The Zacks Analyst Blog Highlights: Banco Santander, Telefonica, Banco Bilbao Vizcaya Argentaria, Repsol and Rent-A-Center

Zacks


For Immediate Release

Chicago, IL – August 16, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Banco Santander SA (SAN), Telefonica (TEF), Banco Bilbao Vizcaya Argentaria SA (BBVA), Repsol (REPYY) and Rent-A-Center Inc. (RCII).

 

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Here are highlights from Wednesday’s Analyst Blog:

 

 

Spanish Stocks: Value Trap or Screaming Buy?

 

I was putting together an ETF country analysis this morning

I found the Best Performing Countries this year –

Turkey +31%

Singapore +19%

Mexico +15%

And the Worst –

Spain -20%

India -15%

Italy -7%

Spain is the worst performing country share index.  No surprise.

I have been following the Spanish Stock Index, the IBEX35, and the iShares MSCI Spanish ETF (EWP) the last few months.    At the moment, this index pays a whopping 12% annual dividend to it holders.  These Spanish large cap shares recently put in multi-year lows, about the time that the Spanish 10-year bond rates peaked at 7.66% in Mid-July.

To my mind, that makes these Spanish large cap shares a Value Play. 

Second, I see a catalyst on the horizon.

Olli Rehn, Vice President of the European Commission in charge of Economic and Monetary Affairs and the Euro, on Monday on CNBC, was asked what to expect from Europe in the fall of 2012. 

His answer?  The European Banking Supervisor would be approved and in place.  That would allow cheap and liquid funding to go from Europe’s institutions directly to the Spanish banking sector.

Inside Spanish iShares EWP, 50% of the index is made up of Banco Santander SA (SAN at 21%), Telefonica (TEF at 17%), Banco Bilbao Vizcaya Argentaria SA (BBVA  at 10%),  and other companies like the oil and gas company Repsol (REPYY at 5%).

Here is the strategy.   Buy Spanish shares, and if you are wrong, you earn a 12% annual dividend.  If the banking catalyst does indeed come to pass, and the bottom is in on the Spanish economy and its major stocks, then you earn the massive dividend and see a nice high double-digit capital appreciation too.

Europe can’t turn around without Spain turning around.  Political support in the European Central Bank and EU, in Germany, and in Spain has to be there.  Ditto for the IMF and the U.S. Treasury and Fed.  Direct lending to Spanish banks is the ‘silver bullet’, if there is one.

And if these Spanish shares are a buy, do I play it with the broad index EWP? By buying the big banks who benefit from the lending catalyst like SAN and BBVA? Or by buying a high dividend paying defensive like TEF?  Or sticking with something with global market exposure like REPYY?

Or do I stay short, or stay away?

 

 

Georgia Gets New Rent-a-Center

 

Rent-A-Center Inc. (RCII), the largest rent-to-own operator in the U.S, leverages an extensive network of stores to effectively penetrate into its target markets, which in turn, facilitates the company to generate healthy sales and gain a competitive advantage over its competitors. Following this rationale, Rent-A-Center announced the opening of its new store in Mableton, Georgia.

The company, through its latest store, will offer furnishings, electrical devices, electronics and computers to the residents of this region. With the inclusion of this new store, Rent-A-Center now operates through 79 locations in Georgia.

The residents of the region will have the benefit of purchasing goods with flexible payment options, facilitating them to pay weekly, biweekly or monthly. Moreover, the company offers a lifetime recall service, which facilitates its customers to re-rent the same or a comparable item and receive payments.

Late last month, Rent-A-Center delivered better-than-expected second-quarter 2012 results. The quarterly earnings of 74 cents a share surpassed the Zacks Consensus Estimate of 71 cents, and increased 8.8% from 68 cents earned in the prior-year quarter, aided by growth on the top line.

The company’s business model, called RAC Acceptance, is gaining traction. When a consumer is denied credit financing for a particular product from the retailer, Rent-A-Center acquires that product from the retailer by virtue of the RAC Acceptance program, and thereby offers it to the consumer under a rental-purchase transaction.

 

 

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Read the analyst report on SAN

Read the analyst report on TEF

Read the analyst report on BBVA

Read the analyst report on REPYY

Read the analyst report on RCII

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