2 Foreign Banks to Lead the Market Rally

The S&P 500 closed Thursday at a new multi-year high led by the large US banks. Goldman Sachs ($GS) hit a new 52-week high, JP Morgan Chase ($JPM) closed within a few pennies of a yearly high and the SPDR Financial ETF ($XLF) was a few ticks away from the best level in over four years.

As much as I like the US banks to lead the current bull market to new highs in 2013, there are a handful of Foreign Banks that look just as attractive and will add diversification to the typical portfolio.

• HDFC Bank Limited ($HDB) - India-based bank that has rebounded nicely from the 2009 lows and recently has pulled back from an all-time high. The stock is now sitting on support at the $39-$41 area and is oversold in the short-term. The PEG ratio is an undervalued 0.86 and when combined with the chart the stock looks like a buy today.
• Banco Bradesco ($BBD) - The Brazilian bank trades with a similar PEG of 0.89 and the chart is not quite as attractive has $HDB, but it is in the upper echelon on bank stocks. I like Brazil as a turnaround story in 2013 and $BBD would be a beneficiary of renewed growth.