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Stock Strategist

Are Russian Stocks Too Hot to Handle?

Investors can tap into Russia's growth and still avoid high-risk energy stocks.

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I recently returned from a trip to Russia, where I met with managers from several of the telecom firms I cover as a stock analyst at Morningstar. Many of these firms' stocks have surged in the past decade, coinciding with the country's positive transformation. While we don't currently see any compelling values in Russian telecom, we thought we'd take the opportunity to share some of our thoughts on Russia's transformation and discuss why a combination of strong growth prospects and an historically volatile market could create investing opportunities in this sector in the future.

Russia's Troubled Past
Historically, because of abundance of land, buildings in Russia have not been built tall. It's a different story today, and tall skyscrapers are actively under construction. In fact, the number of cranes I saw and the number of tall buildings going up reminded me of when I was in Bangkok in March 1997. Just over three months later, the Asian crisis began with Thailand devaluing the baht.

Allan C. Nichols does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.