Since the credit crisis began last year, many of the former blue-chip stocks have been crushed to very low levels. Companies such as General Electric (NYSE:GE), Citibank (NYSE:C), and Bank of America (NYSE:BAC) are now trading in the single digits. Some of the European blue-chips are also down heavily, with some losing over 90%.
To identify the European blue-chips that are now trading under $10, I used the DJ Stoxx 50 and the DJ Euro Stoxx 50 Indices. Both of them contain the blue-chips of Europe with the former including blue-chip companies of the UK. DJ Euro Stoxx contains the top companies of the Eurozone. I have listed only those stocks that are listed in the US exchanges.
List of European Blue-Chips Under $10 :
1. The Royal Bank of Scotland Group PLC (NYSE:RBS)
Current Price: $6.22
After a 20-for-1 reverse stock split back in November, the stock is now trading in the $6 range. When the split went effective, the price was around $20. RBS is now mostly owned by the British Government.
2. Aegon NV (NYSE:AEG)
Current Price: $3.24
This European life insurer said last month that it expected a loss of 1.2 billion euros in the 4Q 2008 due to 350 million euros in impairments on its bond portfolio. Life insurers on both sides of the Atlantic are hurting now due to the problems with the annuity contracts they sold. As the equity markets cratered, annuity contracts were affected since they promised a high fixed return from stock investments.
3. Allianz SE (AZ)
Current Price: $7.35
This German P&C insurance company offers “insurance, banking and asset management products and services to more than 60 million customers in over 70 countries”. The bond giant PIMCO is part of Allianz.
4. Banco Bilbao Vizcaya Argentaria S.A (BBV)
Current Price: $7.27
This Spanish Banking group reported heavy losses in 4Q '08 due to exposure to the Madoff scam and non-performing assets. The booming property market ended in Spain with the global crash in the real estate market. Spanish banks such as BBV are negatively impacted due to this collapse. For the last quarter of 2008, the bank reported a 62% loss in net income.
5. Banco Santander SA (STD)
Current Price: $6.44
Another banking giant from Spain with operations in the UK, Latin America, USA and Europe. In the UK, Santander owns Abbey National bank. Santander bought the Sovereign Bank in the US last year.
6. Societe Generale (OTCPK:SCGLY)
Current Price: $6.10
SocGen lost $7.1B in a fraud committed by a rogue trader last year. Late last year the bank also announced a dividend increase. Unlike SocGen, its main competitor BNP Paribas (OTCQX:BNPQY) has held up relatively well.
When the market recovers, some of these fallen angels will come back strongly. Until then it may be a good idea to keep an eye on these blue-chips.
Disclosure: Long SCGLY, RBS