10 Ways to Invest in Cuba - A New Emerging Market?

by: Stockerblog

Now that Fidel Castro has stepped down as leader of Cuba, many investors are looking at Cuba as being a new emerging market for investments. Here is some interesting trivia about Cuba:

  • It is the is the world's 17th largest island.
  • Private sector employment has almost tripled since 1981.
  • Tourism is the largest source of foreign income for the country.
  • Sugar is the second source of foreign income for the country.
  • Cuba specializes in medical tourism.
  • Its biggest export partners are export partners are the Netherlands, Canada, and China.
  • It has large reserves of oil in the North Cuba Basin.
  • It has the second largest nickel reserves in the world.
  • Here are ten ways to take advantage of a potentially new environment in Cuba:

  • Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) is the large mining company involved in the exploration and production of copper, gold, and silver, along with other minerals. The Moa Mine located at Moa Bay in Cuba is owned by Freeport-McMoRan, but was confiscated by Fidel Castro in the late 1950's revolution.

    The stock has a P/E of 14, a PEG of 0.17, and pays a yield of 1.8%.

  • Sherritt International (OTCPK:SHERF) is a Toronto, Ontario-based mining and oil and gas company that is one of the largest foreign investors in Cuba. It has more business in Cuba than any other Canadian company. As significant portion of its revenues are generated by the Moa Mine in Cuba, as a joint venture with a Cuban government company. It also operates the Varadero, Canasí, Yumuri, Puetro Escondido oil and gas fields leased in Cuba. In addition, Sherritt owns the Cuban electric utility Energas.

    The stock trades on the Toronto Stock Exchange in Canada, and on the Pink Sheets in the United States. It has a P/E ratio of 8.

  • Since more cruise travel should be opening up in the near future with Cuba, Carnival Corp. (NYSE:CCL), which is one of the largest cruise and vacation companies in the world, should plan to take advantage of this new market. The company's cruise lines, which operate out of North America, the United Kingdom, Germany and Italy, include Carnival Cruise Lines, Holland America Line, Princess Cruises, Seabourn Cruise Line and Windstar Cruises in North America; AIDA in Germany; Costa Cruises in southern Europe; P&O Cruises, Cunard Line, Ocean Village and Swan Hellenic in the United Kingdom; and P&O Cruises in Australia. It operates a fleet of 81 ships, and will be receiving another 20 ships between now and 2011. The company is headquartered in both Miami, Florida and London, England.

    It has a P/E of 14, PEG of 0.9, and a yield of 3.8%.

  • Royal Caribbean Cruises Ltd. (NYSE:RCL), which should also benefit from new business with trips to Cuba, owns Royal Caribbean International [19 cruise ships with over 44,000 berths] and Celebrity Cruises [9 cruise ships with over 15,000 berths]. It also owns Pullmantur S.A., which has five ships in Europe and Latin America. The company plans on having six more ships by the end of 2010. It also offers land tour vacations in Alaska, Canada and Europe. Its headquarters are located in Miami, Florida.

    It has a P/E of 13, a P/S 0.97, and a yield of 1.6%.

  • Herzfeld Caribbean Basin Fund Inc. (NASDAQ:CUBA) is a closed-end fund which is a diversified way of playing the Cuban economy. It invests in stocks of the Caribbean Basin Countries, and the United States.

    It has a P/E of 3.3, and has paid a dividend annually for the last three years.

  • The Cuban Electric Co. (OTC:CGAR) owns property in Cuba that was confiscated by Castro, and occasionally trades on the Pink Sheets.

  • Sol Melia (OTCPK:SMIZF) is based in Spain, and operates a quarter of the hotels in Cuba.

    Its net profit margin is 10.05%, and its return on average equity is 13.21%.

  • Altadis (OTC:ALTDF) of Spain, is a tobacco producer which owns half of Corporacion Habanos, a distributor of Cohiba and Montecristo cigars. It is in the process of being taken over by Imperial Tobacco (ITY).

    Its net profit margin is 6.25%.

  • Trailer Bridge Inc. (NASDAQ:TRBR) is a marine freight carrier between the U.S. and Puerto Rico, which is expected to benefit from expanding into Cuba at some point in the future.

    It has a P/E of 15.

  • Petroleo Brasileiro (NYSE:PBR) is in partnership with Cuba's government owned oil company.

    It has a P/E of 21.

  • Repsol YPF SA (REP) is a Spanish oil and gas company with significant operations in Argentina. The company is drilling for oil in Cuban coastal waters.

    The stock has a P/E of 9, a PEG of 1.57, and a yield of 3.6%

  • Stocks in other countries that may participate in the growth of Cuba, include Mexico, Colombia, Brazil and Argentina.

    Disclosure: The author owns CGAR.PK

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