Six Argentina-Based Investment Opportunities

Most investors know that the 'B' in BRIC stands for Brazil. But there is another country in South America experiencing growth. Argentina is the second largest country in South America and the eighth largest in the world. From an economic standpoint, the country has come back from 25% unemployment, defaulted government bonds and a 75% devaluation of their peso, which took place in 2002. With economic growth averaging around 9% over the last couple years, it appears that there might be investment opportunities there.

All of the companies discussed below are based in Argentina, and have ADR's [or ADS's] that trade on the New York Stock Exchange.

Investments and Representations Inc., also known as IRSA, also known as Inversiones y Representaciones S.A. (IRS) has the unforgettable stock symbol, IRS! This is a Buenos Aires based-real estate developer which is involved in residential properties, raw land, shopping centers, office buildings, and luxury hotels. It has a P/E of 23 and a P/S of 3.8. Its quarterly earnings growth year over year was up 388%, on a 53% increase in revenues

Telecom Argentina S A (TEO) is another Buenos Aires-based company. It is one of the largest providers of telecommunications services, and the primary company that serves the northern part of Argentina, including half of Buenos Aires. It also provides Internet services, directories publishing, and wireless services in Argentina. It has a forward P/E of 20 and a very high PEG of 20.

Telefonica of Argentina, Inc. (TAR), the other large telephone company in Argentina, provides domestic and international long distance services, public telephone services, and Internet services. Its P/E is a very high 333, with a P/S of 8.88. Its yield calculates out to over 11% but, that can't be relied upon because it is based on the first dividend it has paid in five years. The company has about $800 million in debt with only $96 million in cash.

Transportadora de Gas Del Sur S.A. (TGS) provides natural gas to residential, commercial, and industrial customers in Argentina. It has a P/E of 11 and a P/S of 2.8. Quarterly earnings year over year were down by over 26%.

YPF S.A. (YPF) is involved in the exploration, and production of oil and gas in Argentina. It has a P/E of 11, and a P/S of 2. It pays dividends at least once or twice a year, and its current yield is 9.2%. Its quarterly revenue growth was up slightly, but earnings were down over 45%.

Apco Argentina Inc. (APAGF) is a way of investing in Argentina by investing in a U.S. company. This is a Tulsa Oklahoma-based company that has its primary operations for the exploration, and production of oil and gas located in Argentina. It has a P/E of 17, and a P/S of 11.2. It even pays a yield of 1.6%. It has $50 million in cash and no long term debt.

Disclosure: The author does not own any of the above.

Comments

[Javaharv:]

Argentina is third most popular in S.America next to Columbia. Argentia is the 8th largest in size, not population. The eighth most populous country in the world is Bangladesh. Argentina is not even in the top twenty in population.

Why is land size a factor in investing?

2007 May 19 01:15 PM

[Stockerblog:]

According to the CIA World Factbook, Argentina is the second largest country by area in South America and the eighth largest by area in the world. Land size may not be a significant factor in investing, but because of its large size, it encompasses a substantial and diverse group of natural resources, including oil, natural gas, timber, sulfur, tungsten, uranium, gold, silver, zinc, magnesium, and copper. [Mining exports increased 500% in the last 10 years.] They also have an extensive amount of farm land and grazing land for cattle. Parts of Argentina are even suitable for growing vineyards, making Argentina the fifth largest wine producer in the world.

2007 May 20 11:35 PM

[Charles.IPG:]

It is not just the factor of large land mass, but the diversity of it's expansive terrain that make it an ideal country for investment. Argentina is a great producer and exporter of many diverse foods - including cereals, oils, milk, fish, olives and beef. It is also one of the most acclaimed producers of wine. Besides that, as the previous poster mentioned it is extremely rich in a diverse array of natural resources. I deal in Argentina real estate investment and find that many people are finding Argentina an ideal country for investment. This is because of it's great potential for price appreciation due to a rapidly recovering economy and continued interest from foreign investors.

2008 Oct 02 05:09 PM