Hot Stock Pick of the Week: Buy this Russian Crisis Trade
Posted August 14, 2008
Russian markets are sharply down on the Georgia invasion. This coal and steel company in particular stands to rise when investors return.
by J. Christoph Amberger
As Putin’s tanks rumbled into Georgia, investors pulled their capital from the Russian markets. Russia’s RTS Index is now down 24% for the year. The Micex Index has dropped 25%.
But given the development of Russia’s currency and economic growth, not to mention its resource base and ruthless business plan, it is only a matter of time until investors are back.
And stock prices move back up.
One of the stocks best suited for a crisis speculation is a vertically integrated steel and power producer. It’s quite risky. Its ADR dropped 50% when Russia’s autocrat accused the company of price gauging and evading taxes.
The risk is considerable. But Russia is also flush with cash and building projects. And the Russian winter may start any day now. Both are prime drivers of this company’s core business. I give this stock a 20-25% upside by November.
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