Speculating on Cuba

01/24/2003 12:00 am EST

Focus:

Neil George

Editor-in-Chief, Income Publication and Products, Agora Financial

We strongly caution readers that a $0.65 stock is at best a speculation. Adding to its high risk nature, this stock is dependent on the potential for changes in US-Cuban relations and the possibility of the future opening of commercial markets on the Communist island. For those willing to gamble on such a possibility, two advisors suggest a penny stock play.

"Change may come in US and Cuba relations," notes Neil George, editor of bygeorgenewsletter.com as well as the Total Return Advisory. "With the Republicans taking control of the 108th Congress, there are some significant rumblings that the US might further ease embargo restrictions. One of the potential leaders of the movement to allow tourism and other transactions and interactions between the US and Cuba might well be Congresswoman Jo Ann Emerson (R-Mo.) of Missouri. She's traveled to Cuba and has had lots of interaction and chats with the top folks down in Havana.

"One of the longer-term ways of speculating on the eventual easing of restrictions (which would allow even more US tourists and business travelers to go to Cuba beyond the hundreds of thousands who already travel regularly) is a Canadian company called Leisure Canada (CA:LCN Canada). This company controls long-term leaseholds on prime properties in Cuba and is in the process of developing them for hotel and resort use. The stock is cheap and won't do much until the easing occurs. But when it does, the shares will become very attractive, and more likely much higher in price than the current 65 Canadian cents."

Adds Nancy Zambell, editor of UnTapped Opportunities, "I have followed  Leisure Canada for several years and continue to like the stock for the long-term. It looks like the company actually has some ground-breaking dates now, with its Monte Barreto property due to start in 9/03 and Cayo Largo soon thereafter. I have personally toured each of the sites slated for Leisure Canada hotels and can vouch that the company has some very fine real estate.Meanwhile, there is more pressure to demolish the silly embargo in the US legislature. The stage is set for a US explosion of tourism once the embargo is lifted. Already, 200,000 US citizens visit the island each year. And with most European countries already placing their hotels across Cuba, the US hoteliers will be rabid to catch up. The result will be a booming business. The firm is also benefiting from cash infusions. The chairman, Wally Berukoff, put another $2.5 million into the company in November. Although any new shares obviously will cause dilution, this is expected with a company in such a growth stage. Again, long-term is my outlook, but I think it will pay off- big."

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