CHICAGO, Sept. 23, 2011 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Bancolombia S.A. (NYSE: CIB), Copa Holdings S.A. (NYSE: CPA), PriceSmart, Inc. (Nasdaq: PSMT) and Global X FTSE Colombia 20 (NYSE: GXG).
3 Ways to Buy Colombia Right Now
As an investor, it can be difficult to "play" the smaller emerging market growth stories. Compared to the BRICs, there are far fewer Colombian companies that trade on the American stock exchanges. Their companies aren't mature enough yet.
But never fear. There are still opportunities available for those who dig a bit deeper.
1. Buy Colombian Companies
While there isn't as much choice as buying a Brazilian or Chinese company, there are still some Colombian companies that trade directly on US exchanges.
Bancolombia S.A. (NYSE: CIB) is one of the best known Colombian companies. Bancolombia was founded in 1881 and has 895 branches in Colombia.
It also does business in El Salvador. You may not be familiar with it, but it is not small with a market cap of $47 billion.
It has an impressive ROE track record, averaging 19% over the past 8 years, which is very solid for a bank especially during a global recession. Its current ROE is 21% well above its peers at 15%.
Bancolombia is expected to grow earnings over the next two years by 9.8% and 17%, respectively. This Zacks #2 Rank (buy) has a P/E of 14.8. It also pays a decent dividend of 2.3% which it did not cut during the global crisis.
Shares haven't been nearly as weak as US and European banks as it is somewhat insulated from the Eurozone problems. But a sell off would make shares an even more attractive buy.
2. Buy Global Companies Doing Business in Colombia
Investors aren't the only ones who see opportunities in Colombia. Many multinationals have moved in and are expanding operations in the country.
Copa Holdings S.A. (NYSE: CPA) is a low cost airline headquartered in Panama City. It services 59 destinations in 25 countries and flies to all the major airports in Colombia including Cartagena, Medellin and Bogota.
The company is well positioned to benefit from the growing Latin American middle class. Earnings are expected to grow about 27% in 2011 which is strong growth for an airline.
Yet Copa also has excellent valuations with a forward P/E of just 10.7. This Zacks #2 Rank (buy) also pays a dividend, yielding a solid 2.3%.
PriceSmart, Inc. (Nasdaq: PSMT) is a San Diego-based retailer which operates 29 warehouse clubs in the Caribbean and Latin America. On Aug 19, it opened its first club in Barranquilla, Colombia.
It has experience operating in the region, as it already has 4 clubs in nearby Panama. Some analysts believe Colombia could be one of its largest markets.
This Zacks #1 Rank (strong buy) is not cheap. It is trading at 27x forward estimates as the stock has recently soared to multi-year highs.
But it does have earnings growth, which is expected to be 29% in 2011. It also pays a dividend, which is rare for a retailer of its size, which currently yields 0.8%.
3. Buy a Colombian ETF
The investment world is figuring out that Colombia is hot. In the last several years, a couple of Colombia specific ETFs have been launched. The Global X FTSE Colombia 20 (NYSE: GXG) is the most heavily traded of the ETFs. It is an index of the 20 most liquid stocks in the Colombian market.
Its largest holding as of June 30, 2011 is, not surprisingly, Bancolombia at 13.9% of the index. Banks make up 21.2%, Financial Services are 20%, Oil & Gas are 17.1% and Industrials are 10.7% of the index.
The ETFs can be a good way to get a broad base of exposure and to buy companies that otherwise would not be available because the company isn't traded on a US or European exchange.
Make a Bet on the Future
Even as the global economy seems to be slowing, some countries like Colombia find themselves with plenty of natural resources, an emerging middle class, and stable lending institutions. Now's the time to consider taking a chance on Latin American growth.
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