By The Sizemore Letter<\/u><\/p>\n
Europe has been calm of late.\u00a0 Former Italian prime minister Silvio Berlusconi is facing house arrest<\/a>, and it barely makes the news.\u00a0 A year ago, this would have caused a run on the euro and roiled the world\u2019s capital markets.<\/p>\n And Greece, the country that first comes to mind when the words \u201cEurope\u201d and \u201ccrisis\u201d are used in the same sentence, has been relatively quiet as well.<\/p>\n Actually, I should rephrase that.\u00a0 Greece is far from quiet.\u00a0 In fact, even doctors have taken to the streets<\/a> in protest over\u2026well\u2026who cares, really.\u00a0 The fact is that the capital markets have stopped reacting to news out of Greece.\u00a0 Greek bond yields have bounced around in a fairly tight range all year and have actually been falling for the past two months\u2026in spite of the global Fed tapering scare. There is a tacit understanding that Germany will continue to keep the Greek government afloat indefinitely, so long as Greece continues to at least make a credible effort at reform and austerity.<\/p>\n It\u2019s not too terribly surprising that Greece will need more bailout funds this year and next.\u00a0 But what is <\/i>surprising is that Greece is slowly clawing its way out of perma-crisis.\u00a0 Greece may actually post a primary budget surplus<\/a> (i.e. a budget surplus excluding interest payments on existing debt) this year. \u00a0In fact, through the first seven months of the year, Greece reported a primary surplus of \u20ac2.6 billion.<\/p>\n Yes, you read that correctly, and no, it wasn\u2019t a sarcastic joke.\u00a0 Greece\u2019s condition is actually improving.\u00a0 The country still depends on its bailout lifeline for the fragile stability it has at the moment; any attempt to go directly to the capital markets would plunge the country back into crisis and probably default and ejection from the Eurozone.\u00a0 And its economy is still contracting; GDP shrank by 4.6% last quarter<\/a>.\u00a0 More than a quarter of Greek are unemployed (see chart), and wages are falling.<\/p>\n Still, the GDP contraction is the slowest in two years, and we should remember that employment is a lagging indicator.\u00a0 It\u2019s not unusual to see unemployment remain high in the early stages of recover.<\/p>\n Is it time to consider Greek stocks?\u00a0 Fellow \u201cBest Stocks of 2013<\/a>\u201d contestant Meb Faber certainly thought so when he recommended the Global X Funds Greece ETF<\/b> (<\/span>GREK<\/a>)<\/span> back in January.\u00a0 Meb was a little early on the call (which is a common curse on value investments), but he correctly noted that Greece had the cheapest stock market in the world<\/a>.<\/p>\n Almost exactly two years ago, I mentioned three Greek stocks I would consider<\/i> buying<\/a> once the dust had settled after a sovereign debt default and possible ejection from the Eurozone.\u00a0 Well, the default never happened.\u00a0 But are the stocks a buy?<\/p>\n I\u2019ll start with the Coca-Cola Hellenic Bottling Company <\/b>(<\/span>CCH<\/a>)<\/span>.\u00a0 Despite its name, this is not really a Greek stock.\u00a0 It is based in Switzerland, has operations in 28 countries and serves 581 million people, primarily in Eastern and Southeastern Europe. Though listed on the Athens Stock Exchange, it also trades on the London Stock Exchange and on the NYSE as an ADR.<\/p>\n None of this is lost on the stock price.\u00a0 For a nominally-Greek stock, Coca-Cola HBC is not cheap. It trades for 1.25 sales\u2014only slightly cheaper than Coca-Cola Enterprises <\/b>(<\/span>CCE<\/a>)<\/span>, the Coke bottler for most of Western Europe.\u00a0 It\u2019s price \/ earnings ratio\u2014at 52.7\u2014is overstated due to earnings being depressed.\u00a0 But suffice it to say, this stock is not a screaming bargain by any stretch.<\/p>\n Hellenic Telecommunications Organization SA<\/b> (<\/span>HLTOY<\/a>)<\/span>, as Greece\u2019s leading phone, internet, and mobile provider, is a much purer play on Greece.\u00a0 Its stock has also had an impressive run, up over 500% since bottoming last summer.<\/p>\n Yet despite the run-up, shares are not expensive, trading at 12 times depressed earnings and 0.85 times sales.\u00a0 If you\u2019re bullish on Greece, this is probably the safest way to play a rebound, though I should emphasize that Greece is still a very <\/i>risky market.<\/p>\n And finally, we get to the National Bank of Greece <\/b>(<\/span>NBG<\/a>)<\/span>, the third stock I said that I would consider two years ago.\u00a0 Be careful with this one.\u00a0 If Greece were to leave the euro or outright default on its debts\u2014which, though not likely at this point, cannot be ruled out\u2014this stock will be worthless.\u00a0 If you buy this, you are making a bet that Greece stays in the Eurozone and continues to service its debts indefinitely.\u00a0 Still, trading at 4 times earnings and only a few dollars away from its all-time lows hit earlier this summer, it might be worth a speculative bet.<\/p>\n This article first appeared on InvestorPlace<\/a>.<\/p>\n Charles Lewis Sizemore, CFA, is the editor of the\u00a0Sizemore Investment Letter<\/a>\u00a0and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, he had no positions in any security mentioned.\u00a0Click here<\/a>\u00a0to learn about his top 5 global investing trends and get your copy of \u201cThe Top 5 Million Dollar Trends of 2013.\u201d<\/em><\/p>\n This article first appeared on Sizemore Insights as Has Greece turned the corner?<\/a><\/p>\n