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Investing in BBVA

Written By Brian Hicks

Posted July 7, 2008

Publisher’s note:

"You’re going where for July 4?!?"

That’s the puzzled question I asked Sam Hopkins when he told me he was about to board a plane for Europe a day before America’s Independence Day.

"Wealth doesn’t wait for hot dogs… or fireworks," he replied.

He’s right. Across the pond, an investment boom in renewable energy assets is occurring.

According to a recent Economist article…

"The number of high-net-worth individuals (people with net assets of at least $1m, excluding their homes) stood at 10.1m in 2007, with total assets of $40.7 trillion, according to an annual report. The study also found that investments in financial vehicles that back green initiatives were becoming more popular. Half of HNWIs worldwide said they put their money into such investments because of higher returns. Only 5% of HNWIs in North America allocated part of their portfolio to green investments, but the primary motivation there was a concern for the environment."

The world’s wealthiest are taking the lead and making a mint in green investments, and as usual Americans are behind the curve.

But not for long. In his latest Wealth Daily dispatch below, and in coming issues from a multi-country research junket, Sam will reveal exactly what’s happening in Europe.

Good investing,

Brian Hicks


MADRID, SPAIN: You can’t blame Spaniards for playing to win. They’re on a roll, with a European soccer championship and Wimbledon title in just the past few weeks. Now Spanish players are surging into games of chance, and their top opponent is the slowing economy.

The Bank of Spain says savings growth in Spanish families and businesses has ratcheted down to half the 2007 rate.

Yet spending on the National Lottery, the continental Euromillions pool and sports betting is up over 130 million euros through the first half of 2008, compared with last year.

In the recession years of 1991 and 1992 (which many observers think we are replicating now, or set to revisit in the near future), Spanish lottery inflows grew by 12% and 8.4% respectively.

That means that the corner lotto stands, and even informal betting on bullfights, may undergo a boom, as worried consumers try to multiply their incomes to combat inflation and bearish stocks.

But I’m not recommending that you lay your money down on any gambling stocks today.

Instead, I want you to take a look at those sluggish savings numbers… and one beaten-down Spanish bank that is a long-term investor’s dream.

It’s Banco Bilbao Vizcaya Argentaria S.A. or BBVA (NYSE:BBV), based in the northern Spanish city of Bilbao.

Investing in BBVA

This winner pays a 5.1% dividend, and it’s trading at a ridiculously low 7 times 2009 forecast earnings.

Banks from Bilbao to Beijing have gone into a tail spin over the shady mortgage mess in the United States and a sort of perfect storm of overlapping boom-bust cycles elsewhere.

Here in Madrid, the Sunday edition of El Pais newspaper tracked Spain’s real estate woes from brick manufacturers all the way to real estate agents. One survey of property managers said fully 57% are lowering sale and lease prices across the board, with one promoter coming down 17% in 5 minutes on a central apartment in the capital.

Throughout Spain, the rising euro currency has hurt some exports but helped national purchasing power for consumer goods. Of course, dollar-based businesses and consumers (including your correspondent) are experiencing the opposite phenomenon—big-ticket U.S. exports are cheaper globally but a plate of Paella can burn a hole in your wallet.

That’s exactly why the time to buy foreign value stocks is now.

I’ve seen BBVA’s branches all over the Spanish-speaking world, and even next door in Portugal.

In mid-June, the bank’s top brass announced plans to establish itself not only in places like Colombia and Mexico, but also in places where conquistadores never set foot.

BBVA is talking about the world’s most momentous emerging markets: Brazil, India, and especially China since the bank recently doubled its holding in the Middle Kingdom’s #7 financial institution CITIC.

So even though it looks like the Spanish economy is down in the dumps, the longstanding Spanish tradition of foreign exploration will serve BBVA and its investors well.

The stock is down more than 21% over the past six months, even though Q1 profits were unchanged from a year before. BBVA treaded water and offset credit defaults with rising revenue, showing itself to be a robust force even when negativity rules Wall Street.

Folks, plenty of people are sitting on the sidelines these days and watching the market move without them, but to make money you have to play to win.



Sam Hopkins

P.S. – As Brian said, much of what’s going on in Europe these days revolves around a new energy economy that will balance against the property downturn from which Spain and other countries are suffering. Spain, along with Portugal, is entering a new Age of Exploration and leading Europe into a future of energy options and prosperity. Green Chip International investors are already profiting from renewable energy companies based here, and there are more Spanish winners to come. Learn more in this new report: