Ireland’s stocks may be a better bet than its bonds.
A quick survey of the 19 Ireland-based companies whose stock trades on U.S. exchanges, shows impressive performance. Over the past 12 months, only one of these stocks generated negative returns (drug manufacturer Amarin Corp. lost 77%) and the average return of the rest came in at 55%.
That performance trounces that of a broader gauge of European stocks, the Vanguard FTSE Europe ETF (NYSE: VGK), which gained only slightly more than 10% since this time last year.
Still, as Europe’s stocks underperformed U.S. stocks in 2013, there are good values to be found.
Take data-storage leader Seagate Technology PLC (Nasdaq: STX) as one example. The stock is relatively cheap with a P/E ratio of 11.2. That’s about 40% below the S&P 500 P/E average (of which Seagate is a member).
Seagate is already well-positioned to capitalize on the fast-growing, cloud data storage market. And being based in Ireland, international buyers may be more inclined to look to Seagate’s products and services in lieu of U.S. firms that are being viewed with a cautiously suspicious eye following the NSA spying scandal.
The company is a great stock to own over the long run. In the short-term, a recent quarterly report, in which analysts’ expectations were narrowly missed, has spooked some investors, sending Seagate’s shares down 23% from its mid-January peak.
See for yourself…
There is a support level just more than 5% below current prices, between $40 and $45 a share. This level also represents the 38.2% Fibonacci retracement level, which is typically a great place to buy during mild dips within a longer-term up trend.
Not only does Seagate represent a great growth stock. It also pays a handsome dividend, worth about 3.5% a year. And it’s a healthy, sustainable dividend at that.
The company generated more than $850 million in cash last quarter. It maintains a conservative payout ratio of about 25% (meaning it pays investors just $0.25 of every $1 it earns), and has grown its dividend payments by 27% annually over the last five years.
Ireland’s bonds may be a landmine, but the country is home to a few market-leading companies. And Seagate Technology is one of them.