Europe’s strug­gles make blue chip share prices cheap

The Pak Banker - - International3 -

NEW YORK: This is a good time to make money off of some­one else's mis­for­tune.

One of the best, but rarely fol­lowed, rules of in­vest­ing is to buy when things look bleak. Blue chip stocks in the euro zone are down 5.5 per­cent since it be­came clear in midApril that Greece needed help to pre­vent it from de­fault­ing on its debt. Some econ­o­mists spec­u­late that the bailouts of Greece and Ire­land mean that the euro won't longer.

In­vestors are wait­ing to see whether the Euro­pean Cen­tral Bank takes ad­di­tional steps this week to pre­vent Europe's fi­nan­cial cri­sis from spread­ing to Spain and Italy. That un­cer­tainty has cre­ated stock bar­gains. You may not find the same pa­rade of on­cein-a-life­time deals as dur­ing the 2008-2009 fi­nan­cial cri­sis when Gen­eral Elec­tric Co.

last much traded as low as $7.06 (it closed at $16.78 on Fri­day). But the broad re­treat from any­thing as­so­ci­ated with Europe means that there are easy pick­ings. Take French oil gi­ant To­tal SA. It has fallen 21 per­cent this year and is trad­ing at a price-earn­ings ra­tio of only 8.3. "The com­pany has be­come in­cred­i­bly in­ex­pen­sive," says Cody Dick, an an­a­lyst with Drey­fus World­wide Growth, a $430 mil­lion mu­tual fund that is buy­ing To­tal. "When you look at the stock com­pared to its peers it's been un­jus­ti­fi­ably dis­counted."

At $51.34, the stock costs about what it did dur­ing the fi­nan­cial cri­sis in Oc­to­ber 2008. It comes with a div­i­dend yield of 4.9 per­cent. Com­peti­tor BP PLC, mean­while, doesn't of­fer a div­i­dend.

Though To­tal has its head­quar­ters in France, its rev­enues are global. -Ap

PARIS: Ma­jor An­dre Tur­cat, French first test pi­lot of the Con­corde, left, talks with Chief Me­cani­cien Michel Retif who was in the first flight of the Con­corde, cen­ter, and Jean Belon of the French man­u­fac­turer of en­gines for air­crafts SNECMA dur­ing the Air France Con­corde crash court case in Pon­toise, north of Paris, Mon­day. -Reuters

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