Horrible as the situation in Ukraine is, the chaos unleashed by Russia’s invasion and the resulting weakness in global equity markets has created some new windows of opportunity in well-run and recently-popular stocks. Singapore’s DBS Group (OTCPK:DBSDY) is among that group, as this well-run and very asset-sensitive bank has sold off almost 20% from its February highs.
DBS Group management has proven through this latest cycle that its underwriting is fundamentally sounder than in cycles past, and the company has also been careful with its capital allocation and M&A strategy. The biggest risk I see for DBS Group now is that higher energy prices and decreased business confidence lead to a slower tightening cycle in the U.S. and less rate leverage for DBS Group. Even with that risk in place, though, I like this bank’s prospects for mid-single-digit long-term core earnings growth, and I believe the ADRs are undervalued below $110.
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