Vale SA (ADR) (VALE), Itau Unibanco Holding SA (ADR) (ITUB), LATAM Airlines Group SA (ADR) (LFL): 3 Long-Term Picks to Benefit From Latin America

Page 1 of 2

Several major sporting events, including the next FIFA World Cup and Olympics, will be soon kick-off in Brazil. This means that the economic activity will be highly stimulated, not only through the consumption generated by the events but also by strong government spending.

If Brazil´s above average GDP growth makes its companies attractive investments, the current circumstances make them even more alluring. Offering plenty of upside, Vale SA (ADR) (NYSE:VALE), a mining company; Itau Unibanco Holding SA (ADR) (NYSE:ITUB), a bank; and LATAM Airlines Group SA (ADR) (NYSE:LFL) are three interesting stocks that could stand as worthy purchases for your long-term portfolio. Let’s take a closer look:

Vale SA (ADR) (NYSE:VALE)
Best of two worlds

Itau Unibanco Holding SA (ADR) (NYSE:ITUB) is the largest non-government Latin American bank. After proving resilient in tough economic patches, the firm looks poised to deliver strong returns on equity. A product of a merger between Itau and Unibanco, the bank seems to possess the best qualities of each one of its parts: Itau´s efficiency, cost effectiveness, and strong management and Unibanco´s underwriting standards, which result in lower nonperforming loan rates.

The conglomerate holds leading market shares in virtually all of its product offerings, including credit cards and investment banking. Its presence is not limited to Brazil, but rather widespread through Latin America. Over the next few years, the company could become a regional giant, expanding through strategic acquisitions; one thing is sure, Itau Unibanco Holding SA (ADR) (NYSE:ITUB) has the money to support this strategy. Diversification in its product portfolio is also expected to drive top-line growth over the next few years.

Although many investors are concerned about inflation and currency depreciation in Latin America impacting Itau Unibanco Holding SA (ADR) (NYSE:ITUB)’s income, its history suggests that the bank will be able to navigate such circumstances while remaining profitable and keeping a strong balance sheet. Moreover, profitability will be boosted by a decreasing risk in its loan portfolio.

Trading at less than 6 times its earnings, about half the industry average, while offering compelling growth prospects, strong capitalization and liquidity, and increasing returns, I’d recommend buying this stock for the long-term; the upside potential is wide, but so is the safety margin.

Forget about Rio Tinto

Although many analysts recommend staying away from the mining sector at the moment, Vale — a Brazilian company that holds the most valuable iron ore franchise in world — deserves a closer look. Despite being a diversified mining enterprise, its focus is clearly set on its iron ore business, which contributes with 70% of sales and 90% of EBITDA. Going forward, management will allocate most of its resources at maximizing the value of the firm´s iron ore assets. As a result, analysts expect average annual EPS growth rate of 21%-22% over the next five years, comfortably outperforming its peers (Zacks Estimate).

However, Vale SA (ADR) (NYSE:VALE)’s subsidiary business segments are also important and deserve to be mentioned. The firm is the second largest nickel producer in the world and holds other mining assets, like coal, that have been registering consistent increases in production.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!