Undervalued stock market sectors

Undervalued stock market sectors

Posted: Xelga On: 24.05.2017

Although the Russian stock market recorded huge gains inmost of the Russian stocks are still undervalued. The Russian stock market brought some impressive returns in Although the returns recorded in were really great, they were only a result of a deep undervaluation of the Russian stocks.

undervalued stock market sectors

As shown by the chart below, the RSX share price is still well below its pre-crisis and even post-crisis levels. The data show that most of the Russian companies are valued far less favorably than their foreign peers. But the economic indicators keep on improving, despite the often exaggerated political risks. Barring any collapse of commodity prices, the valuation of Russian stocks should keep on growing and a big part of the valuation discrepancies should be eliminated.

It means more gains for RSX shareholders. RSX data by YCharts.

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The natural resources are important not only for the Russian economy but also for the Russian stock market, which is reflected also by the RSX composition. The most important holdings are Sberbank OTCPK: SBRCYGazprom OTCPK: OGZPYLukoil OTCPK: LUKOYNovatek and Magnit. It is able to see that all of the companies except of Gazprom, Norilsk Nickel OTCPK: NILSY and VTB Bank experienced growth of their EPS over the last 5 years.

The most impressive growth was experienced by the oil producer Surgutneftegas OTCPK: SGTPY and the food retailer Magnit. Their EPS grew by Although most of the companies experienced some EPS growth over recent years, their valuations lag behind their foreign peers significantly.

undervalued stock market sectors

This can be partially explained by the western sanctions that were imposed also on the Russian energy sector. However, as can be seen, the sanctions damaged the valuation of the energy companies more than their ability to generate profits.

How to Select a Sector and Stock based on the PE Ratio

It is able to expect that the situation will change sooner or later, especially if the sanctions are lifted. The table below shows dividend yields and nitto 1320 legends money hack worked dividend growth rates of the 15 top RSX holdings in comparison to their international peers.

Especially Mobile Telesystems NYSE: MBTNorilsk Nickel, Lukoil, Gazprom and Moscow Exchange pay very generous dividends. It is significantly higher compared to the sector averages. Also the dividend growth rate is positive, it reaches double digit values in most of birkenstock buy online germany cases. The biggest growth of dividend payments was experienced by Magnit. None of tim sykes forex companies experienced a decline of dividends.

The Russian shares are undervalued stock market sectors and what is important, the Russian economy is recovering.

undervalued stock market sectors

The Russian GDP growth got into the negative territory in Q1 The decline culminated in Q2at But as the oil price started to recover in earlythe Russian GDP started to develop in a more positive bee option binary brokers review. Although the growth is still negative, the GDP declined only by 0.

It is expected that it could grow by 1. The unemployment rate declined to 5. The indebtedness of Russia keeps on growing, but its current level of Also the Russian currency keeps on strengthening.

The valuation of the Russian stocks is still very low, compared to their foreign peers. A big part of the difference can be attributed to the often overblown political risks. Even if the anti-Russian sanctions and tensed relations between Russia and the western countries prevail, the Russian stocks should do quite well, as long as the commodity prices undervalued stock market sectors at least at the current levels.

But it is in the best interest of Russia as well as the western countries, to make a normal business. It seems like president Trump understands it and it is quite possible, that the sanctions will be lifted soon.

If the USA normalize their relations with Russia, the European Union will follow. In this case, the process of closing the valuation gap will be much quicker.

Sector Valuation: Shiller PE By Sectors - husoxupowoj.web.fc2.com

Although the investors in Russian stocks and RSX recorded huge returns inthe Russian stock market still provides a vast upside potential. I wrote this article myself, and it expresses my own opinions.

I am not receiving compensation for it other than from Seeking Alpha. I have no business relationship with any company whose stock is mentioned in this article.

Financial stocks are the most undervalued, Goldman Sachs says - Business Insider

This article discusses one or more securities that do not trade on a major U. Please be aware of the risks associated with these stocks. ETF Screener ETF Analysis ETF Guide Mutual Funds Closed End Funds Editor's Picks. Russian Stock Market Still Significantly Undervalued Feb.

Summary Although the Russian stock market recorded huge gains inmost of the Russian stocks are still undervalued. The Russian economic situation keeps on improving. The political risks are overblown and the sanctions may be lifted relatively soon.

The VanEck Vectors Russia ETF is still a good buy. RSX data by YCharts The valuation of Russian stocks The natural resources are important not only for the Russian economy but also for the Russian stock market, which is reflected also by the RSX composition. Want to share your opinion on this article?

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