A Latin American Dominating Stock

The recently issued U.S. National Security Strategy states that the United States intends to make “it harder for non-Hemispheric competitors to increase their influence in South America”. Recent action in Venezuela has also raised the strategic stakes in the broader Latin America.

It has also raised attention on the region and the question could Mexico’s and South America be an investment opportunity over the long haul?

Could economy and stock market be taken to the next level by surging Chinese and American direct attention and investment?

China’s higher manufacturing labor costs is Mexico’s advantage. According to consultant Alix Partners, Mexico has surpassed China as the cheapest country in the world for companies looking to manufacture products for the U.S. market. Next in line is Brazil.

In addition, the Alix partners report showed that across many industries, China’s cost advantage in producing goods and delivering them is shrinking. In addition to the cost factor, flexibility, speed of response and quality all point to Mexico over China. Ironically, these trends have led to Chinese companies moving production to Mexico to capitalize on the trade advantages that come from geographic proximity.

The bigger prize may lie in the South American continent.

China is also made significant inroads in South America going from doing nearly no business in 2000 to bilateral trade worth more than $500 billion in 2024. China is now South America’s biggest trading partner and has actively financed infrastructure with more than 20 countries in the region signing on to China’s Belt and Road Initiative

From copper in Peru and to lithium in Argentina, mining companies are on the prowl for commodities. China’s agricultural giants import soybeans from Brazil. Chinese utility companies electrify entire cities. China also controls much of the continents shipping infrastructure and about 40 ports from which goods move across the Pacific.

The European Union (EU) is also getting in the game. It just signed a trade pact with South American countries that will create one of the largest free-trade zones in the world, covering markets with more than 700 million people.

The number of stocks that trade on U.S. markets is somewhat limited but also larger than you might imagine.

For Mexico, some of the stocks that the Cabot Wealth Explorer has recommended range from telecom giant America Movil ADR (AMX) to Cemex ADR (CX) is a multinational infrastructure play based in Monterrey, Mexico that benfits from strong demand from firms building factories and office buildings.

For Brazil, the biggest market in South America by far, take a look at Itau Unibanco (ITUB), a large Brazilian bank and Petrobras (PBR), the leading Brazilian multinational oil and energy behemoth. In mining, Vale (VALE) produces hiuge amounts of iron ore, nickel, and copper, and is one of the most valuable Latin American companies.

Beyond Brazil, I have recommended three stocks based in Panama. Copa Holdings (CPA), a Panamanian airline holding company and Banco Latinoamericano de Comercio Exterior S.A. (BLX), better known as Bladex, a financier of multinational trade.

If you prefer a broader “shotgun approach to tapping into the growth of this region, your best bet is the iShares Latin America 40 ETF (ILF) that tracks 40 major Latin American companies. For Brazilian stocks, there is BlackRock’s iShares MSCI Brazil ETF (EWZ).

All the above stocks represent good companies but my favorite stock right now to capture the growth of this increasingly dynamic and strategic region, I need to keep exclusive for members of Independent Wealth.

I encourage you to join today because this exceptional dominating growth stock with an average earnings growth of well over 30% per year for a decade,is profiled below.