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Is Latin America, not Facebook, the Next Big Internet Opportunity
Investing Update | May 14 2012
The Internet Market Growth Potential in Latin America is outrageous, especially in Brazil!
Let me stress this point – there are probably few things growing faster or more consistently than the U.S. national debt. One of these is – The World-Wide Internet. I wish I had an Internet Growth Clock like the National Debt Clock to illustrate this unstoppable growth.
ComScore reports Latin America’s online population grew faster than any other global region in 2011 - continuing to surprise everyone forecasting Asia's ascendency to this role.
Key insights from Comscore's 2012 Latin America Future in Focus include:
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Latin America’s online population grew faster than any other global region in 2011, rising 16 percent to 129.3 million visitors in December 2011.
Latin America is home to five of the most engaged social networking markets worldwide. Internet users in Argentina averaged 10.7 hours on social networking sites in December 2011, followed by Chile (9.5 hours per visitor), Peru (8.7 hours), Colombia (7.6 hours) and Mexico (7.1 hours).
Google Sites (GOOG) reigned as the most-visited property in December 2011, reaching 123.4 million visitors in the region, while Facebook.com (FB) led as the most-engaging web property accounting for 25 percent of all time spent online.
Latin Americans continue to display a strong propensity for search. In 2011, the total number of searches conducted increased 38 percent to more than 21 billion in December. With an average of 173 searches per searcher, Latin America leads the globe in search frequency.
Mobile phones and tablets continue to account for a growing amount of digital traffic, with Puerto Rico leading the region with 7.7 percent of all digital traffic consumed away from a personal computer. Apple led across nearly all markets in share of non-computer traffic fueled by the iPhone and iPad.
Fueled by the holiday shopping season, online retail visitation jumped 30 percent as more Latin Americans turned to the web to shop and purchase goods and services. Among retail categories, comparison shopping had the highest penetration with nearly 1 in 4 online users visiting these sites in December 2011.
Now over 40% of Latin America's population has access to the internet. An increase to a 50% penetration could add an additional 30 million potential online consumers.
There's an investment angle here that can be played through MercadoLibre (MELI).
Consider how it impacts MercadoLibre's existing market share. This translates to another 6 million to 7 million visitors to its sites; a close-to effective 20% growth without changing a thing!
Plus with a dominant position in Brazil, MELI will also benefit from the continuing economic upturn there.
And there's even more boosting the growth for MELI. The population in Brazil and the rest of Latin America is growing faster than the U.S or world averages.
The reaction to this and recent earnings is ridiculous. MercadoLibre (MELI) profiled in this update, is down big time this week - so clearly this is a buying opportunity for longer term investors.
For more emerging markets investing and trading ideas like this one, download the attached update and ...
Happy trading!
Rudy
- The highest gaining stocks in the week included:
- Banco Macro SA (NYSE:BMA) +5,1%
- Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) +3.3%
- Banco Santander Brasil SA (NYSE:BSBR) +3.3%
Latin Airlines Merger Reshapes Western Hemisphere Air Travel
Investing Update | May 9, 2012
Latin American Airline carriers have some favorable tailwinds.
With an expanding middle class and a continuing economic boom in business, air traffic levels are soaring to new heights. The International Air Transport Association ranks Latin America as the fastest-growing airline market in the world, with passenger-demand growth of 10.2% in 2011. That's more than double North America's 4.0% last year.
So it's logical that the emergence of a dominant carrier for Latin America should be positively received by investors and travelers alike.
In the next couple weeks, the Chilean carrier LAN Airlines SA is expected to conclude a merger with Brazilian airline TAM SA via a stock swap.
The new LATAM Airlines Group SA will be a unique and industry-leading entity.
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It will be able to access the stock market more fully, with a valuation of about $13 billion, making it the world’s biggest air carrier by that measure.
It will create the leading South American carrier.
It will rank as the #2 carrier between North and South America.
It will maintain financial flexibility as one of the few Investment Grade airlines in the world.
It will create one of the 10 largest carriers by revenue and would be the biggest acquisition of an airline in at least two decades
And ...It will provide service through a network of 120 destinations in 23 countries.
Latam Airlines will be the first airline in the western hemisphere to receive the new Boeing 787 Dreamliner, which is expected to revolutionize the airline industry, incorporating the most advanced technology.
Our LSI Subscribers and LCM clients should already have this great idea in their portfolios.
And there are other fast moving stocks we cover. Last week the biggest upside movers among Latin American Emerging Market Stocks included:
- YPF Sociedad Anonima (NYSE:YPF) +8.3% (A partial recovery post government intervention and reflecting fresh, younger management.)
- Grupo Simec, S.A. de C.V. (AMEX:SIM) +3.9%
- America Movil, S.A.B. DE C.V. (NYSE:AMX) +3.4% (Several good news items have hit in the last few weeks.)
Consider how the Latin Capital Market team can help you and contact us using the links below.
In the meantime...
Happy trading!
Rudy
Oil Discovery Lights Up Interest in Colombia's Ecopetrol
Investing Update | April 30, 2012
In what seems like a weekly occurrence, Colombia's state-controlled oil company Ecopetrol (EC) reported a discovery Wednesday at an exploratory well in its decades-old Tisquirama block in the northern state of Cesar.
For more about Ecopetrol and another new Colombian stock, read the attached weekly update for April 30th if you have not already downloaded it.
The other big news comes from Argentina where the lower house of the legislature is expected to pass an expropriation of 51% of the YPF shares on Wednesday.
Apparently nervous about government moves to take control of petroleum firm YPF SA (NYSE:YPF), investors pushed Argentina's Merval stock market gauge down 2.8% for the week after it tumbled 6.5% a week earlier. But after crashing 33.63% a week earlier, YPF's stock price retreated a more modest 2.88% in the latest week. The stock's U.S. ADR price seems to have stabilized at the current $14 level for the time being.
And other Argentine issues suffered steeper setbacks too, including Petrobras Argentina SA (NYSE:PZE), McDonald’s franchisee Arcos Dorados Holding (NYSE:ARCO) and agricultural firm Cresud Inc.(NASD:CRESY), each of which skidded more than 6% during the week. Bucking the tide was e-commerce firm MercadoLibre (NASD:MELI), which advanced 4.83%.
It's clear that the government very much needs private investors and will not be taking ownership of the 49% it does not own. Interestingly, the biggest risks here are demands from YPF on the other public shareholders and threats for more lawsuits to YPF.
Outlook for Sugar Prices Less Sweet in 2012
Investing Update | April 23, 2012
A week ago I stressed that "consistent with our ongoing strategy of gradually selling out of defensive, lower return stocks into higher growth, higher profitability equities," it is a time to take some profits on "great companies."
"I'm seeing more and more real value situations in the core sectors of Finance, Industrials and Technology stocks and in this service we move capital around to where it will hopefully be the most productive," I added.
One stock we're reducing exposure to is Cosan (CZZ) Brazil's leading sugar producer.
Cosan is vertically diversified into every facet of the sugar and ethanol businesses. Units of the company grow sugarcane, mill it into various grades of sugar, refine some of it into ethanol and then transport the products to storage facilities, ports and terminals it owns using its own rail and trucking resources. In addition, it then even pumps ethanol-blend fuel into autos at Esso service stations it controls.
But in recent months investors have been losing their enthusiasm for this uber-diversified company. The international price of sugar has tumbled 20% over the past nine months with the futures market showing little indication of any immediate recovery.
The price of CZZ's ADRs traded on the NYSE have skidded from a 52-week high of $15.29 set early in April to recent quotes of less than $14.
It is time to step back for a while from owning CZZ shares and wait for this vertically integrated company to get its disparate units operating in concert to produce consistent revenue and profit growth.
For more about this stock and other emerging market stocks read the attached weekly update for April 23rd if you have not already downloaded it.
Investing in Cuba - The Next Frontier Market
Submitted by Rudy Martin on Fri, 04/20/2012 - 02:34
Video | April 20, 2012
Despite a wave of social reforms in Cuba, the United States is unlikely to end its embargo any time soon. But Rudy Martin says there are many foreign companies ramping up investment in Cuba, offering large commercial investment opportunities.
One day the embargo will be allowed to expire and when it does 11 million people will become consumers of a range of products from soaps to satellites to SUVs. The first mover companies will have unique advantages. Listen to this video for more insights on this hottest emerging frontier market.
Despite a wave of social reforms in Cuba, the United States is unlikely to end its embargo any time soon. But Rudy Martin says there are many foreign companies ramping up investment in Cuba, offering large commercial investment opportunities.
One day the embargo will be allowed to expire and when it does 11 million people will become consumers of a range of products from soaps to satellites to SUVs. The first mover companies will have unique advantages. Listen to this video for more insights on this hottest emerging frontier market.
Taking Profits on a Pair of Great Companies
Investing Update | April 16, 2012
Latin American beverage giant Ambev and water utility SABESP — both headquartered in Sao Paulo, Brazil's dynamic and fast-growing metropolitan area -- are still great companies.
Yet, I suggest taking gains here because I'm seeing more and more real value situations in the core sectors of Finance, Industrials and Technology stocks.
And as you may recall in this service we move capital around to where it will hopefully be the most productive. So that's where we're going with the proceeds from these two sales.
Remember this is consistent with our ongoing strategy of gradually selling out of defensive, lower return stocks into higher growth, higher profitability equities. So don't expect more high-yield plays in LSI for a while. We're aiming for higher growth at great value.
The attached model portfolios include our current recommended weights for select holdings. This issue highlights stocks that were big movers last week including:
- Compania de Minas Buenaventura S.A. (NYSE:BVN) +6.3%
- Companhia de Bebidas das Americas (NYSE:ABV) +5.3%
- NII Holdings Inc.(NasdaqGS: NIHD) +4.6%
Keep following LSI for more details on where I see the values in emerging and global markets in the coming quarters. I think you'll be surprised that there are some great new ideas on the horizon that are fueled by sustainable growth.
Happy trading!
Rudy
Argentina Playing Poker to Lower YPF Shares Price
Investing Update | April 9 2012
Buy them when they're low.
That's clearly the approach the Argentine government is taking towards the energy company YPF in what is an essential re-insertion of the government into the management of its energy resources.
Argentina’s central government, in coordination with the provinces, has taken a series of steps that have again fueled the fears of a complete takeover of YPF and further action in the oil industry in Argentina. Based on its recent market close, the market value of YPF is down 55% from its 52-week high set in January of 2012.
The drama of how they get there will keep this YPF story on the front news pages for months.
In the meantime, this imminent intervention (notice I do no use the word nationalization) is scaring investors away from other oil investments in Argentina too. Shares of Petrobras Argentina (NYSE:PZE) are now selling at less than half the value of their January high!
On the bright side, this is all good news for value investors with a longer-term horizon. But as I continue to warn, the public soap opera drama is likely to heat up more before the first dollar is paid to investors for their shares.
Currently, the Argentine government is blaming the energy firms of not supplying enough oil.
The Argentine government also is slamming the oil companies for not reinvesting more in exploration and production.
Further, the Argentine government is accusing public companies of bleeding the country dry by sending profits out of the country.
Don't buy an over-played, high-pitched disaster story. That's not what's happening here.
Clearly the government needs to change some of the economics and regulations too. And what is not being adequately reported is that these changes are already in the works, as you would know if you were watching local coverage closely and not just the common very uninformed Wall Street and other English-speaking financial press.
For example, on the very positive side for long term investors in Argentina, these actions are part of a Federal Oil Agreement designed to increase production, ensure supplies to the country, generate employment, and to save and attract foreign investment.
If this were being done in the United States, we've would have a one-sided re-election in November and energy stock prices would be up!!
So for more reasons as to why this is a positive development and more emerging growth stock trading ideas like this one, download the attached update and ...
Happy trading!
Rudy
- The highest gaining stocks in the week included:
- Grupo Simec, S.A. de C.V. (AMEX:SIM) +8.4%
- Grupo Aeroportuario del Sureste, S.A. de C.V. (NYSE:ASR) +5.8%
- Empresa Brasileira de Aeronautica S.A. (NYSE:ERJ) +5.3%
Weekly Trading Ideas - April 2 2012
Investing Update | April 2, 2012
Thanks for you patience. We are currently moving the site to new servers.
Here is the weekly update for April 2nd if you have not already downloaded it.
Weekly Trading Ideas - March 26 2012
Investing Update | March 26, 2012
Thanks for you patience. We are currently moving the site to new servers.
Here is the weekly update for March 26th if you have not already downloaded it.
Weekly Trading Ideas - March 19 2012
Investing Update | March 19, 2012
Thanks for you patience. We are currently moving the site to new servers.
Here is the March 19th update if you have not already downloaded it.
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