YRC Worldwide, Inc. (YRCW), National Bank of Greece (ADR) (NBG): Are These Impressive Comeback Stocks A Buy?

This will ultimately keep the bank from being nationalized, which therefore keeps it privately owned. Thus shares will be heavily diluted, but it appears as though both investors and the rating agencies are impressed with the bank.

Last Thursday Fitch upgraded the Greek banking sector from CCC to B- following the capital raise and its avoidance of being nationalized. With the financial industry as a whole seeing some signs of life, many are buying ahead of a recovery in hopes that National Bank of Greece (ADR) (NYSE:NBG) will recover some of its massive losses over the last few years.

In the last five years alone, it has lost 95.78% of its value, trading with a $2 billion market as Greece’s largest financial institution. With that said, there is still a lot of risk associated with the Greek financial system and these banks are heavily diluted. Thus I still suggest investing in the Global X Funds (NYSEMKT:GREK), which will still give you high exposure to National Bank of Greece (ADR) (NYSE:NBG); as it makes up more than 7% of the ETF. Over the last month it has gained 42%, and will continue to gain if the Greek economy is improving. If National Bank of Greece (ADR) (NYSE:NBG)’s rally was to reverse abruptly, you’d be better protected with Global X Funds (NYSEMKT:GREK) along with being more diversified in a high risk market.

Conclusion

In my book Taking Charge With Value Investing (McGraw-Hill, 2013) I break portfolios down into holdings that serve a purpose, and one of those “purposes” is speculative holdings. These speculative holdings have different degrees of risk and should be determined in your portfolio based on total size and risk assessment. However, it is good to have speculation in your portfolio, but only in very small amounts. These investments have massive upside potential, as small investments can return large amounts of earnings to your portfolio. With that said, there is also a great deal of risk associated with these investments, thus meaning that investors must perform very thorough due diligence. Personally, I think YRC Worldwide is interesting, and I’d watch it closely. But for National Bank of Greece (ADR) (NYSE:NBG), I’d definitely go in a different direction.

The article Are These Impressive Comeback Stocks A Buy? originally appeared on Fool.com is written by Brian Nichols.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.