Israel: Beyond the Risk, Opportunities Beckon

If you're looking for a new market, this one deserves your attention

    View All  
Israel: Beyond the Risk, Opportunities Beckon

Israel is often described as an island of democracy in a sea of conflict. And between the ongoing Israeli/Palestine division, recent attacks in neighboring Egypt and threats from both Iran and Syria, it’s hard not to think of conflict when you think of Israel.

The problem (well, besides the conflicts themselves) is that those headline quarrels can overshadow something else the country has to offer: investment opportunity.

Here are a few things you might not know about Israel:

  • It boasts the highest standard of living in the Middle East, along with a steadily growing economy.
  • The country’s GDP has gone from $44 billion to $200 billion in the last 20 years, with an average growth rate just under 4% since 2002.
  • Last year, its GDP expanded just under 5%, matching the rate of the year before and dwarfing U.S. growth, which didn’t even touch 2%.
  • At the same time, unemployment hovered around 5.4% — the lowest number since 1985 and much better than the U.S., France and Britain, where unemployment has been at least 8%
  • On top of that, Israel has produced better risk-adjusted returns than all other developed markets in the past decade.

And that’s just the big picture. Despite its risk and conflict, the country has been booming, and could be a great option if you’re looking to dive into a new market. So, how do you play Israel? Here are some options:

Technology

Israel isn’t just an island of democracy — it’s also a hub of innovation. It has the most start-ups per capita in the world, and it has 60 companies trading on the Nasdaq, more than any country except the U.S. Some of those companies include Mellanox Technologies (NASDAQ:MLNX) and Checkpoint Software Technologies (NASDAQ:CHKP).

Mellanox, for one, has exploded in the last year, more than quadrupling in share price. The fabless semiconductor company has seen 12 consecutive quarters of revenue growth, and sales for this year are expected to be five times what they were in 2007. Shares soared 44% to a new high on the heels of its Q2 earnings reports and have seen even more gains since then. The company now boasts a market cap of around $4.5 billion.

If Mellanox’s boom doesn’t speak to the growth potential hidden in Israel, I’m not sure what does.

Sure, MLNX has a P/E ratio over 80, which means that stock may actually be a little overbought. But at the same time, Mellanox could have the growth to justify such a number.

A new Intel (NASDAQ:INTC) server and the growing popularity of cloud computing should continue to mean increased demand for this company, and big names like IBM (NYSE:IBM), Hewlett-Packard (NYSE:HPQ), Dell (NASDAQ:DELL) and Oracle (NASDAQ:ORCL) are some of its customers.

But it doesn’t end there. Checkpoint Software Technologies is the No. 2 software security firm in the world, although its stock has dropped off recently after years of steady gains. After hitting a low in early July, the stock is up more than 12% in the past month and could be poised to for another upward trend.

Moving away from the Nasdaq, there’s also Vringo (NYSE:VRNG), the video ringtone company. This start-up has been on the patent prowl of late. Most recently, it sold off stock to fund a $22 million deal that gave it 500 patents from Nokia (NYSE:NOK). Plus, it merged with intellectual-property firm Innovate/Protect last year, which had filed patent suits against other big names like AOL (NYSE:AOL), Google (NASDAQ:GOOG), Gannett (NYSE:GCI) and Target (NYSE:TGT).

All that action should help the company keep growing. This small cap has already seen lots of gains, as shares are up over 280% since 2012 kicked off.

Yeah, I think you get the point. Next sector. . .


Article printed from InvestorPlace Media, http://investorplace.com/2012/08/israel-beyond-the-risk-opportunities-beckon/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.