Top Picks 2007: Mostrous takes "silk road" to Singapore

Posted Dec 29th 2006 2:30PM by Steven Halpern
Filed under: Newsletters, ETF Investing

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

United Overseas Bank Limited (Other OTC: UOVEY) is the top speculative idea for 2007 from Yiannis Mostrous. The global expert and editor of The Silk Road Investor -- and author of a new book by the same name -- explains, "United Overseas is a play in the positive changes taking place in Singapore, which continues to improve its image and attract the affluent from across Asia.

"United Overseas has been steadily improving operations and asset quality while expanding into Thailand and Indonesia.The bank has achieved a healthy mix of non-interest and interest-based income, with non-interest income growing strongly -- always a good thing. Its non-performing loan ratio dropped from 8.5% to 5.6% during the past year.

"Though Singaporean banks have been slow growers for sometime, improvement is visible as the economy enjoys strong growth amid a reflationary environment. As a result, loan growth could easily reach double digits next year. Banking stocks should eventually trade at a premium to the market, especially as return on equity improves through growth.

"Meanwhile, UOB is expected to continue its share buyback program. Add to this a yield of 3.5% and investors are basically getting paid to wait while management continues to improve operations and expand the business. UOB is also attractive on a valuation basis at 1.75 times price-to-book and 12.5 times forward price-to-earnings."

To see Yiannis' favorite conservative global idea for 2007, click here.