5 Stocks to Buy in March

Three resource stocks and two contrarian plays top the list

    View All  
5 Stocks to Buy in March

Stocks to Buy #5: iShares MSCI Russia Capped ETF (ERUS)

rsx 300x173 5 Stocks to Buy in March
Click to Enlarge
Wait? Buy Russia here? It might not be as crazy as it sounds. The fact that Russia has an intrusive government and important structural problems in its economy is well known.

Not for nothing does its market trade for an absurdly low valuation. According to etfdb.com, the price-to-earnings ratios of the three largest Russia ETFs are as follows:

ETF Ticker P/E
Market Vectors Russia ETF RSX 10.42
iShares MSCI Russia Capped ETF ERUS 4.99
Market Vectors Russia Small-Cap ETF RSXJ 4.85

Notably, the Market Vectors Russia Small-Cap ETF (RSXJ) and iShares MSCI Russia Capped ETF (ERUS) feature the second- and third-lowest valuations of all equity ETFs. As any investor knows, valuation alone isn’t a reason to buy — especially when something’s cheap for a reason. However, it does set up the potential for a possible trade from the long side.

Throughout history, the threat of armed conflict has represented a good time to buy since the actual outcome proves more benign than the initial fears.

This is a risky trade to make, since it’s impossible to say how the Ukraine issue plays out. However, what we do know is that RSX is already discounting a very destructive scenario. If the reality is somewhat more favorable, Russia is a depressed market poised to pop. Traders should keep a close eye on this one — it just might be 2014’s answer to the rally in Global X FTSE Greece 20 ETF’s (GREK) during 2012.

As of this writing, Daniel Putnam did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2014/03/5-stocks-to-buy-march/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.