He also likes Qatar Electricity and Water, a utility. Power sales should increase as the country spends heavily on increasing it grid. The company has exclusive rights to operate desalinization plants, an important business in a desert region.
Larry Seruma, portfolio manager of Nile Pan Africa, favors Nigeria, an oil economy that reported GDP growth of 7.7% last year. Seruma says Nigerian banks represent special bargains. In recent years, the leading banks have been increasing earnings at annual rates of more than 30%. The growth is likely to continue because Nigerians are just beginning to obtain mortgages and use other banking services.
With a market capitalization of $2.7 billion, Zenith Bank is one of the country's biggest. The bank has a rock-solid balance sheet, yet it pays a dividend yield of 9.4%, more than double the payout for comparable institutions in South Africa and other more established emerging markets. The Nigerian bank must pay a steep yield because global investors have not yet discovered the opportunities that the country presents, says Seruma.He also likes producers of oil and gas. A holding is Cove Energy, which has fields near the East African coast in Tanzania and Mozambique. The resources are particularly valuable because they are convenient for the fast-growing markets in China and India. "There is a bidding war for reserves that can serve Asia," says Seruma. Seruma has 38% of his assets in South Africa. He says that many businesses in the country stand to benefit from growth in neighboring countries. South African retailers and banks are opening new outlets in Nigeria. Consumer products companies are exporting throughout Sub-Saharan Africa. 10 Stocks Poised to Rise in Apple's Wake >> "The government wants companies to emphasize trade with Africa, instead of focusing primarily on exports to Europe and other sluggish developed markets," says Seruma.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV