A side effect of market turmoil is the creation of opportunity in equity markets as the price of even the strongest companies get dragged down with the weakest. Looking back with the comfort provided by hindsight we can now declare the great recession that followed the Lehman default was the mother of all opportunities. And for investors that are not sickened by a roller coaster ride the Greek drama may be another such opportunity.

I clearly remember buying Apple at $81 ($11.5 at today’s price) and JP Morgan at $28 and being labelled a gambler because analysts were predicting the end of the financial world. Those investments paid off handsomely, well beyond what even I would have imagined. However, looking back, the greatest profit gained was definitely the experience accumulated.

In truth, the total gains during that period were limited as I was too concerned with what was happening globally to trust what the figures coming out of our models were saying. Consequently, my investment approach at the time proved to be too cautious, and exposure to the equity market remained relatively too low too long.

Greece is turning into another Lehman moment, albeit to date in miniature form and hopefully it will remain that way. While I do not intend to bore anyone with another analysis of the Greek drama, I tend to be of the opinion that Europe is much better able to absorb an eventual crisis. A Greek default is unlikely to drag Equity markets far below current levels.

Thus, keeping in mind that normal conditions currently do not exist and risk is elevated, market opportunities are already being created. A simple measure that provides an indication that a share is undervalued is the ratio between earnings per share (EPS) and the current price, or the inverse of the PE ratio.

For the sake of simplicity I will use the EPS indicator provided by Google Finance. Anyone has access to this figure and I suppose it is the one year quarterly trailing EPS. Divide this figure by the current market price and you will get a number that is a good indicator of the company’s growth potential. The following are a few examples taken from Google Finance; BMW 8.8%, Allianz 9.7%, Renault 7.1%.

Unless one believes that BMW and Renault are going to report weaker earnings for a prolonged period, than the above rate of earnings are particularly attractive. In addition, this simple estimate assumes an earnings growth rate at zero. Thus these and similar shares are considerably more attractive if one has an optimistic view of the Greek crisis.

Antoine Briffa is Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.