Risk makes Turkish stocks cheap

Article Excerpt

Measured by the stocks held in the iShares Turkey ETF, the forward distribution yield on the portfolio is a high 4.1%, with a p/e ratio of 7.0. This makes the ETF one of the cheapest among emerging markets. If investors consider the profitability of some of the largest Turkish companies, just how potentially attractive those low p/e’s are becomes even more apparent. Here are two of the cheapest major companies: Turkiye Petrol Rafinerleri operates refineries and distributes petroleum products. It trades at a price-to-earnings ratio of 7.3, in line with its direct emerging-market peers. However, this is a very profitable company with an average yearly return on equity for the past five years of over 30%. That’s at least double that of its main peers. Turkcell is a major mobile phone service provider in Turkey. It has a price-to-earnings ratio of 8.5. This is about half the valuation placed on the Canadian company Telus, but in line with Turkcell’s emerging markets peers. However, the…

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