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August 2007

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relatively conservative Latin America plays

August 28, 2007 – Comments (0)

I don't think that now is a good time to jump en masse into Latin America or other emerging markets. however, I think there are some good individual stocks that are at or near where I would like to buy.

First, Cemex (CX) is a quasi-emerging markets stock. while headquartered in Mexico, it derives revenue worldwide. it has come down quite a bit in the recent selloff and with the weakness in the housing market. I would still add to my position today, and I did buy the stock in the selloff. people will continue to need houses, and the market will soon find a bottom. meanwhile, Cemex continues to generate a lot of cash and to (excuse me) cement its position in the markets it serves.

next, while many Canuck banks are expanding just over the border into the US (where they face stiff competition), Bank of Nova Scotia (BNS) expanded into Latin America. Canuck banks operate as oligopolies in Canada (a similar situation to UK and Irish banks, which I also like). BNS is less diversified that other Canuck banks (e.g. less wealth management), and relies more on spread income, but it has an attractive portfolio in emerging markets, including Latin America. however, it is run conservatively. unfortunately, I don't think the shares are cheap enough.

Telmex (TMX) is another Mexican company I like. it has high margins and good management. Carlos Slim Helu he has more political influence in Mexico than I am comfortable with as an advocate of democracy, but as a capitalist I am very confident in his stewardship of TMX (although he has stepped down from daily ops). it is expanding services to the rest of Latin America. I should note that Pax World Balanced (PAXWX), one of the oldest socially responsive funds, owns Telmex and its competitor America Movil (AMX). AMX was originally the wireless side of TMX until its spinoff, and I'd also consider buying AMX if I could get it cheap enough, but this post is about relatively conservative plays.

the last idea I have is Femsa, or Mexican Economic Development (FMX). that sounds more like a government board than a beer brewer, and I'm sure something got lost in the translation. but anyway, Femsa does beverages. aside from beer, it bottles coke (largest bottler in Latin America) and operates the Oxxo convenience stores, which have a dominant position in Mexico. the last business is growing the fastest, but the beverage businesses are relatively low-risk. and of course, Femsa has operations throughout Latin America.

my two favorite ideas are Cemex (already own) and Bank of Nova Scotia. I would 'settle' for Telmex. I think that BNS is the least risky play because of the strength of its Canadian assets. I think that Cemex is perhaps a bit riskier, being headquartered in Mexico. I also think that I'd buy Cemex at today's prices, and I'd consider buying Telmex if it dropped a bit more.  [more]

Recs

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Reiterating Reliance Steel & Aluminum (RS)

August 20, 2007 – Comments (0)

I wish I'd bought this one, but I did pick it. And although it's up 35%, I'd like to reiterate this pick.
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Injunction against Whole Foods blocked, Wal Mart declares bankruptcy, Americans in danger of starvation

August 17, 2007 – Comments (3)

The judge in charge of the case blocked the FTC's appeal for a preliminary injunction to block Whole Foods' acquisition of Wild Oats. This is good news for the company, and though the FTC has said it will appeal, this decision weighs in Whole Foods' favor ... unless the FTC can prove the judge made some sort of error.  [more]

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Reiterating Lloyds (LYG), Allied Irish (AIB)

August 16, 2007 – Comments (0)

I'd like to reiterate my pick of Lloyds TSB (LYG). the shares are nearly at the price where I'd perhaps like to buy some more - except that I already purchased Allied Irish for my portfolio. nonetheless, LYG has been making large profits, and paying large dividends. it is #1 in the UK retail banking market. it has been focusing on keeping costs low, and has succeeded. And unlike Barclays, it hasn't been wasting money on ill-conceived acquisitions. THe downside is that the UK banking market is mature, and increasing efficiency can only get you so far - someday, this bank might not grow any faster than the UK economy as a whole.  [more]

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From 80th percentile, to 50th, to 40th, back up to 70th

August 08, 2007 – Comments (0)

My CAPS rating has been rather volatile of late, as the title indicates.  [more]

Recs

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Fuel Tech - sales disappoint

August 06, 2007 – Comments (0)

Fuel Tech's sales disappointed today, and the stock has dropped over 10%. However, their sales are lumpy, similar to International Game Tech, another strong company that has suffered this year because of that reason. The long term demand for both products should remain strong.  [more]

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