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Contrarian, macro, hedge fund manager, Emerging Markets
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Summary

  • Pricesmart is emerging as the Costco of Latin America and the Caribbean.
  • Current valuation for stock is fair.
  • Technical picture is optimistic.

Pricesmart (NASDAQ:PSMT) is the Costco of Central America and the Caribbean. It operates warehouse clubs in Costa Rica, Panama, Trinidad and Tobago, Guatemala, the Dominican Republic, Colombia, El Salvador, Honduras, Aruba, Barbados, Jamaica, Nicaragua, and the United States Virgin Islands. Previously the isolation and small market sizes of these countries prevented entry of big box stores, but Pricesmart has now been able to fill that niche. As a result earnings growth has been high at over 15% per year since 2009, and is expected to continue to grow at the 15% per annum range. The one risk that can derail Pricesmart's growth is the aggressive entry of Wal-Mart (NYSE:WMT) into larger Latin American markets such as Mexico.

In the video below, I go into more detail about Pricesmart's stock, the story that can drive its growth further, how its current price represents a fair valuation for the stock, and why the stock is worth buying upon a weekly close above $90 per share.

Source: PriceSmart: Bullish Or Bearish?