BALTIMORE (Stockpickr) -- With commodity wealth, an established industrial base and a burgeoning middle class, it's no surprise that Latin America is high on investors' radar. In the first half of the decade, Latin American stock funds were among the best-performing international investments out there -- and in 2008 and 2009, as international economies reeled from the financial crisis here in the U.S., Latin America surprised analysts by staying strong despite substantial pullbacks in other emerging market areas like China and India.
Now, with credit flowing and consumer demand picking back up, it's worth revisiting a handful of Latin American stocks with growth potential.
Today, we'll take a look at
that trade on U.S. exchanges.
Despite economic tailwinds starting to pick up, 2010 has proved somewhat challenging for Mexican cement giant
. The company is down nearly 30% this year on poor financial performance. One of the biggest pulls on Cemex has been its exposure to areas outside of Latin America, where the company already holds a dominant position in the building materials business. Because Cemex's No. 2 market, the U.S., is continuing to see drastic cutbacks in building, the company continues to see its profitability threatened.
Things are more attractive back home. Cemex's Mexican operations are highly profitable, contributing nearly a third of the company's overall earnings before interest and taxes. The company has done a good job of ingraining itself into Mexican culture in the last decade, famously positioning its cement as a prime wedding gift for couples (who would logically be in need of a home of their own) and cinching a leading position in the 85% of Mexican cement sales driven by consumers.
The key to Cemex's growth though, is through major construction projects in the other markets it operates in. With infrastructure construction starting to perk up again across the world, Cemex should see a boost in demand for its products that'll help carry the company through to an uptick in private-sector construction. In the meantime, Cemex is making meaningful acquisitions -- but buyer beware: With a significant debt load already on this company's balance sheet, management will need to be vigilant in keeping its obligations in check.
It's hard to mention Latin American enterprise without bringing up
, the Mexican billionaire who topped
billionaire list in 2010 with the No. 1 spot. One of Slim's crown jewels is telecom giant
, the region's largest wireless provider with more than 200 million customers in 16 countries.
America Movil was spun out of fixed-line operator Telmex in 2000, only to turn around and acquire its parent earlier this year. The combined company generates substantial cash flows, with enough financial flexibility to reduce its debt load and increase capital spending at the same time.
Telecom competition in Latin America remains fierce as a handful of companies compete for untapped portions of the market, but many are transplants or arms of foreign rivals. Because management understands Latin America's business nuances, America Movil should continue to thrive in the coming years.
While most air travelers are familiar with the names
and Airbus, the name
may not sound as familiar. That comes despite the fact that the Brazilian aerospace firm is the third-largest commercial aircraft maker in the world, with airliners dotting the globe.
In the past, Embraer has been known for producing light jets and turboprops for commercial, corporate and military operators -- the kind operated by regional airlines here in the U.S. -- but the company has been making a push toward larger aircraft, pushing to 43% market share of the 61-120 seat aircraft market.
Although corporate jet sales will likely continue to languish for some time, Embraer should be a big beneficiary as the world's regional airlines eschew aging propeller-driven models for similar-sized jets.
( STD) may not be a Latin America-based firm -- the company is headquartered in Spain -- but the bank is enjoying its enormous footprint in the region. Santander has enjoyed brisk growth in recent years, fueled in large part by well-played international acquisitions. Today, the 150-year-old firm's Latin American business contributes 40% of the firm's profits -- a number that many analysts expect to grow in the next few years.
That growth has been helped in 2010 by the violent decline of the Euro amid sovereign debt concerns. As exchange rates de-emphasize Santander's eurozone operations, a larger chunk of dollar-denominated business will be attributable to the eight Latin American countries the firm operates in. That said, a
also devalues the company's assets to American investors.
Investors will need to be cognizant of the situation unfolding across the pond if they choose to invest in shares of this firm.
To see the rest of this week's Latin American plays, including
, check out the
-- Written by Jonas Elmerraji in Baltimore.
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At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.