5 Chilean stocks unshaken by the quake
Latin America is still a booming emerging market, and these picks are cashing in.
A 6.6 magnitude aftershock shook the region of Concepcion last night, the second major tremor in the wake of the severe earthquake early Saturday that measured 8.8 on the Richter scale.
There is a lot of uncertainty in the region as the clean-up continues and fears of another quake persist. Infrastructure damage is substantial, and critical ports in this export-reliant nation are only operating at about 50% of capacity. But before investors start running for the exits to dump their Chilean stocks, let me reassure you that there still some great finds in this region. These Chilean stocks are unshaken despite the mayhem in the region.
The first is Chile's A.F.P. Provida (PVD). Providia is the largest private pension fund management company in Latin America with approximately $35 billion in assets under management. The country's social security system was privatized in 1981, and workers are now required to pay into these funds. The company has more than 3 million customers and more than 120 offices throughout Chile and controls nearly a third of the pension fund market in Chile. Seeing as this domestically traded ADR keeps most of its profits on paper, it should remain unaffected by the recent earthquake. The stock was trading near its 52-week high of about $51 before the quake and but shares have been pushed down in the mid-$40s. That provides a great buying opportunity. Jump into this stock as long as prices are under $48.
My next Chilean ADR to buy is Enersis (ENI). This company is the largest utility in Latin America. Based in Chile, the company distributes power to almost 12 million customers (approximately 45 million people) in regions of Chile, Argentina, Brazil, Colombia and Peru. ENI shares have traded essentially flat in spite of the quake, because the company has operations beyond the region that will keep it profitable. And as booming Latin American economies increase their demand for electricity in the months ahead, this ADR will be flying high. ENI shares are trading at around $21.50, and are a good buy under $24.
Three other Chilean ADRs to consider are:
Chile Endsea (EOC): This ADR is known as Empresa Nacional de Electricidad formally, and is the largest power generator in Chile and a top generator in South America. Enersis owns a 60% stake in this pick.
LAN Airlines (LFL): This regional airline transports passengers throughout Chile and Latin America. With about 70 passenger aircraft and 10 freighters, the company is nimble enough to adapt to economic conditions -- but big enough to cash in on the growth of this emerging market.
Sociedad Quimica y Minera (SQM): A leading chemical company, SQM provides agricultural products to farmers around the world. But perhaps its most profitable angle is lithium mining. This element is crucial to fast-charging batteries in electronics and hybrid automobiles.
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With the universe of this category in its seasonal sweet spot, these picks have tailwinds propelling them into the new year.
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