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One of the age-old rules of investing is that you can find many of tomorrow's winning investments among today's losers.

Just look at some of the companies getting punished over the past few months. Many of them have strong business models and competent management teams that will emerge from the ashes. Allied Irish Banks (NYSE: AIB) is one of them.

The other real estate bubble
We've seen all the negative stories about real estate here in the U.S., but a similar phenomenon is going on in parts of Western Europe. Residential real estate markets in Spain, England, and Ireland all rose quickly over the past five years and all have gone cold in the past year. Fears of rising bad loans always come about when real estate values decline and an economy softens, and Allied has taken the expected hit as a result. The share prices of Allied, Bank of Ireland (NYSE: IRE) and Anglo Irish Bank (OTC BB: AGIBY.PK) have all fallen by 35% or more over the past year.

Lending is cyclical, so Allied and the other Irish banks will no doubt experience higher loan losses than they have since 2003. But the results are less cyclical for banks that focus on credit risk first and growth second. Allied has historically experienced very low loss levels on its loans, in part because of a booming Irish economy, but also partially because Allied has focused on sticking to markets where it has expertise and the willingness to forgo growth for quality. The company has made that focus clear many times on its conference calls.

A strong domestic franchise, and much more
Also lost in the noise is that Allied Irish is a very strong business. The banking business in Ireland is essentially an oligopoly, and Allied is the largest bank there. Over the years, it has built deep relationships with its customers and has developed a broad product offering. Those moves have helped to further cement its competitive position.

Ireland, though, makes up only about half of Allied's business. The rest is composed of its rapidly growing business in Poland, a business-focused bank in the U.K., and its investment in M&T Bank (NYSE: MTB) in the United States. Allied has grown its Polish operations to become that country's third-largest bank. On some measures, it's also Poland's most efficient. Over the long term, Allied's continued expansion in Poland and other parts of Eastern Europe will offer a dynamic growth opportunity for shareholders.

A powerhouse on sale
Even with a price-to-earnings ratio of 7, Allied is seeing its underlying positives get downplayed or ignored, while the bears play up the negatives in parts of the Irish economy. This situation has created an opportunity for investors to snap up a top-quality bank at a rock-bottom valuation. But the opportunity won't last, as investors start to realize that the positives remain and that the economy in Ireland will only slow, not fall apart. A large and well-funded 3.5% dividend yield provides a nice boost of cash while we wait for cooler heads to prevail.

If you agree that Allied Irish Banks will rise once again, or if you think the best is over for this venerable bank, tell us what you think in Motley Fool CAPS. Based on your ratings, we'll single out the best international stock for 2008 and share the results in the days to come.