Argentina · Banks
Banco Galicia: A big winner in the current environment
Miguel Braun · Oct 1, 2024 · 2 min read
Dear all, good evening.
I'm writing this time to make a switch from Stellantis shares to Banco Galicia shares. "Stellantis has cut its financial outlook for 2024, citing challenges in North America and a slowdown in the global industrial landscape.
The automaker announced on Monday that it expects an adjusted operating income (AOI) margin of between 5.5 and 7% for 2024, a significant decrease from the previously projected "double-digit" range. In addition, the company expects industrial free cash flow for the year to fall between -5 billion euros and -10 billion euros, a marked change from the previous positive outlook."
Stellantis remains incredibly cheap in terms of its net worth and past earnings, but the problem is that the market believes its future earnings will fall. The car market is very competitive, so it is hard to increase and even maintain vehicle sales market share.
For the patient, it is a stock that over the medium/long term will recover and meanwhile at some point will pay dividends and buy back its own shares.
For the impatient, since the money we have to invest is limited, maybe it is time to find something with more momentum. In this sense, Banco Galicia shapes up as the ideal option:
- It is the largest bank in Argentina.
- It has an impressive number of business units, all complementary to each other: the bank, two brokerage houses, an insurance company, a fintech and the FIMA funds, which have a large amount of pesos under management.
https://www.gfgsa.com/es/nuestras-companias
They are big beneficiaries of:
- The tax amnesty and the increase in deposits in Argentina.
- The appreciation of the peso.
- Inflation in pesos with a flat dollar, since most of the bank's investments adjust for inflation in pesos, which is a gain in USD.
- The drop in country risk.
In addition:
- It had a tremendous return of more than 36% on equity in the first half of 2024 and everything indicates the good results should keep coming.
- It trades at two times the book value of the latest balance sheet and 5 times earnings. This tells us that for every 100 USD you pay to become a shareholder, the company earns 20. This is before the amnesty and the lifting of the controls, and with country risk still at 1,200.
- Unlike Stellantis, the market believes its earnings will increase, which makes it a more attractive stock with more momentum.
Recommendation: STRONG BUY
Those who want to make the switch, let me know and we proceed!
Thank you very much, regards.
Financial Advisor · Author · Columnist