You don’t have to be a contrarian to have investment success, but it certainly helps.

#-ad_banner-#From 2005 through 2007 — when it was fashionable to invest in real estate — the reality was that real estate was the last place you should have been putting your money. Then after housing bubble popped in 2009 — when it was terrifying to invest in real estate — investors should have been betting their life savings on residential properties.

You can’t expect to reach your full investment potential by merely following the majority. In fact, going against the crowd is often the best place to look for investment ideas.

Today there isn’t much that is more out favor than Russian stocks. It’s well-known that Russia has a problem with corruption making it a frightening place to invest in already. Now with the developing Ukraine crisis and the U.S. imposed sanctions — many investors find it even more unnerving.

But as Warren Buffett says “you pay a rich price for a cheery consensus.”

In fact, the doom and gloom that surrounds Russian stocks makes them extraordinarily inexpensive. Now could be the perfect time for a contrarian move — here’s why.

After several months of sanctions that targeted only individuals and small firms, the United States recently upped its measures to target Russia’s largest oil producer Rosneft. And Rosneft wasn’t alone. Russia’s second largest gas producer Novatek and its third largest bank Gazprombank have also been put in jeopardy.

These specific companies were targeted because they’re run by close allies of Vladimir Putin. The sanctions are meant to shut these firms out from medium to long term dollar funding.

One firm not specifically targeted by these sanctions but still sporting a dirt cheap valuation is colossal natural gas producer Gazprom (OTC: OGZPY) — the single largest producer of natural gas in the world.

In 2013, Forbes listed the largest energy producing (oil and natural gas combined) companies as the following:

1. Saudi Aramco – 12.7 million boe/day
2. Gazprom – 8.3 million boe/day
3. National Iranian Oil Company – 6.1 million boe/day
4. Exxon Mobil – 5.3 million boe/day
5. Rosneft – 4.6 million boe/day
As you can see, Gazprom is the second largest energy producer in the world. But it’s not just Gazprom’s size that has me thinking it will not be going anywhere and will not be “sanctioned” out of business.

The main reason is because Gazprom produces so much energy that it is crucial to global energy security, especially that of Europe.

It’s no exaggeration to say that Gazprom is the reason many of our closest European allies don’t shiver through the winter. Over twenty countries are heavily reliant on Gazprom’s services.

Source of image: Morgan Stanley

In short, a big chunk of Europe gets all of its natural gas from Gazprom, and the continent as a whole is fully reliant on the Russian giant.

I wouldn’t be interested in Gazprom if shares of the company were not shockingly inexpensive. And that’s what Gazprom currently offers.

To put size and price into perspective, let’s compare them to the largest western energy company — Exxon Mobil (NYSE: XOM). It becomes strikingly evident how cheap Gazprom shares truly are.

In 2013, Exxon produced 5.3 million boe/day, which is slightly less than two thirds of the 8.3 million boe/day that Gazprom produced. All production isn’t created equal of course. A greater percentage of Gazprom’s production is in natural gas, while Exxon’s production is more heavily weighted to oil. So while Gazprom had more production, the actual net earnings of each company in 2013 were very similar at roughly $32 billion.

Despite having very similar earnings, Exxon has an enterprise value (market capitalization plus net debt) of $440 billion, while Gazprom has an enterprise value of $131 billion — one-third of Exxon’s. And on a price to earnings basis Exxon trades at 13 times while Gazprom trades at a shockingly low 2.5 times.

That basically means that as an investor you can buy $1 worth of Exxon’s earnings for $13 or pay $2.50 for $1 worth of Gazprom’s. The firm’s stock price could double and its price to earnings ratio would still not be even half that of Exxon’s.

If there wasn’t fear surrounding Gazprom the share price would be two or three times where it currently is. On top of that, Gazprom is paying investors a 5% dividend yield to wait.

So Russia may be full of corruption, but the truth is that dominant companies like Gazprom aren’t going anywhere. I believe sentiment about Russia will lessen, in months to come, and even a modest price to earnings valuation increase would make this a rewarding investment.

Don’t get me wrong, there is plenty of hair on this dog. The company is run by cronies of Putin, a dictator who is not afraid to do whatever he wants. But that’s what makes the stock so cheap.

Is this a comfortable investment? Certainly not. But the best investments seldom are. I think Gazprom’s share price could double quite easily while, at the same time, it’s hard to see shares going much lower from here.

Risks to Consider: There is political risk involved with owning anything in Russia, and literally anything is possible. Gazprom also carries with it commodity price risk.

Actions to take –> Buy shares of Gazprom (OTC: OGZPY) while there is blood in the street, and enjoy the dividend while you wait for Russian stocks to come back into favor.

This article originally appeared on InvestingAnswers.com: This Dominant Global Company Is Selling For Cheap


P.S — The bottom line is that if you’re looking for higher yields, then it’s time to start looking at foreign markets. Consider this… Out of 118 companies that pay dividend yields over 12%, 93 of them are located outside the U.S. To see the list of these high-yield stocks, or to learn more about investing in international dividend payers, follow this link.