When I started looking at European stocks in the 1st
quarter of this year it really surprised how cheap these companies
were selling from a valuation stand point. Being a follower of Philippine
stocks on the period when we were on the relentless rally towards the
7000-and-beyond levels, the spread between the earnings multiple, price to
book, dividend yield etc between PHL and EU stocks to me was just too wide (PHL
being expensive and EU being cheap). Now one could argue that PHL was expensive
for a reason (potential growth) and EU was cheap for a reason (contracting
economy) but that would be subject to an entirely different debate and will most
likely end up not really knowing who's right or wrong, so to simplify
things let's just take the numbers as they are, what's cheap is cheap and
what's expensive is expensive. =)
Having this said, back then I really had
the conviction that there is a compelling case for a long term investment on
these EU stocks and damn If only I had the access (and capital LOL) to the
Europeans stock exchanges I would have bought them right upfront hahaha! :D
Anyways, back to the point of this article, here's the analysis I made during
1st quarter this year.
**Analysis was made on 11-Apr-13.**
We were thinking that we take this recent correction on the European markets to position ourselves on German car-makers, BMW GR, VOW GR, DAI GR and Italy's F IM. See some fundamental and technical reasons below.
