This post was published earlier on ZYX Buy Change Alert.
Banco Santander (STD) is one of the largest Spanish banks. Spain is clearly in trouble.
What is often missed about STD is that it has significant operations outside of Spain. The company is among the top 15 financial institutions in the world.
Take a look at the chart that shows lending by country.
Here is a breakdown of over 100 million commercial customers by country.
The map shows breakdown by region of the bank’s profits.
Any time a majority of investors miss the big picture, it represents an opportunity for those willing to step up.
There is an old saying, “Buy when there is blood in the streets.” In the modern context, as far as STD is concerned, there is blood in the street.
This is a high risk high reward situation. If the situation in Spain gets really bad, there may be a run on this bank. In such an event the stock can go to zero.
On the other hand, if Spanish and European situation is slowly resolved, over the next year, our target is $16 to $18. Afterwards, if there are no major problems with Europe, and the Latin American economy starts rapid growth, STD has the potential to be a $50 stock in five years.
We have been writing about critical bond auction in Spain tomorrow. If the auction goes well, this stock has the potential to spike up. However there is no way to tell how the auction will go. In the event of a poor auction, the stock will dip.
The Plan
The plan is to very slowly accumulate this position with the full knowledge that this is a high risk high reward situation.
What To Do Now?
Those in the stock may consider adding a 5% tranche right here at $6.37.
Those not in the stock may initiate a 5% to 10% tranche right here at $6.37.
CAUTION: The way to control risk in this stock is to keep quantity very, very small.
