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7 Latin America Stocks to Buy for Geopolitical Protection

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·7 min read
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It’s a tough time for investors right now. A handful of headwinds and headlines are causing major uncertainty on Wall Street at the moment, and many sectors have struggled because of it. In the meantime, though, you might want to shift some of your assets to a more distant ecosystem like Latin America stocks.

Of course, moving your portfolio abroad features significant risks. However, there are two major flashpoints that could continue to cause havoc for many firms based in other parts of the world: inflation worries and the Russia invasion of Ukraine. That said, both factors are reason enough to consider Latin America stocks.

Moreover, what makes Latin America stocks such a great investment opportunity? Well, the region primarily features a younger workforce relative to mature economies across the globe. Therefore, it’s mathematically much easier to view the region as a viable long-term opportunity. Second, Latin America stocks feature a robust balance between human resources, natural resources and general political stability.

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With all of that in mind, many Latin America stocks have catalysts working in their favor at the moment. However, these seven stand out among the rest.

  • Cemex (NYSE:CX)

  • First Majestic Silver (NYSE:AG)

  • Coca-Cola Femsa (NYSE:KOF)

  • MercadoLibre (NASDAQ:MELI)

  • Credicorp (NYSE:BAP)

  • PagSeguro Digital (NYSE:PAGS)

  • Petrobras (NYSE:PBR)

As with any investment, Latin America stocks are not without risks. According to the World Economic Forum, “structural economic and social deficiencies in the region had not been resolved” before the pandemic. In addition, global disasters — like an all-out war — can easily filter down to every corner of the earth. Thus, due diligence is advised.

Latin America Stocks to Buy: Cemex (CX)

A person wearing work clothes scoops cement out of a bucket.
A person wearing work clothes scoops cement out of a bucket.

Source: chomplearn / Shutterstock.com

As a multinational building materials firm headquartered in San Pedro, near Monterrey, Mexico, Cemex is an intriguing idea among Latin America stocks to buy due to the housing boom and the search for affordable residential units. Yes, the headlines typically focus on the U.S. market because we live here. However, the bullishness for real estate has gone global.

Theoretically, this backdrop bodes well for CX stock, except for one inconvenient fact: so far this year, Cemex shares are struggling. Year-to-date (YTD) CX stock has declined by more than 25%. Furthermore, nearer-term momentum appears weak, with CX stock down 13% over the past two weeks.

But if you have a patient outlook regarding Latin America stocks, Cemex should be worth your consideration. While annual sales took a dip in 2020 because of the novel coronavirus pandemic, the loss wasn’t too bad. And with a $14.5 billion revenue tally in 2021 — about 11% above 2019’s result — Cemex seems to be on solid footing.

First Majestic Silver (AG)

Macro of silver
Macro of silver

Source: Phawat / Shutterstock.com

To be fair, First Majestic Silver is not technically one of the Latin America stocks, considering that it’s headquartered in Vancouver, Canada. However, the firm has major operations based in Mexico. So, why mention AG stock?

Simply, the underlying business — a silver mining operation — focuses on Mexico, specifically in the municipality of San Dimas. Overall, our neighbor to the south is an ideal location for a mining firm. And because Mexico is such an important trading partner for the U.S. — actually, the trading partner — its government is unlikely to deliberately ruffle feathers.

Moreover, the other factor that makes First Majestic an intriguing idea among Latin America stocks is the namesake business. Over the next several months, it’s quite possible for precious metals to rise higher. Yes, the metals have been disappointing. But with the current market environment, they could prove to be a valuable investment opportunity.

Latin America Stocks to Buy: Coca-Cola Femsa (KOF)

Close-up photo of hands holding glass Coca Cola (KO) bottles, clinking them together. One hand has a bottle opener and is opening a bottle.
Close-up photo of hands holding glass Coca Cola (KO) bottles, clinking them together. One hand has a bottle opener and is opening a bottle.

Source: BORIMAT PRAOKAEW / Shutterstock.com

We all know that Coca-Cola (NYSE:KO) is the most popular soda in the U.S. However, here’s a learn-something-new moment (at least for me): Coca-Cola is incredibly popular in Mexico, to the point of being integral in everyday life.

I’m not making this stuff up. From a Business Insider report, the average Mexican consumer drinks more than 700 cups of Coke every year. That’s nearly double what the average American consumer gulps down.

Therefore, if you’re looking for one of the more viable Latin America stocks, you should consider Coca-Cola Femsa — the largest franchise bottler of the iconic brand in the world. While sales did slip more than 5% in fiscal year 2020, the company is working hard on a comeback in recent quarters. In fact, in its most recent quarterly report, the firm said total revenues for FY 2021 were 6.1% better year-over-year (YOY).

MercadoLibre (MELI)

MercadoLibre (MELI) homepage on a smartphone
MercadoLibre (MELI) homepage on a smartphone

Source: rafapress / Shutterstock.com

Headquartered in Buenos Aires, Argentina, MercadoLibre operates an online marketplace focusing on e-commerce and online auctions. For those with a long-term perspective on Latin America stocks, MELI stock should be on your radar. With the underlying region featuring roughly 300 million digital buyers and growing, MercadoLibre stands poised to become even more relevant over the next several years.

What’s incredibly encouraging for the company is that the momentum accrued during the Covid-19 lockdowns has more than sustained itself. In 2020, MercadoLibre rang up top-line sales of $3.97 billion, up 73% from the prior year’s tally. Then, in 2021, it generated a staggering $7.1 billion, up 78% from 2020’s haul.

Additionally, during the fourth quarter of last year, the e-commerce platform posted sales of $2.13 billion, up 64% from the year-ago quarter. So, what has all this translated to in the market? A loss, surprisingly, of 18.5% YTD.

Still, this could be stemming from the natural jitters of the current market environment following a rough recovery from the pandemic. Thus, speculators may have a contrarian opportunity.

Latin America Stocks to Buy: Credicorp (BAP)

Stock market or forex trading graph and candlestick chart suitable for financial investment concept. Economy trends background for business idea and all art work design. Abstract finance background.
Stock market or forex trading graph and candlestick chart suitable for financial investment concept. Economy trends background for business idea and all art work design. Abstract finance background.

Source: Shutterstock

I’m going to try to spread the love as much as I can with Credicorp, the largest financial holding company in Peru. While plenty of Latin America stocks are focused on energy and natural resources — don’t get me wrong, these business are incredibly viable right now — it’s also important to note that there’s a real economy in the region.

Indeed, Peru’s economy grew 13% last year, according to a Reuters report. This tally beat out estimates made earlier that year. As we settle into a more normal routine regarding the pandemic, the country’s finance minister expects its economy to grow between 3.5% and 4%.

Interestingly, shares of Credicorp are up more than 24% YTD, making it one of the best-performing Latin America stocks available. Clearly, investors expect good things from BAP stock, which isn’t unreasonable given its distance away from key geopolitical flashpoints.

PagSeguro (PAGS)

UOL Pagseguro credit and debit card machine called Minizinha.
UOL Pagseguro credit and debit card machine called Minizinha.

Source: rafastockbr / Shutterstock.com

Based in Sao Paulo, Brazil, PagSeguro is a financial services and digital payments company. Primarily offering payment processing software for e-commerce websites and mobile applications, PAGS fits in very well with the other Latin America stocks mentioned on this list. Again, the approximately 300 million digital buyers should bolster PAGS over the long run.

But while the narrative sounds good in theory, in actuality, PAGS has been extremely choppy. Since its initial public offering (IPO) — specifically its first public closing session — shares have tanked over 49%. On a YTD basis, PAGS is down more than 43% while against the trailing year, it’s hemorrhaged nearly 76%.

So, be warned: you want to perform extra due diligence with this one.

Latin America Stocks to Buy: Petrobras (PBR)

the Petroleo Brasileiro (PBR) logo on a building during daylight
the Petroleo Brasileiro (PBR) logo on a building during daylight

Source: A.PAES / Shutterstock.com

Though it’s officially titled Petróleo Brasileiro, the Rio de Janeiro, Brazil-based petroleum specialist is best known as Petrobras. Based on the present global context, Petrobras could be the most viable among the Latin America stocks on this list.

On a YTD basis, PBR stock is up almost 33%, making it one of the top performers of 2022. Over the trailing year, shares have skyrocketed to the tune of 87%. Of course, this dynamic is mostly due to the geopolitical flashpoint in Ukraine. And with this ongoing conflict, its country’s oil supply could be shelved for quite some time.

In other words, it’s a dire situation that would likely see fossil fuels swing higher in the near term.

And while clean and renewable energy is an alternative, it’s going to take a while for such infrastructures to be fully integrated. Therefore, PBR stock could be extremely relevant, if only for cynical reasons.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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