While I’m not a fan of U.S.-based banks at this time, there are significant opportunities in the financial sector in other markets, such as Peru’s Credicorp (NYSE:BAP). This is the largest financial services company in the nation with significant growth prospects, since Peru is still significantly under-penetrated with banking and insurance products compared to its regional neighbors. For example, Peru has just five bank branches and 14 ATMs per 100,000 people—Columbia, Mexico, Brazil and Chile have more than double!
The company has a diversified portfolio—including Banco Credito de Peru, the nation’s largest bank, Prima AFP, the second largest asset management group in Peru, and Pacifico Insurance Group, which provides automobile, life and health insurance to about a third of Peruvians.
In addition, recently, Credicorp acquired a 51% stake in IM Trust of Chile, with the ultimate intention of creating a regional investment bank. Looking forward to the second quarter, the analyst community is estimating 11.8% annual sales growth and 9.2% earnings growth. The company has a good earnings surprise history, so I actually expect stronger earnings.
Bermuda’s Everest Re (NYSE:RE) is our second new buy recommendation this week. This diversified insurance company has branches in Canada, the U.S., Singapore, the United Kingdom and Ireland, and the stock has been seeing significant momentum lately due to its strong financial results.
In the first quarter, Everest Re’s sales rose 3.3% to $1.25 billion compared to $1.21 billion in the same quarter a year ago. During the same period, the company’s earnings rose to $304.7 million or $5.68 per share compared to a loss of $315.9 million or $5.81 per share. Everest Re”s operating earnings were $239.9 million or $4.48 per share. The analyst community was expecting operating earnings of $3.45 per share, so the company posted a 29.9% earnings surprise.
Looking forward to the second quarter, the analyst community is expecting 5.5% annual sales growth and 45.9% earnings growth of $3.59 per share. In addition, the stock has a 1.9% annual dividend yield.
Australia’s Telstra Corporation (PINK:TLSYY) wraps up our new buys for this week. This is the leading telecom in Australia, offering everything from basic land line telephone services, mobile services, broadband access, a range of data and Internet services, as well as cable distribution services for Foxtel cable.
Plus, the company provides international voice, satellite, and IP data services; and operates mobile networks in Hong Kong. It has 2.4 million retail fixed broadband customers and approximately 2.5 million mobile broadband customers.
Finally, the company is also making headlines for its investments in cloud computing, online music streaming services and a video site that aims to compete with YouTube.
In the first half of its fiscal year, Telstra reported a 23% increase in earnings to $1.6 billion. The company added 958,000 mobile customers in Australia during the half year and signed up 106,000 fixed broadband customers. The analyst community is estimating 16.7% annual sales growth and thanks to improving operating margins, and Telstra’s earnings should grow faster than its sales. The company pays out a near-8% dividend and is a solid buy.