By Fani Kelesidou
Everyone is aware of Greece's financial troubles. Greeks are facing the biggest economic turbulence in recent history. Almost every day, images of Greek riots travel around the world spreading the news of a collapsed economy. Analysts and decision makers are very much concerned about how long is this crisis going to last.
The recent political elections in Greece resulted in a coalition government, which reassured the country's position within the euro zone. So, for now, the fear of Greece abandoning the euro is eliminated. Furthermore, the newly established government is trying to confront the major enemies of the domestic economy: corruption and tax evasion. This way, it is expected that government income will substantially rise.
Greece has a long history of money laundering on behalf of its politicians. In addition, for years, tax evasion had been a usual habit for the Greek businessmen. Money laundering and economic mismatches have led to the current unprecedented deficits. Of course, not all Greek citizens are to be blamed. There are those who remained loyal to their tax obligations. At the moment, Greece is implementing a series of fundamental reforms, which focus on changing the tax legislation. Politicians are under special focus, and their bank accounts are being controlled. The country is making a real effort to get rid of every element of corruption. The Greeks, especially those who are most affected by the crisis, have left no room for any kind of tolerance.
The ECB seems to realize that it is time for the crisis to be over. As I mentioned before, the ECB is going to assist countries, which are under financial distress, through additional open market operations. Even though, it is considered to be a risky move, I think it is a bold step. I believe that the next six months will be crucial in determining the future of the Euro zone. I prefer to be optimistic. After all, how long can this turbulence keep going?
What is most striking is that, since the start of 2012, the Athens Composite index has performed unexpectedly well. It is up by 12 percent, putting it in par with Europe's core indices. France's CAC 40 index is up by 11.20 percent in the same period. The Athens Composite Index has substantially outperformed the Shanghai Composite.
In general, I strongly believe that, in the most unpredictable of situations, there are some great opportunities to be found. As Baron Rothschild once said:
Invest when there is blood in the streets even if it is your own.
Greece is the right place to invest if you are seeking for opportunity in the "blood". Here are four Greek stocks to consider:
National Bank of Greece (NBG)
National Bank of Greece is the oldest and the largest financial institution within the country. It was founded in 1841, and it operates 528 domestic bank units. Also, NBG has established a network of 1.131 bank units spread around Southeastern Europe and Eastern Mediterranean. In addition, NBG, is the owner of Finansbank (FNKXF.PK) in Turkey.
As stated in a previous article, there are two sound reasons for investing in NBG. First the ownership of Finansbank serves as a safety cushion for NBG. Finansbank has a market cap of $5 billion and reveals a strong financial position. Its earnings growth rate follows a positive trend. In 2011, Finansbank's Capital Adequacy Ratio of around 18 percent was the highest among its peers. Secondly, even in the worst case scenario, about 50 percent of NBG's income derives from operations in Turkey and Southeastern Europe. If any bank is going to survive the debt crisis in Greece, then this is NBG.
At the moment, NBG is trading at $2.40, which is half way until the 52-week high of $4.14. Year-to-date stock returns stand at 21.21 percent. Following the news of recapitalization of Greek Banks, including NBG, the stock rallied all through September. It is estimated that the recapitalization will have a positive effect on NBG's valuation. Overall, I believe that, at current levels, NBG could be a bargain. My suggestion is to watch for upside moves.
Coca-Cola Hellenic Bottling Company S.A. (CCH)
With a market cap of $6.18 billion, Coca-Cola Hellenic is the largest bottler of the Coca-Cola Company's products in Europe. CCH operates in 28 countries and serves approximately 570 million people. For five consequent years, Coca-Cola Hellenic has been included in the Dow Jones Sustainability Indexes [DJSI]. It is listed as one of the top-ranking companies in sustainability, in Europe and worldwide. For 2012, Coca-Cola Hellenic achieved a total sustainability score of 79 percent, which was up by 2 percent from last year.
CCH is trading at attractive valuations. Currently, the stock is trading at $18.60, with a price-to-sales ratio of 0.75 and a price-to-book value ratio of 1.82. Year-to-date stock returns account for 11.38 percent. CCH has a revenue growth rate of 30.38 percent, and a gross profit margin of 34.89 percent. Total debt-to-equity ratio is 0.78, which is close to the industry's average of 0.74. Overall, I believe that analysts' negative estimations on CCH are based on the fact that the company is headquartered in Greece. However, only about 7 percent of CCH's income derives from Greece. The company operates a diversified portfolio that promises meaningful profits in the long-term.
Navios Maritime Partners L.P. (NMM)
Navios Maritime Partners engages in seaborn transportation services for dry bulk cargoes. It is one of the leading shipping companies in Greece with operations all around the world. The company's vessels are chartered out primarily under long-term contracts, which have an average remaining term of 4 years. The company is sponsored by Navios Maritime Holdings (NM).
Navios Maritime Partners is competing against harsh conditions not only for Greece, but for the shipping industry, as well. Nevertheless, the company reveals a strong financial performance. It has a long-term debt-to-equity ratio of 0.45, which is much lower than the industry's average ratio of 1.24. Profitability figures are remarkable. Gross profit margin stands at 92.60 percent, and 5-year average gross profit margin at 88.10 percent. The stock is trading at $15, which is below the analysts' mean average target price of $16.96. Finally, the stock is considered to be among the top dividend payers within Greece. NMM has a dividend yield of around 12 percent and a 5-year average dividend yield of approximately 11.06 percent. I strongly suggest that the stock could be an excellent diversifier in a yield-oriented portfolio.
Dryships is a global provider of marine transportation services for dry bulk and petroleum cargoes. DryShips also engages in offshore drilling services through Ocean Rig (ORIG), its majority owned subsidiary. The company was formed in 2004. It is based in Athens and incorporated in the Marshall Islands. Until the sub-prime crises, the company rewarded its shareholders with significant gains. However, in the past few years, investors seem to be concerned about the company's capability to address its debt pile. At the moment, DryShips's total debt-to-equity ratio stands at 1.03, which is very close to the industry average.
The stock trades at attractive valuations. Price-to-book value ratio is just 0.24, and price-to-sales ratio is 0.79. The stock is trading about 30 percent above the 52-week low, and 40 percent below its 52-week high. On the negative side, for Q2 2012, the company reported a net loss of $18.2 million. This loss was mainly attributed to lower net voyage revenues in the dry bulk carriers segment. On the other hand, for Q2 2012, adjusted EBITDA was higher by $8.4 million as compared to Q2 2011. As I stated before, Dryships' 65% ownership in Ocean Rig translates into an asset valuation of $1.3 billion. At the current market cap of less than $1 billion, the stock is priced below its subsidiary. I do not expect this market anomaly to last longer.