Wednesday, May 16, 2012

Mark Faber Says (semi) Nice Things About Spain

From the Globe and Mail:

Pain in Spain awakens contrarians 
The Spanish stock market is the worst performing of the world’s major markets this year, down more than 20 per cent, just the kind of thing that gets contrarian thinking going.

Stocks in Spain have fallen so much they’re roughly back to the same levels as in March, 2009, during the most gloomy point in the financial crisis. That makes Spain the only big market currently trading at levels that back then turned out to be a brilliant buying opportunity because of the extreme levels of pessimism. Share prices are also down by more than half from their all-time high, reached in late 2007.

Value seems to be building up, too. Spanish business publication recently noted that stock prices are so depressed that eight of the 10 largest listed companies in the country trade below their book value.

The biggest company on the Spanish market, telecom giant Telefonica SA, (TEF-N12.740.201.59%) has a yield of around 12 per cent, based on last year’s payout. BCE, the equivalent stock on the Toronto market, has a yield of about 5.4 per cent, while Telefonica has the added bonus of offering exposure to Latin America’s rapidly growing telecommunications market.

Even one of the world’s great contrarian investors, Marc Faber, publisher of the Gloom Boom and Doom Report, recently had some moderately kind thing to say about the country, along with some others in beaten down European markets, provided an investor was in a speculative frame of mind.

“If someone really wanted to take speculative positions, he should look to quality non-financial stocks in countries such as Spain, Italy, France, Greece, and so forth,” Mr. Faber told Bloomberg Television....MORE