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As investors, our job is to look for opportunities wherever they may arise. Though domestic equities provide ample opportunity, it is also worth focusing on emerging markets as well. Firstly, investors may find benefits to tracking emerging markets because they are earlier in their growth trajectory.
In other words, even though the companies may be smaller in size, their growth potential is often higher. Secondly, emerging markets provide investors with a means of diversification. If your entire portfolio is too concentrated in one market, an adverse price move in the wrong direction could devastate your portfolio.
How to Play LATAM’s Growth
ETFs
Investing in ETFs is the most straightforward way to participate in Latin America’s economic development. ETFs are useful for investors because they eliminate single stock risk, are highly liquid, and save investors time researching individual companies.
Despite the sentiment you may hear echoed in the news about these economies, the price action doesn’t lie. For example, over the past year, the Global X MSCI Argentina ETF is up by 23% and is just 7% off its all-time highs. Argentina’s stock market is being driven by a revival of economic growth and citizens looking to equities markets to escape rampant hyperinflation.
Mexico is another country seeing economic strength. Because of the strained relationship between the United States and China, many U.S. companies are moving to minimize geopolitical risk by moving their manufacturing to Mexico. As a result, the iShares MSCI Mexico ETF is up 21% year-to-date. In Friday’s session, the ETF broke out of multi-month price consolidation to fresh highs in expanding volume – a bullish indicator.
No Need to “Reinvent the Wheel”
Another way to find opportunities in LATAM is to look for companies that are mirroring the success already achieved by similar companies in the United States.
StoneCo is a financial technology solutions provider. The company is the premier player in the Brazilian digital payments market and is considered the “Brazilian Paypal.”
A Long Runway
Unlike the U.S. market, which is saturated with digital payment companies, Brazil’s market is largely untapped. As Brazil’s economy develops, more and more of its citizens will begin using digital payments. Though most payments are still conducted in cash, the shift is starting into the digital world, and it is showing up in STNE’s earnings and earnings estimate picture.
Earnings
Last quarter, EPS swung to a profit of $0.14 per share versus a loss the year before. Meanwhile, revenue jumped a healthy 52%. In the past 60 days, the Consensus Estimate Trend has been revised higher more than once for the next quarter and the full year.
Top Tier Industry Group
The Zacks Internet – Software Industry that STNE is in has been outperforming the market and is ranked in the top 27% of all groups tracked.
Relative Strength and Diversification
STNE checks all the boxes. First, since the company is international, it aids investors in gaining portfolio diversification. Secondly, the stock is showing strong relative strength. Over the past month, STNE is up by 30%, drastically outperforming the 3% gain in the S&P 500 Index.
From a technical perspective, the stock is trying to break over a key zone which it has failed at several times in the past. However, the recent relative strength coupled with the strong expectations going forward gives me confidence that this break-out will stick. If the stock can get and stay above the $12.50-$13 zone there is a ton of room to run.
Bonus: ARGT’s largest holding is MercadoLibre, the Buenos Aires-based e-commerce leader of South America. While MercadoLibre is based in Argentina, its largest market is Brazil. Recently, Brazil elected a new president who is likely to implement more stimulus in the form of welfare to its citizens. The move is expected to be a catalyst for MELI moving forward, and thus, the ARGT ETF.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Global X MSCI Argentina ETF, iShares MSCI Mexico ETF, StoneCo, Paypal and MercadoLibre
For Immediate Release
Chicago, IL – May 1, 2023 – Today, Zacks Investment Ideas feature highlights Global X MSCI Argentina ETF (ARGT - Free Report) , iShares MSCI Mexico ETF (EWW - Free Report) , StoneCo (STNE - Free Report) , Paypal (PYPL - Free Report) and MercadoLibre (MELI - Free Report) .
3 Ways to Play Latin America's Ramping Growth
Latin America is Presenting Growth Opportunities
As investors, our job is to look for opportunities wherever they may arise. Though domestic equities provide ample opportunity, it is also worth focusing on emerging markets as well. Firstly, investors may find benefits to tracking emerging markets because they are earlier in their growth trajectory.
In other words, even though the companies may be smaller in size, their growth potential is often higher. Secondly, emerging markets provide investors with a means of diversification. If your entire portfolio is too concentrated in one market, an adverse price move in the wrong direction could devastate your portfolio.
How to Play LATAM’s Growth
ETFs
Investing in ETFs is the most straightforward way to participate in Latin America’s economic development. ETFs are useful for investors because they eliminate single stock risk, are highly liquid, and save investors time researching individual companies.
Despite the sentiment you may hear echoed in the news about these economies, the price action doesn’t lie. For example, over the past year, the Global X MSCI Argentina ETF is up by 23% and is just 7% off its all-time highs. Argentina’s stock market is being driven by a revival of economic growth and citizens looking to equities markets to escape rampant hyperinflation.
Mexico is another country seeing economic strength. Because of the strained relationship between the United States and China, many U.S. companies are moving to minimize geopolitical risk by moving their manufacturing to Mexico. As a result, the iShares MSCI Mexico ETF is up 21% year-to-date. In Friday’s session, the ETF broke out of multi-month price consolidation to fresh highs in expanding volume – a bullish indicator.
No Need to “Reinvent the Wheel”
Another way to find opportunities in LATAM is to look for companies that are mirroring the success already achieved by similar companies in the United States.
StoneCo is a financial technology solutions provider. The company is the premier player in the Brazilian digital payments market and is considered the “Brazilian Paypal.”
A Long Runway
Unlike the U.S. market, which is saturated with digital payment companies, Brazil’s market is largely untapped. As Brazil’s economy develops, more and more of its citizens will begin using digital payments. Though most payments are still conducted in cash, the shift is starting into the digital world, and it is showing up in STNE’s earnings and earnings estimate picture.
Earnings
Last quarter, EPS swung to a profit of $0.14 per share versus a loss the year before. Meanwhile, revenue jumped a healthy 52%. In the past 60 days, the Consensus Estimate Trend has been revised higher more than once for the next quarter and the full year.
Top Tier Industry Group
The Zacks Internet – Software Industry that STNE is in has been outperforming the market and is ranked in the top 27% of all groups tracked.
Relative Strength and Diversification
STNE checks all the boxes. First, since the company is international, it aids investors in gaining portfolio diversification. Secondly, the stock is showing strong relative strength. Over the past month, STNE is up by 30%, drastically outperforming the 3% gain in the S&P 500 Index.
From a technical perspective, the stock is trying to break over a key zone which it has failed at several times in the past. However, the recent relative strength coupled with the strong expectations going forward gives me confidence that this break-out will stick. If the stock can get and stay above the $12.50-$13 zone there is a ton of room to run.
Bonus: ARGT’s largest holding is MercadoLibre, the Buenos Aires-based e-commerce leader of South America. While MercadoLibre is based in Argentina, its largest market is Brazil. Recently, Brazil elected a new president who is likely to implement more stimulus in the form of welfare to its citizens. The move is expected to be a catalyst for MELI moving forward, and thus, the ARGT ETF.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.