While the majority of companies trading on NASDAQ or the NYSE are based in America, a sizable portion of them are located outside the States. As of press time, about 841... give or take a couple.
Due to a lack of Stateside name recognition, a lot of quality internationally-based plays often get overlooked by American investors. But fundamentals are fundamentals, so we thought it might be interesting to look for companies that are built on solid foundations, yet might not get the same attention as their domestic peers.
For this we decided to limit our search to plays in the Financial sector, and only include companies outside the US.
We looked for international financial plays that had the following attributes:
1) The company has a P/C and P/B greater than 1
It is important for finance companies to have strong book value and cash in addition to validation of these assets by the market. As a result, a P/C (profit to cash ratio) or P/B (price to book ratio) of 1 should be a minimum “floor” for investing.
2) The bank has an operating margin greater than 25% percent
Operating margin shows how efficiently a company is operating is business after a good is sold. The operating margin is more appropriate for banks because the costs associated with operating are much more significant for a bank than the cogs.
3) The bank has an ROI greater than 20 percent
Return on Investment, or ROI, shows how well a company is using its invested capital. Since banks are essentially made up of all invested capital, this is a very important statistic.
We found four companies that fit the bill. They are:
BBVA Banco Frances S.A. (BFR)
Market Cap: $1.28 billion
RenaissanceRe Holdings (RNR)
Market Cap: $4.17 billion
Greenlight Capital Re. Ltd. (GLRE)
Market Cap: $1.17 billion
Country: Cayman Islands
Alto Palermo S.A. (APSA)
Market Cap: $527 million
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