Is Latin America, not Facebook, the Next Big Internet Opportunity

Brazil Stock Investing
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:

  • 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.

And the growth will continue.

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

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Latin Airlines Merger Reshapes Western Hemisphere Air Travel

Warren Buffett
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.

  • 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.

And if the demand for the Boeing 787 Dreamliner is any indication of its market impact, then watch out!!

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:

I could go on and tease you about how great the next stock pick in this newsletter is and YES!!! it may well be my best pick of the year. But I won't.

Consider how the Latin Capital Market team can help you and contact us using the links below.

In the meantime...

Happy trading!

Rudy

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Oil Discovery Lights Up Interest in Colombia's Ecopetrol

How to Invest in Colombia
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.

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