It’s rare that you see a high-quality company growing profits strongly that’s also dirt cheap. Yet that’s what we have today with the FTSE 250‘s Bank of Georgia (LSE: BGEO).

The share price has rocketed around 20% in a month and 250% over five years. Yet the Georgian bank is trading on a rock-bottom price-to-earnings (P/E) ratio of 3.3.

We have history

So, is this FTSE 250 stock a no-brainer candidate for my portfolio? Possibly, but it’s complicated.

You see, I was a shareholder not long ago, but I got worried about the economic implications of the Georgian election. So I dumped the stock.

The election, which took place late last month, was widely seen as a choice between a future inside the European Union (EU) or closer ties to Russia.

Georgia’s pro-Western opposition, which officially lost, has accused the ruling Georgian Dream party of rigging the vote. Consequently, the country’s move towards membership of the EU now looks unlikely.

At the weekend, demonstrators clashed again with police in the centre of the capital Tbilisi. So the situation is a complex one centring around identity, governance, and the nation’s future.

This political risk explains why shares of the company, which effectively forms a Georgian banking duopoly with TBC Bank (another FTSE 250 stock), are valued so cheaply.

Yet earnings are still strong

Despite all this uncertainty, and the Russia-Ukraine war nearby, the Georgian economy is proving remarkably resilient.

In the bank’s recent Q3, CEO Archil Gachechiladze said: “We do not expect this period to have any significant impact on the economy.”

Indeed, the firm reiterated real GDP growth forecasts of 9% in 2024 and 6% for 2025. It said this growth will be “underpinned by strong domestic demand, resilient external sector inflows, and prudent macroeconomic management“.

In the quarter, the firm’s consolidated profit jumped 42.5% year on year to GEL 509.3m (£145.3m), with an impressive 32.1% return on equity. Monthly active retail customers rose 12% to 1.9m.

Bank of Georgia has a growing operation in neighbouring Armenia, whose economy is also expected to grow rapidly in future. It acquired Ameriabank for $303m earlier this year.

The group’s loan book increased by 63.4%, driven by the consolidation of Ameriabank and 23.6% growth in its core Georgian business.

Finally, it recently earned the title of ‘World’s Best Digital Bank 2024’ from Global Finance.

Overall then, the business is performing very well.

My move

Despite the reassuring comments from the CEO, I have to imagine the political situation in Georgia isn’t helping foreign investment or tourism.

Tbilisi is a city I’ve wanted to visit, but I’ve been reading recent blog and Reddit posts saying that the vibe isn’t good there (perhaps unsurprising, given what’s going on).

I’m still umming and ahing here. The business and Georgian economy appear to be booming still, while the stock is dirt cheap and offering an extremely well-covered 5.9% forward dividend yield.

Yet there’s substantial political risk, which feeds into an incredibly volatile share price. So far this year, it’s experienced multiple ups and down ranging between 20% and 30%.

Perhaps my hesitancy is all I need to know. After all, there are other cheap shares that I have higher conviction in. Weighing things up, I think I’ll just buy those instead.