While U.S. investors fret about the collapse of the housing boom, India’s prospects couldn’t be stronger. Housing units are expected to grow by an estimated 250 million over the next decade. That’s more than twice the number of housing units in the entire United States today! For a bank in ICICI’s dominant market position, financing such breakneck expansion is a license to print money.
And ICICI is already benefiting tremendously from the explosion in consumer finance, fueled by robust demand for home and car loans from a prospering middle class population in India. ICICI has the financial deck stacked in its favor. The fees banks like ICCI can charge to consumers often far exceed what they could get away with in more competitive, developed markets.
ICICI’s recent blow out results underscore the strength of its position in India. Net profits rose 30% compared with the same period a year ago. Deposits were up a whopping 57%. Loans shot up 45%, quarter over quarter, with high margin consumer lending already accounting for two thirds of its outstanding loans. Net interest income — the difference between interest earned on loans and interest paid on deposits — rose 47%. And ICICI is just getting started. Profits are expected to forge ahead at 35% per year as far as the financial eye can see. As the deputy managing director of ICICI remarked: "We’ve never had it so good"
The Indian stock market also has the wind at its back. Fourth quarter is the best time of year to be investing in Global Bull Markets. And this year is no exception. Foreign institutional investment is giving momentum to a strong rally in the market. No one wants to miss out on India’s growth story.
So buy ICICI (IBN) at market today, and place your stop at $30.90. For potentially even quicker double-digit percentage profits, buy the March $35 call options (IBNCG.X)
To make room for ICICI, let’s close our position in TEVA (TEVA), which has been lagging our other profitable Global Bull Market picks.