award for the best run company in Central or Eastern Europe. In addition, the company is trading at a value with a P/E of 8.99 and a PEG of 0.27, and a 43% net profit margin. The danger of investing in Garanti Bank is that, like other emerging markets, Turkish borrowers are at a higher credit risk than customers in more developed nations.

Anadolu Efes Biracilik (OTCPK:AEBZY) - Efes is the fifth largest European beverage company and the largest soft drink and brewer in Turkey. They also sell their drinks extensively in Russia, the rest of the CIS states, and Caucasus region. Financially the company is sound as well. Efes has a 11.63% earnings growth rate, a P/E of 20 versus a 110 average for competitors, and a debt equity ratio of 0.25. Efes is also growing as an income opportunity with a 2.18% dividend yield, and the dividend is growing at a rate of 17% per year.

Eregli Demir ve Celik Fabrikalari (OTC:ERELF) - Erdemir is a leading steel and iron producing company in Turkey. With a 6.88% dividend yield, it is the best income option of the Turkey stocks I have mentioned. Other than that, the company's financial levels are average at best with a 0.75 debt/equity ratio, a 10% ROIC, and 20% earnings growth rate (versus 59% for the industry).

Overall, this concludes my series about investing in Turkey and the leading companies in the country. There are opportunities in every sector. Nevertheless, unless if you find an extensive fundamental edge or perfect technical entry point, I would recommend buying one of the Turkey ETFs (TUR, TKF) for exposure in the country.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.