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Thursday, March 30, 2017
You can buy Spanish stocks today at 1998 prices...
That's crazy, right? It's rare to see an asset trading for the same price it was 20 years ago. But that's the reality in Spanish stocks right now.
However, this situation won't last for long... Spanish stocks just broke out to a 52-week high. And history says they should continue higher as a result.
Let me explain...
The iShares MSCI Spain Capped Fund (EWP) broke out to a new 52-week high earlier this month. It trades around $30 right now. But here's the crazy thing...
That's the same price it traded for in late 1998... nearly 20 years ago.
Spanish stocks – as measured by EWP – have gone nowhere for 20 years. It's hard to believe, but it's true.
Not surprisingly, Spanish stocks are a better value today than they were in 1998...
EWP trades at a price-to-earnings (P/E) ratio of 17 right now, compared with a P/E ratio of 24 in late 1998. But Spain won't stay cheap for long...
Take a look at what has happened. After falling for most of the past two years, EWP is back in an uptrend...
Again, EWP has been hitting new 52-week highs this month. And that means the gains could continue.
We looked at every time EWP reached a 52-week high since 1996. And Spanish stocks tend to outperform after these breakouts. The table below shows the returns...
EWP has produced a small 3.8% annual return since 1996. But buying after breakouts led to much better gains.
Buying when EWP hit a 52-week high led to 3.3% returns in six months and an 8.2% return over the following year. That's double the typical buy-and-hold return in Spanish stocks.
These aren't blockbuster returns. But Spanish stocks are most exciting because of the rare situation they present today...
Spanish stocks are trading at 1998 prices. They just hit a 52-week high. And history says they'll likely outperform as a result.
Now is a smart time to put money to work. And buying shares of EWP is the easiest way to make the trade.
"Canadian stocks had a fantastic 2016... rising 22%," Brett says. "But history says that boom has gotten out of hand." He explains why Canada's stock market has reached an extreme – and double-digit losses are likely this year. Read more here: It's Time to Bet Against One of Last Year's Big Winners.
"Who says uncertainty is a bad thing?" Brett writes. Uncertainty in the media hit an all-time high recently... But we want to own stocks when others are fearful. If you've been avoiding U.S. stocks, learn why contrarian investing is the smart choice right here: Uncertainty Is at a Record High... And That's Good for Stocks.
THE MACAU GAMBLING MARKET IS BOUNCING BACK
Today's chart highlights a rebounding gamblers' stock...
Regular readers know Steve has been talking about the potential in Macau for nearly a decade. The tiny, autonomous region is the only place in China where gambling is legal. But after years of soaring profits, gambling revenue fell into a downtrend as the Chinese economy stumbled.
But that picture is changing... Macau's gambling revenues have climbed for the last seven months, and recently hit a two-year high. The opening of new resorts has helped bring back casual and VIP spenders alike. And one of the winners in this rebound is Wynn Resorts (WYNN).
The company opened its newest location, Wynn Palace, in August. As you can see below, shares of WYNN are thriving. The stock is up around 36% from its November low and just hit a fresh 52-week high. Macau makes up 71% of Wynn Resorts' casino sales. As the region's gambling market recovers, WYNN shares should keep rising...