6 Energy and Ag Plays Heating Up

10/11/2012 8:30 am EST


Rudy Martin

Editor, Investing Insight

If you don't want to wait around for Europe to heal, China to wake up, or the US to hit the gas, look at what's happening in Latin America, advises Rudy Martin of Latin Stock Investing.

With little tangible progress in resolving Europe’s financial woes, nothing of substance to cheer about in Asia, and mixed news on the US economy, stock markets across the globe were generally indecisive during the third week of September.

The lackluster economic ambience, combined with an absence of any segment pressing to assert stock-market leadership dictated a wait-and-see posture for the Latin Stock Investing Model Portfolios. But as was mentioned in this space a week ago, investment possibilities in the agriculture sector are being considered. In addition, the list below of companies currently being closely watched includes an interesting energy investment:

Seadrill (SDRL), headquartered in Bermuda, is an offshore drilling firm providing worldwide offshore drilling services to the oil and gas industry. Its primary business is the ownership and operation of jack-up rigs, tender rigs, semisubmersible rigs, and drillships for operations in shallow, mid- and deepwater areas, and in benign and harsh environments.

Bunge (BG) is a global agribusiness and food company. It conducts its operations in four divisions: agribusiness, sugar and bio-energy, food and ingredients, and fertilizer. These divisions include five business segments: agribusiness, sugar and bio-energy, edible oil products, milling products, and fertilizer. In December 2011, it acquired the food division of Hypermarcas in Brazil.

Cosan (CZZ) is a Brazil-based holding company primarily engaged in the distribution and commercialization of fuels. Vertically integrated, Cosan’s various division control everything from sugar fields, to sugar and ethanol processing plants, to transportation, distribution, and storage facilities for its products, to service stations and convenience stores.

Cresud (CRESY) is an Argentina-based company engaged in production of basic agricultural commodities, in addition to the development and sale of properties. The company is involved in crop production, milk production, and beef cattle production. Its crop cultivation activities include wheat, corn, sunflower, and soybeans, among others.

The company also focuses on the development of agricultural properties, and provides commodity brokerage services. A subsidiary is involved in the acquisition and development of shopping centers, offices, and luxury hotels. As of June 30, 2011, the company owned 25 farms with 473,243 hectares of land.

Industrias Bachoco SAB de CV (IBA) is a Mexico-based holding company primarily engaged in poultry production. The company’s main product lines include chickens, table eggs, pork, turkey, and other poultry-related products.

Sociedad Quimica y Minera de Chile SA (SQM) is a Chile-based company engaged in the production of specialty plant nutrients and chemicals commodities. Its various divisions include:

  • Plant nutrition, including the production of organic fertilizers and nutritional solutions;
  • The extraction and production of iodine derivates;
  • Lithium, principally used in the production of rechargeable batteries;
  • Industrial chemicals, active in the production of such chemicals as sodium nitrate, potassium nitrate and boric acid, among others; and
  • Potassium, which includes the production of potassium chloride and potassium sulfate.

All companies with US-listed stocks domiciled in Latin America or doing significant business in the region are watched by Latin Stock Investing as possible Model Portfolio candidates. For various reasons, including food disruptions caused by the US drought, the ones above have been receiving particular attention.

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