Sherritt Wins If U.S. Relaxes Cuba Stance

The 47-year-old trade embargo that the United States put on Cuba still stands, but America is clearly easing its stance on its communist neighbour. This week, President Barack Obama announced plans to lift some minor restrictions on travel and business, and got a positive response from Cuba.

This is excellent news for Sherritt International Corp.(SHERF.PK)(TSX:S), according to Desjardins Securities analyst John Hughes. Sherritt is by far the biggest foreign investor in Cuba and has called for an end to the trade embargo for years.

"Any move toward 'normalizing' U.S. trade relations with Cuba would be positive for Sherritt, as the company's Cuban operations accounted for 65% of total revenue and 82% of consolidated operating earnings in 2008," he wrote in a note to clients.

Mr. Hughes maintained a "buy" rating on the stock and hiked his price target 27% to C$5.30 a share. He noted that the new target assumes that existing trade sanctions remain in place, but the higher multiple reflects the positive tone of discussions underway between the governments.

Sherritt operates the Moa nickel-cobalt mine in Cuba in a joint venture with the government, along with oil and gas and power assets.