Spain is a Long-Term Bet
Mary is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Despite its current economic position the Spanish market offers potential in long-term value. Its standing in the international community has taken some blows recently, but Spain is adhering to strict austerity measures in an effort to reign in its budget deficit. Spain's austerity measures are aimed at corporations as opposed to consumers, which is encouraging to many economists.
The yield on 10-year government bonds recently climbed to 5.87%. The yield was 5.5% at the start of the year. Spanish companies such as Banco Bilbao Vizcaya Argentaria (NYSE: BBVA) offer exposure to fast-growing emerging markets in Latin America. BBVA saw strong growth in Latin America in Q1 2012 even though its domestic operations slowed. BBVA offers a 4% dividend yield. The average analyst rating is currently set at hold.
There are several ETFs that offer exposure to Spain. The SPDR S&P International Telecom ETF (NYSEMKT: IST) includes Spain's largest telecommunications provider, Telefonica, as one of its top holdings. Telecommunications is still a great industry. It is continually expanding on a global level. People may not have money, but they do have cell phones. It never ceases to amaze me that the people I know that are on welfare and food stamps always seem to have the newest smart phone. Apparently that is the case on a global level. Spain is no exception and Telefonica is the largest provider they have.
The iShares MSCI Spain Index (NYSEMKT: EWP) holds only Spanish companies and is a great value in that it is currently hovering around its 52 week low. It also includes Telefonica in its main holdings, but provides industry diversification as well. There are a couple of banks, including BBVA, oil and infrastructure companies included in this fund's top 10 holdings. So if you are looking for full on exposure to Spain and Spain alone, then EWP is a great investment alternative.
Europe has been around for quite some time. Spain will come back and they will come back strong. If you have the time and patience to stick around and wait for it, the payout will be nice. ETFs can be a great way to maintain a more diversified interest than individual stocks alone. Of course, BBVA is not to be over-looked as a potential investment. It is one of the world's largest banks with branches spanning the breadth of Latin America. Pick a play and put your faith in Spain's economic recovery. It will happen.
MaryPosey has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.