In the last few weeks, I’ve posted articles about the BAC stocks, Brazil, Argentina and Chile. South America has another country that has a few publicly traded stocks that have benefited from the high prices of metals and minerals. Peru does has a few disadvantages from an economic standpoint, such as having over 51% of its population considered poor, and almost 20% considered extremely poor.
Below is a list of some of its positive aspects, which makes a review of Peruvian stocks worthwhile:
It is a strong exporter of copper, cotton, guano, sugar and oil. It eliminated price controls. It eliminated restrictions on foreign direct investments. It is continuing the privatization of state owned companies. Its GDP grew 7.7% in 2006. It signed the Peru Trade Promotion Agreement with the United States. It has free trade agreements with Brazil, Argentina, Uruguay, Venezuela, and Paraguay, and Thailand. It is working on free trade agreements with Chile, India, Mexico, and Singapore. It is the fourth largest South American country by population. It is rated number 50 in terms of GDP purchasing power parity, ahead of Ireland, Finland, and Israel.
These are some of the Peruvian stocks worth taking a look at:
The Lima, Peru-based company, Compania de Minas Buenaventura SA (NYSE:BVN) is the largest publicly traded Peruvian mining company. It is in the business of mining and processing of gold, silver, zinc, and copper. It has a P/E of 12, a forward P/E of 9.4, and a yield of 2.2%. It has paid dividends twice a year since 1997. The company has recently unwound a substantial portion of its hedging transactions.
Although it is based in Vancouver, Canada, Peru Copper Inc. (CUP), owns Minera Peru Copper S.A., which has its operations in Peru. The company is in the business of the acquisition and exploration of copper mining properties in Peru. The stock, which has a market cap of $574 million, has negative earnings. Its return on equity and operating cash flow are also negative. A possible takeover offer on this stock recently fell through.
Northern Peru Copper (OTC:NPUCF), is involved in the development of copper, gold and molybdenum properties in the northwest portion of Peru. Its corporate offices are also based in Canada, with its operations in Peru. Earnings have been negative for the last couple years. The stock has a market cap of approximately $272 million.
Southern Copper Corp. (PCU) mines for copper, molybdenum, zinc, and silver in the Andes Mountains of Peru, although their corporate offices are located in Phoenix, Arizona. The stock has a P/E of 12, and pays a high dividend of 6.9%. It has made payments every quarter for over ten years.
Cememtos Lima SA SPO (OTCPK:CEMTY) is a major cement producer in Peru. Unfortunately there is little financial information available on the company. The same is true of Telefonica Movi Peru [TMVCF.PK], the large Peruvian telecommunications company and Gold Hawk Resources [CGHRF.PK], a gold and silver mining company.
Mark Turner wrote an excellent article a few months ago about the Peruvian stocks, and their advantage due to their lack of publicity.
Disclosure: The author does not own any of the above.