In the last few weeks, I’ve posted articles about the BAC stocks, Brazil, Argentina and Chile. South America has another country that has a few publicly traded stocks that have benefited from the high prices of metals and minerals. Peru does has a few disadvantages from an economic standpoint, such as having over 51% of its population considered poor, and almost 20% considered extremely poor.
But the country does have some positives, making a review of Peruvian stocks worth considering:
1. Strong exporter of copper, cotton, guano, sugar and oil.
2. Elimination of price controls.
3. Elimination of restrictions on foreign direct investments.
4. Continuation of privatization of state owned companies.
5. GDP grew 7.7% in 2006.
6. They signed the Peru Trade Promotion Agreement with the United States.
7. They have free trade agreements with Brazil, Argentina, Uruguay, Venezuela, and Paraguay, and Thailand.
8. They are working on free trade agreements with Chile, India, Mexico, and Singapore.
9. Fourth largest South American country by population.
10. It is rated number 50 in terms of GDP purchasing power parity, ahead of Ireland, Finland, and Israel.
The Lima, Peru based company, Compania de Minas Buenaventura SA (BVN) is the largest publicly traded Peruvian mining company; they are in the business of mining and processing of gold, silver, zinc, and copper. They have a P/E of 12 and a forward P/E of 9.4, with a yield of 2.2%. They have paid dividends twice a year since 1997. The company has recently unwound a substantial portion of its hedging transactions.
Peru Copper Inc. (CUP), although based in Vancouver, Canada, owns Minera Peru Copper S.A., which has its operations in Peru. The company is in the business of acquisition and exploration of copper mining properties in Peru. The stock, which has a market cap of $574 million, has negative earnings. Return on equity and operating cash flow are also negative. A possible takeover offer on this stock recently fell through.
Northern Peru Copper (NPUCF.PK), is involved in the development of copper, gold and molybdenum properties in the northwest portion of Peru. Their corporate offices are also based in Canada, with their operations in Peru. Earnings have been negative for the last couple years. The stock has a market cap of approximately $272 million.
Southern Copper Corp. (PCU) mines for copper, molybdenum, zinc, and silver in the Andes Mountains of Peru, although their corporate offices are located in Phoenix, Arizona. The stock has a P/E of 12 and pays a high dividend of 6.9%, and payments have been made every quarter for over ten years.
Cememtos Lima SA SPO (CEMTY.PK) is a major cement producer in Peru. Unfortunately there is little financial information available on the company. The same is true of Telefonica Movi Peru (TMVCF.PK), the large Peruvian telecommunications company and Gold Hawk Resources (CGHRF.PK), a gold and silver mining company.
Mark Turner wrote an excellent article a few months ago about the Peruvian stocks, and their advantage due to their lack of publicity.
Author does not own any of the above.