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This company is a one-stop shop in the Brazilian ethanol market, meaning it should do well no matter how weakly other sectors fare, writes Rudy Martin of Latin Stock Investing.

With its stock price up 3.8% recently, leaving it ahead by 14.4% since it was added to our LSI Model Growth Stock Portfolio on January 2 of this year, Brazilian agricultural and energy firm Cosan (CZZ) provided a positive note to an otherwise generally dull week for Latin American stocks.

Cosan provides a living a case study in “vertical integration.” The Sao Paulo-based firm owns farmland upon which it grows and harvests sugar, mills and processes it in its own facilities, transports its output in its own shipping facilities, stores its products in its own warehouses, owns its own port facilities, and then distributes its ethanol-blend motor fuel to motorists at its own chain of approximately 4,500 Esso- and Shell-branded service stations.

If all that hasn’t been enough, Cosan recently boosted its credentials as a broad-based energy provider by acquiring 60.1% of the equity shares of Brazilian gas utility Companhia de Gás de São Paulo—Comgás (Bovespa: CGAS3).

The latest upward burst in Cosan’s stock price was triggered by an announcement a few days ago that it had knocked the cover off the ball in its 2013 fiscal third quarter, ended December 31. Total revenue of $4.3 billion was 33.1% higher than depressed results for the same quarter a year earlier.

Total net income of $173.5 million was up a resounding 265%, while EBITDA of $603.1 million came in 141.4% above the comparable figure from the same quarter the prior year. Fully diluted earnings per share at 36.5 cents per share amounted to a 243% improvement over comparable results for the three months ended December 31, 2011.

With the firm’s NYSE-listed ADRs priced at a shade less than 25 times trailing 12-month earnings, investors expect Cosan’s results to continue to improve.

Latin American economic growth is expected to accelerate in 2013. Latin America’s economy, after expanding an estimated 2.6% in 2012, is expected to grow 3.4% this year, according to Standard and Poor's Ratings Services. The numbers for both years trail the region’s average annual 3.5% annual pace of economic growth for the 2002 to 2011 period.

Brazil’s economy is expected to grow 3.2% this year, following an anemic estimated advance of 1% in 2012, according to the S&P report. The growth of economic activity in Mexico, on the other hand, is expected to ease to 3.5% in 2013 from that economy’s estimated 3.8% pace of expansion last year.

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Tickers Mentioned: CZZ

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