PriceSmart offers great exposure to Caribbean area and operates similar to Costco.
Manchester United will have huge sponsorship deals in 2014 from Nike and GM.
Fomento remains a great pick for a thriving Mexican convenience and beverage market.
The 2014 World Cup kicks off in Brazil on Thursday, June 12th. A total of 32 teams will compete to win the quadrennial tournament. While Brazil could be the biggest country to prosper, with millions traveling to the region to watch games featuring their favorite countries, there are other companies that could also benefit from a strong tournament.
Aside from the companies that will benefit directly from the tournament, I thought it would be fun to look at companies headquartered or with a large presence in each of the countries. My goal of selecting one stock and ETF for every country is to introduce some unknown companies to investors and also show off some forgotten ideas.
The picks are listed in several articles, broken down by geographic region. Ideas for stocks were not found for Honduras, Iran, or Algeria. Information was obtained from ETF Database and the World Bank for many of the picks.
Stock Pick: PriceSmart (NASDAQ:PSMT)
PriceSmart has been one of my favorite retailers for quite some time. The company made one of my top ten lists some time ago and has been on my radar ever since. Picture a smaller version of Costco in an emerging market and you can see the growth possibility for PriceSmart.
PriceSmart has 33 warehouses in 12 different countries, and with 6 stores, Costa Rica is the largest represented. There is also a distribution center located in Costa Rica, one of several the company has to supply products to all of its stores. Costa Rica is also the possible tester for a platinum membership card, as it is the only region with it available. The card comes with an annual membership of $75 with a 2% rebate up to $500. A normal membership costs $35 annually.
The company continues to see huge growth. In the second quarter, sales were up 11%. Earnings per share rose from $0.82 to $0.93 in the quarter. Analysts see revenue growing 11% and 14% over the next two respective years. Shares trade with a high valuation, but the growth is coming as the company continues to expand and sees Colombia as one of its key markets going forward. This is a great stock for a portfolio and one of my favorite to recommend in this project.
Shares of PriceSmart have risen 425% in the last five years. Over the last year, shares are up only 3%. In 2014, shares have actually fallen 18%. It seems all the growth was made two to three years ago, as investors finally took profits and didn't agree with high valuations. However, I believe with shares trading at this level, they look extremely attractive for the long haul.
Stock Pick: Fomento Economico Mexico (NYSE:FMX)
Those familiar with my writings will remember that Fomento was one of my top ten stock picks for 2014. I gave three reasons I loved the company for 2014. Those reasons were: Oxxo growth-cross selling, bet on Mexico, and beaten down shares.
Fomento has three huge business segments with Oxxo, Coke Femsa (NYSE:KOF), and Heineken. Oxxo is the largest retailer in Latin America. Coke Femsa, 49% owned by Fomento, is one of the largest beverage bottlers in Latin America. Through a transaction to sell its former beer segment, Fomento is now a 20% owner of Heineken, one of the world's largest beer companies.
I highlighted the World Cup and Olympics in the article, due to the fact that Coke Femsa acquired a Brazilian beverage company that would give it reach to 33% of Brazil's population. Coke Femsa is continuing strong expansion through Brazil and the Philippines, along with expansion across its already strong Mexican footprint.
In the first quarter, Fomento saw impressive revenue growth of 14.3%. Coke Femsa saw growth of 15.3%, while the Comercio unit led by Oxxo saw growth of 12.3%. The company's continued expansion of Oxxo, including strong growth in Colombia, and Coke Femsa through acquisitions, will power Fomento shares higher. Shares remain up only 3% in 2014, despite a strong first quarter.
ETF Pick: iShares MSCI Mexico (NYSEARCA:EWW)
The oldest Mexico ETF, iShares MSCI, has been around since 1996. The ETF is currently trading close to 52-week highs, due to a strong run by Mexican stocks.
The iShares ETF has over $3 billion in assets under management. The fund, which owns 52 stocks, has many recognizable names including: American Movil (NASDAQ:AMOV), Fomento, Televisa (NYSE:TV), Cemex (NYSE:CX), and Wal-Mart de Mexico (OTCPK:WMMVF). With the ETF, you get huge access to the largest retailers and telecommunications plays in the country and surrounding areas.
Stock Pick: Manchester United (NYSE:MANU)
This is a pretty fun stock pick for the 2014 World Cup, as Manchester United is well represented in Brazil. Louis Van Gaal will become the new head coach of Manchester United after the World Cup is over. Other players from Manchester United participating in the tournament are:
- David De Gea (Spain)
- Juan Mata (Spain)
- Robin Van Persie (Netherlands)
- Shinnji Kagawa (Japan)
- Wayne Rooney (England)
- Danny Welbeck (England)
- Phil Jones (England)
- Chris Smalling (England)
- Javier Hernandez (Mexico)
- Antonio Valencia (Ecuador)
- Patrice Evra (France)
- Nani (Portugal)
- Morouane Fellani (Belgium)
- Adnon Januzaj (Belgium)
As you can see, Manchester United is well represented at the World Cup. When the players get home, they will find themselves entering a season that will hopefully be a return to the top of the standings, after a seventh place finish in the English Premier League.
While the poor finish knocks Manchester United out of next year's prestigious Champions League and takes away the nice broadcasting revenue that goes along with it, the team will manage to survive with new sponsorship deals coming. Daily Mail reports Nike (NYSE:NKE) is in the process of signing a new 10-year shirt deal that will pay $100.5 million annually. This is a very large increase from the current $39.4 million collected annually from Nike. The Nike deal is in addition to a new $58.6 million annual sponsorship deal from GM's (NYSE:GM) Chevrolet unit that begins next season.
Through the first nine months of the current fiscal year, Manchester United seems to be clicking on all fronts. The commercial segment has seen revenue increase 26.6%, with sub-segment sponsorships seeing an increase of 43.5%. Broadcasting revenue is up 35.7% in the first nine months. Matchday revenue is up only 1.7%.
It is important to note that through nine months, the commercial segment represents 43% of total revenue. To shareholders, the company's advertisement and shirt deals are more important than winning matches or attendance. Obviously, those two items attribute directly to financial strength in the commercial segment though. It is the strength of the commercial segment that prompted me to call Manchester United a "consumer goods and licensing play that participates in sports" back in 2012.
Shares of Manchester United are now up 13% in 2014 and have increased a nice 24% from their 2012 IPO. Analysts see the company increasing revenue by 18% in the current fiscal year. It will be interesting to see what analysts predict for next year and how much of a weight they put on the lack of broadcasting revenue. I believe shares can go higher with the coming sponsorship deals and a return to form in the next season.
ETF Pick: High Dividend Yield ETF (NYSEARCA:VYM)
It's nearly impossible to select just one ETF for the United States, with hundreds to choose from. I am going with this low-cost (0.10% expense rate) dividend focused large cap fund. The fund recently hit a new 52-week high, but continues to be a great long-term pick, with exposure to some of the largest companies in the world.
This ETF, created in 2006, has 395 holdings. The fund has 86% of assets in large cap stocks. Technology (16%), consumer (14%), and financials (12%) make up the largest segments. Here are the top ten stocks in the fund: Apple (NASDAQ:AAPL), Exxon Mobil (NYSE:XOM), Microsoft (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), General Electric (NYSE:GE), Wells Fargo (NYSE:WFC), Chevron (NYSE:CVX), Procter & Gamble (NYSE:PG), JPMorgan (NYSE:JPM), and Pfizer (NYSE:PFE). That's quite the impressive list for this great dividend fund.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.