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Tickers in this Article: BBV, REP, STD, TEF, TLVT, CVX, PBR, EWP
This week we are taking a look at a country that is arguably better known for its beaches and restaurants than its companies. As is unfortunately so often the case, when you look at the investment options in Spain, it doesn't take long to complete the list. Fewer than half of the largest holdings of the iShares MSCI Spain Index Fund (NYSE:EWP) are separately tradable as listed ADRs on American exchanges.

In researching these companies, another distressing point comes to the fore. Namely, that the bullish argument for many Spanish companies is the extent to which they get a lot of their revenue from outside of Spain! Now, that's certainly understandable to a point (Spain is a relatively small market), but it does highlight a macroeconomic concern that investors should keep in mind. Specifically, there are some concerns about the direction of Spain's economy at present, with the country's own finance minister sounding a warning note on the direction of GDP, inflation, construction and employment. (To learn more, read Macroeconomic Analysis.)

Name
Industry
Market Cap
Avg. Volume
BBVA
(NYSE:BBV)
Banking
$61B
1.0M
Repsol YPF
(NYSE:REP)
Energy
$35B
0.8M
Santander
(NYSE:STD)

Banking
$100B
1.6M
Telefonica
(NYSE:TEF)
Telecom
$115B
0.4M
Telvent GIT
(NYSE:TLVT)
Industrial tech.
$580M
< 0.1M
BBVA
BBVA is the second-largest bank in Spain, but the company gets about one-third of its business from Mexico, and has operations throughout Latin America. BBVA also has a play on the U.S. from its acquisition last year of Alabama-based Compass Bancshares (one of the 25 largest U.S. banks at the time of the deal). For investors with some patience and strong nerves, this could be an interesting time to acquire shares; the U.S., Spanish, and Mexican banking markets all look attractive to me over the long term, but have investors nervous at present and that is often a good time for value-oriented investors to buy. (Learn what those in-the-know look for when acquiring a company in How The Big Boys Buy.)

Repsol YPF
I have to admit that the investment case for Repsol is not the most scintillating; namely, that the company is pretty cheap relative to its peers and poor past performance gives a restructuring angle to the name. Frankly, I would not buy these shares just because the P/E ratio or dividend yield might be better than Chevron's (NYSE:CVX). I would look for more progress in terms of exploration and production - the company does have a stake in one of the same discoveries as Petrobras (NYSE:PBR), and more success in finding more oil and gas could have investors in a more bullish mood.

Banco Santander
The Santander story is quite similar to that of BBVA: another very well-run bank where the story is about what's happening for the company outside of its home market. In the case of Santander, about one-third of the loan portfolio is concentrated in Spain, with the United Kingdom accounting for another third, and Latin America accounting for 12%. Santander also has notable exposure to Brazil, owning Banco Real (the fourth-largest bank in Brazil).

Telefonica
This large telecommunications company can appeal to an unusually broad range of investors. Value investors should like the combination of below-peer valuation and above-average ROIC, while dividend investors can look to a 4% dividend yield, and growth-oriented investors can focus on the fact that this company generates about 40% of its revenue from the faster-growing Latin American regions. (Learn how return on invested capital is a great way to measure the true value produced by a company in Spot Quality With ROIC.)

Telvent GIT
Telvent is definitely the black sheep in this fivesome; it is rather small and illiquid, and more than 62% of its shares are owned by the Spanish conglomerate Abengoa. All the same, investors who are less interested in mega-cap investments may want to take a look. Telvent is in the business of developing monitoring and control systems for customers like pipelines, utilities and transit systems.

Now it's your Turn
Admittedly, these are only the barest introductions to some potentially interesting investment ideas. Please view this as a starting point for your own due diligence, and look for the next in our series of weekly world tours.

To check out a previous destination, read Weekly World Tour, Wall Street Style - Brazil.

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