Penny Stock Picks

We wanted you today to start tracking and studying about a
South American bank that we find attractive at current
levels due to its low multiple and debt level. The bank we
are referencing is BBVA Banco Frances S.A. which trades
under the symbol “BFR” as an ADR at $4.48 a share.

BFR which together with its subsidiaries, provides
financial services to large corporations, medium and small
companies, and individuals in the Republic of Argentina.
As of March 31, 2009, it operated a network of 270
offices, including 239 consumer branch offices, 27 branch
offices specialized in the middle-market segment, 14
in-company branches, 4 branch offices for large corporate
and institutional clients, and 3 points of sale.

BFR currently trades around 7 times earnings with sales in
the range of $770 million. The bank unlike many of its
peers carries very little debt with cash on hand of about
$1.73 billion. Earnings in the first quarter of 2009 was
AR$85.9 million, which represents an improvement of 15.6%
compared with earnings in the first quarter of 2008. The
earnings per share was AR$0.18 and the return on equity
(ROE) reached 16.4% in annual terms. The improvement in
the recurrent income structure of the Bank is reflected in
the net interest margin and in the net fee income, which
grew 19.0% and 32.2%, respectively, compared to the first
quarter of 2008.

Although Latin Americas third largest economy sparked a
sharp slowdown starting in the fourth quarter of 2008 due
to the global recession, we believe things will begin to
improve throughout the year and therefore BFR could prove
to be an attractive investment as global consumer
confidence stabilizes.

Again I would like to impress upon members of the
underground especially you newbies is that always
remember, pigs get slaughtered so when a stock has gone up
it never hurts to take half or your cost off the table and
ride the rest. On the other hand if you are alerted to a
stock and do decide to jump into one that has already run
up significantly you may want to go easy at first.. Just a
little advice from the Sandman.

Don’t forget to please spread the word, because as I
talked about before, there’s always strength in numbers.
Also a special thanks to all of you who continue to
support the underground!!! We have grown at a significant
rate thanks to you. One other thing to leave you
with…Please remember that these stocks can be very
volatile so as always be very diligent if you decide to
jump into them

About The Company

BBVA Banco Frances S.A., together with its
subsidiaries, provides financial services to large
corporations, medium and small companies, and individuals
in the Republic of Argentina. The company’s deposit
products include checking accounts, savings accounts, time
deposits, and investment accounts. Its loan portfolio
comprises consumer financing, focusing primarily on credit
cards; working capital loans and leasing, including Visa
business cards; mutual funds; and mortgage loans. The
company also manages payroll accounts; and offers asset
management services, as well as involves in the provision
of insurance advisory services to customers in the areas
of coverage of risks related to life, personal accidents
and home insurance, and ATM’s robbery insurance, within a
range of products offered by certain insurance companies.
In addition, it offers foreign trade services, including
letters of credit, collections, bank drafts, fund
transfers, and foreign currency transactions. Further, the
company provides electronic banking, automated teller
machine, self-service terminal, Internet and mobile
banking, call center, and trust banking services. BBVA
Banco Frances S.A. also engages in capital markets and
securities activities, principally underwriting and
placement of corporate bonds, commercial paper, and equity
securities. As of March 31, 2009, it operated a network of
270 offices, including 239 consumer branch offices, 27
branch offices specialized in the middle-market segment,
14 in-company branches, 4 branch offices for large
corporate and institutional clients, and 3 points of sale.
The company was formerly known as Banco Frances S.A. and
changed its name to BBVA Banco Frances S.A. in October
2000. The company was founded in 1886 and is based in
Buenos Aires, the Republic of Argentina. BBVA Banco
Frances S.A. operates as a subsidiary of Banco Bilbao
Vizcaya Argentaria S.A.

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