Why Investing in Puerto Rico is a Good Idea and the Best Way to Invest

Back on February 5, I wrote about how Standard & Poor's reduced the rating on Puerto Rico to junk status, giving it a BB+ rating. I also mentioned that Puerto Rico might be a good contrarian play.

In the article, I discussed two stocks, OFG Bancorp Inc. (OFG),  a bank holding company, and Popular Inc. (BPOP), a financial holding company which owns Banco Popular de Puerto Rico.

At that time, OFG Bancorp was at 14.77. It is now trading at 17.77, an increase of over 20%.  Plus a dividend was paid during that time frame. The other stock, Popular, closed at 26.50 on February 5, and has risen to 30.33 today, a boost of greater than 14%. Not too shabby for a three month time frame.

But is the party over in Puerto Rico? Not quite. The governor of Puerto Rico has proposed a balanced budget, with $1.5 billion in spending cuts, plus reducing debt by $775 million, along with increasing revenues.

One way of participating in the Puerto Rico recovery is through stocks. But another way is through municipal bonds. You can buy the bonds directly, or you can invest in Puerto Rico municipal bond ETFs.

Of course, the biggest advantage of investing in Puerto Rico bonds is their exemption from state and Federal income taxes. Plus that tax benefit flows through to ETFs.

An example of an ETF you might consider is the PowerShares Insured New York Mini Bond ETF (PZT), currently yielding 3.93%. Don't be fooled by its name. Although you get the advantage of diversification with New York bonds in the portfolio, the ETF has several Puerto Rico bonds which make up a significant percentage. Over 5% of the fund's assets are in the Puerto Rico Commonwealth Aqueduct bonds with a coupon yield of 5.125%. The ETF also has over 4.2% of its funds in the Puerto Rico Commonwealth Highway & Transit  5.25% bonds.

So if you want income or growth or both, there are several ways to achieve these goals with the benefit of the Commonwealth of Puerto Rico. For a list of Puerto Rico stocks, which can be downloaded, sorted, and added to, check out WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com

Puerto Rico Downgraded to Junk: Time to Buy Puerto Rico Stocks?

Standard & Poor's dropped the rating on Puerto Rico to BB+, which is considered junk status. A contrarian might think that now may be a good time to look at Puerto Rico stocks. Are there any stocks worth buying?

Some facts about Puerto Rico:
1. It is considered a high income country by the World Bank.
2. Its industries include petrochemicals, pharmaceuticals, agriculture, and technology.
3. The country receives over 5 million tourists per year.
4. One third of the tourists are cruise ship passengers.
5. The UN Development Program rated it high for the Human Development Index.
6. If it were a country, it would rank in the top 90 of all countries in terms of Purchasing Power Parity.
7. If it were a country, it would rank in the top 50 of all countries in terms of GDP per capita.
8. It was claimed by the Spanish Crown in 1493 following Columbus' second voyage to the Americas.
9. According to the CIA Factbook, it has the potential for onshore and offshore oil.
10. Tourism has benefited from the U.S. passport law which had cut down on the number of visitors to other non-U.S. Caribbean islands.

According to the free list of Puerto Rican stocks at WallStreetNewsNetwork.com, most of the stocks are in the banking industry, a great play if you are looking for a turnaround.  However, some of these stocks are low cap, so they should be considered very speculative.

Oriental Financial Group Inc. (OFG), which trades on the NYSE, is a bank holding company which owns Oriental Bank and Trust. The stock trades at 16 times trailing earnings and seven times forward earnings. Earnings for the quarter ending September 30 were up 10.5% on an 18.3% rise in revenues. The company just reported earnings for the fourth quarter ending December 31, with earnings per share of $0.35 per share versus a loss of $0.53 per share. The stock has a dividend yield of 2.2% and pays quarterly.

Popular Inc. (BPOP), which trades on NASDAQ, is a financial holding company which owns Banco Popular de Puerto Rico, and provides banking, leasing, and insurance services. The P/E ratio is 4.6, with a forward P/E of 8.8. For the quarter ending December 31, earning were up an incredible 94.2% on a great 27.5% revenue boost.

For a list of other Puerto Rico stocks, which can be downloaded, sorted, and added to, go to WallStreetNewsNetwork.com.
Author does not own any of the above.

By Stockerblog.com