While there is a fair amount of risk by investing in Russia now, stock prices can’t really get any lower, and the upsides are astronomical. Here are three Russian companies traded on the NYSE that can help you capitalize on many other investors’ fear.
Mobile TeleSystems OJSC (ADR) (NYSE:MBT) is in a solid position to grow its business on the increasing number of Russians who can afford cellphones. While a person without a cellphone in the United States is relatively rare, many people throughout Russia are just beginning to get their hands on the devices. The company is also active in pay-television, and other communications and entertainment ventures.
While the company has about $11 billion in liabilities compared to nearly $15 billion of assets, it is cutting about $350 million of liabilities in each of the last three years, while assets have increased about $400 million in the same span. Look for great things from this company in the years ahead.
Don’t let the name of this next recommendation fool you, it is available to every investor. VimpelCom Ltd (ADR) (NYSE:VIP) is a telecommunications holding company, which provides more security than investing in Mobile TeleSystems OJSC (ADR) (NYSE:MBT), though the profits would likely be less because it is so diversified.
With the telecommunications industry set to thrive in Russia from the growing middle-class and its increasing disposable income, VimpelCom Ltd (ADR) (NYSE:VIP) has its finger on the pulse of a potential boom in Russia. The stock’s initial public offer on the NYSE was in 2010, and it went down from $18.70 to around $7.50 early in 2012 before recovering to its recent $12 level. This stock is undervalued. The company is worth nearly $20 billion, and revenue has more than doubled since the company’s IPO.
Mechel OAO (ADR) (NYSE:MTL) is the riskiest of these three investments, but with the company nearly doubling its revenue since 2009, and with a dividend yield of approximately 7%, it’s nearly impossible to ignore this stock. Mechel OAO (ADR) (NYSE:MTL) is an integrated mining and steel company that focuses on producing steel, nickel, iron, and coal. Though revenue has increased substantially in comparison to the company’s chart, it’s best to keep this firm on the watchlist for at least another year before deciding to pick up shares.
Operating expenses exceeded revenue by about 10% last year, leading to a $1.5 billion loss. However, large expenses arise with exploration companies and it is best to look at a three-year timeline to determine if the company has profit margin under control. Profit was over 2% in those three years. While that is far from impressive, it gives you an idea of the overreaction the stock has experienced due to a single year’s earnings report.
To put it into perspective, during those same three years, the stock price decreased nearly 90%, despite nearly doubling revenue during that span. Take the short-term liabilities with a grain of salt.
These Russian stocks have reached absurdly low prices. So, while indexes in other nations, including BRIC, are near historic highs, Russia looks to be undervalued, and that could be your golden opportunity to get in now before the mainstream learns that Russia is ready to launch.
The article Get Ready for Russian Stocks to Launch Into Orbit originally appeared on Fool.com and is written by Phillip Woolgar.
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