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How would you like to
get a cut of the take almost every time someone pops open a beer in
Chile... or a bottle of juice or mineral water for that matter?
When a Chilean says, "Una
cerveza, por favor," seven times out of eight, he's getting a brew
made by the most profitable company in Chile. It absolutely
dominates Chile's beer market with an 85% market share.
This brewing giant is
not only the largest beer maker in Chile, it's the second-largest in
Argentina, too -- thanks to its hugely popular Cordoba beer. And
Argentina's market is four times bigger than Chile's.
It is Chile's only
bottler of Pepsi, Dr. Pepper, Snapple, Crush and Canada Dry. The
company also distributes Heineken, Corona, Negra Modelo, and
Guinness.
The company also has 65%
of the mineral water market in Chile, 45% of the market for pisco, a
popular type of brandy ... and an astounding 100% of the fruit juice market.
A company this dominant
would be banned in most countries. This aggressive growth machine
would be slammed with anti-trust lawsuits if it were U.S. based. Yet
you can buy this virtual Chilean monopoly right here on the NYSE for
only nine times earnings. Compare that to the average beverage
industry stock, which is twice as expensive, selling for 18 times
earnings.
In my 21 years of
scouting out special situations for investors, I've rarely seen a
stock with so many things going for it. It's exactly the sort of
locked-in profit play I've spent my career looking for.
Its semi-annual dividend
tripled between 2004 and 2007, and this year it rose another +45%.
The stock yields 5.1% at current prices.
The only thing different
from a year ago is that the stock is cheaper for U.S. investors.
That's because the Chilean peso has weakened against the dollar.
Over the next year, I expect the peso to rally as investors slowly
sell their U.S. Treasury bills and diversify into emerging markets
again.
In fact, I believe this
stock could easily double within a year.
Whatever Angle You Look at, It's
Bullish
The company I've found
is in a sweet spot that most companies can only dream about.
It's in a
recession-proof business -- people drink in good times
and bad.
Take virtually anything
people drink in Chile, and this company has a hand in it. Almost
every time someone pops open a drink... a few more pesos end up in
its coffers.
The company has
extremely well-established brands and superior distribution, making
it difficult for competitors to make headway.
With dominant market
shares come very high profit margins -- sales have doubled over the
past four years. Although the recession will dampen growth for the
next two or three quarters, it should stay positive.
In fact, sales should
rise about +8% annually over the next several years thanks to
population and income growth and rising sales for its higher-priced
items. Earnings are estimated to continue growing at a +5% pace over the
long term. This should help support steadily rising dividends.
Through good times and
bad, it keeps plowing ahead. Since listing on the NYSE in 1992, the
stock has soared 333%--more than doubling the S&P 500.
Here's the clincher. On
top of solid growth it also gives you a CD-crushing
5.1% yield.
The dividend has soared from 65 cents to over $1.50 in the past five years.
And it's wallowing in liquidity, which means your dividends are
secure. It's next dividend comes out in April, and I've positioned
my "Reliable Income" portfolio from my newsletter, High-Yield
International, to take it.
Good Investing!
Nick Lanyi
Editor --
StreetAuthority High-Yield International
P.S. I am continuing to identify attractive
high-yielding investments around the world that I think
offer the potential for outsized gains over the next year or
two. If you'd like to receive in-depth coverage of today's
most compelling international income opportunities, I
recommend you check out my monthly newsletter
here.
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