Bank of America Corp (BAC), Chevron Corporation (CVX): America: Is It Cheap Enough for Your Portfolio?

Rosneft isn’t a huge threat to Chevron Corporation (NYSE:CVX) and its more recognizable rivals, considering that the company operates heavily in Russia; however, its growth has been a boon to the Russian economy. Oil prices can’t keep rising forever, however. With oil and gas making up around 75% of Russian exports, if demand ever falls, investing in this country won’t be as cheap as its current P/E looks.

On the other side of the valuation spectrum, much-maligned Cyprus ranks at the top of the charts with a market P/E of 34.7. That’s hardly surprising, considering Cyprus’ precipitous plummet in 2013; this isn’t a country to invest in under any valuation or occasion right now. Cyprus would rank below Bank of America Corp (NYSE:BAC) for the fourth-highest valuation on the Dow if it were a member of the blue-chip index.

Bank of America Corp (NYSE:BAC), however, is performing quite well — unlike Cyprus. The big bank has managed to turn things around since the depths of the recession by strengthening its capital position, ditching non-core assets, and doing its best to rebuild its reputation. Its high valuation has been justified by its 28% gain over the past six months alone. That kind of performance can’t be said of Cyprus, which has become the poster child of everything wrong with Europe’s economy.

Investing around the world
When investing internationally, it helps to know which economies are on the right track and which are headed for tough times. Japan’s bold stimulus move and the United States’ slow but steady recovery have made these nations’ markets prime real estate for investors, and their respectable P/E averages offer up plenty of stocks at acceptable valuations. As with many stocks, don’t be fooled by cheapness alone: While Russian and Chinese markets may look like they’re harboring steals, the low average valuations of these countries are symptomatic of the problems still facing these economies.

The article Is America Cheap Enough for Your Portfolio? originally appeared on Fool.com.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Chevron and owns shares of Bank of America.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.