Sometimes, great investments are found in the most unusual places.  Regions that most investors avoid — due to fear, misinformation or a general lack of knowledge — can harbor overlooked stock gems.  

One such location is Russia. This former Soviet state is home to an extremely successful company that investors everywhere should know about. #-ad_banner-#

There is no question that the transition to a capitalistic society has been difficult for Russia. However, there are signs of improvement. According to research by Deloitte, private consumption expanded by over 6% in each of this year’s first two quarters. A strong summer harvest has eased food prices, providing consumers greater discretionary income, and inflation has been slipping lower this year. In addition, retail sales climbed more than 4% in July from the same month last year.

Most interesting is the fact that the Bank of Russia is expected to continue a policy of interest rate cuts through 2014. Lower borrowing costs are one key factor in economic growth, and the Bank of Russia is on the right track in this regard. 

Not only is the central bank staying with the policy of lowering interest rates, it’s also clamping down on unfettered consumer lending policies. Annual interest rates as high as 60% for unsecured consumer loans are common in Russia. The Central

Bank is combating this practice by requiring banks to set aside 300% of the loan’s principal in a reserve fund. There is also talk of the Bank of Russia potentially setting a maximum rate for consumer loans and credit cards.  

This increasingly consumer-friendly environment is what triggered my search for a consumer-oriented investment. I was amazed by the investment potential of one Moscow-based company in particular. This company operates electronic payment services and kiosks in the Russian Federation, Kazakhstan, Moldova, Belarus, Romania, the United Arab Emirates and even the United States. The share price has soared over 300% since June, and the uptrend shows no signs of ending.

Boasting the unusual name Qiwi (Nasdaq: QIWI), this company is among the largest providers of non-bank self-service payment locations in the former Soviet Republic.

Qiwi just reported third-quarter results, crushing estimates and adding fuel to the already sharp uptrend in price. In the third quarter, Qiwi’s revenue was reported at more than $50 million, which beat the $40 million consensus estimate and was up nearly 50% from a year ago. Earnings per share jumped 39%, to $0.35, excluding certain items. 

	© QIWI, 2013
	Qiwi is collaborating with U.S. credit card behemoth Visa to offer the Visa Qiwi cellphone wallet.

In addition, Qiwi lifted its expectations for full-year 2013: Revenue is forecast to rise 42% to 45%, compared with previous guidance of 27% to 30%, and adjusted net profits to rise 50% to 55%, revised upward from 35% to 40%. Qiwi also announced an annual dividend of nearly $17 million, or $0.32 per share, and said it intends to pay out all its excess cash as dividends.

These numbers are supported by the more than 60 million monthly customers who pay a small fee to use Qiwi’s processing services. In addition, more than 54,000 merchants accept payments through the company’s network. Helping to bolster confidence in this Russian company, Qiwi is collaborating with U.S. credit card behemoth Visa (NYSE: V) to offer the Visa Qiwi cellphone wallet.

QIWI’s technical picture is a classic long-term uptrend on both the daily and weekly charts.

Risks to Consider: Despite the positive signs, Russia remains a very risky place to invest. The heavy hand of the state could descend again at any time, quashing economic growth. Always use stop-loss orders and diversify.

Action to Take –> Opportunity lies within the risks of investing in Russian businesses. I firmly think that Qiwi is a legitimate company with substantial upside. Buying now with a 12-month target of $65 makes solid investing sense.

P.S. QIWI may be a great stock to buy and hold, but the 2.7% yield won’t be enough for some yield-hungry investors… That’s why we put together a special report on a fast-growing oil stock with a 10.2% annual yield. To learn more about why we like this company, click here now.