Dunnan on Dollars Personal Finance Tips from Nancy Dunnan Investing in Cuba
Fidel Out? Trade In? February 22, 2008 - Well maybe. Maybe not. But it doesn't hurt to think about the possibilities. Remember, for years we had difficulty investing in China and look what's happened there. And before that there was post-war Germany and post-Communist Russia. ************** Fidel is stepping aside and his brother will be taking his place. U.S. officials, wondering just how different Cuba will be when ruled by brother. And most U.S. officials, taking the conservative path, have said that it's still unlikely we will lift an almost five decade old embargo just because of the change in leadership.
Nevertheless, the chairman of the Senate Finance Committee is on record as saying it's time for a new look at our arrangement with Cuba. That comes from Max Baucus, Democrat from Montana. And, as he noted when speaking with the press, in one way, the embargo has already been broken, or perhaps side-stepped is a better term - in that American farmers export millions of dollars worth of commodities to Cuba yearly. They are able to do so based on a law passed in the year 2000.According to Baucus, if all export restrictions were ended, our agricultural sales to Cuba would go up by about $300 million a year. Meanwhile, for those of you who enjoy speculating, or at least thinking about doing so, here are some possibilities - with no guarantees attached. The Cruise Ship Industry This should come as no surprise. Cuba would be an excellent destination for cruise ships. Add to that the fact that more and more Americans are vacationing via ship - they consider it easy (everything is pre-planned), relatively safe (ships are not likely to be targeted by terrorists), comfortable (often you unpack only once) and predictable (many are all-inclusive or almost so. Thus you know how in advance much your vacation will cost). Something to keep in mind...until the country's infrastructure is further developed, cruise lines companies may make an easier entrance onto the stage than the hotel industry. Automobiles You've seen pictures or heard stories about all those 1950s cars replete with tail fins racing around Havana. Whether or not Cuba will turn to Detroit is certainly iffy. It seems more likely it will turn to inexpensive cars made in Mexico and Brazil. However, you, too can invest in foreign car manufacturers. Infrastructure The country needs roads, bridges, sewers, electricity, clean water. Florida Rock Industries, which trades on the NYSE, is a nearby cement and concrete supplier that has posted year after year of increased profits. Then there's the Miami-based Herzfeld Caribbean Basin, trading on NASDAQ. The sometimes volatile closed end fund invests in several companies with direct ties to Cuba, such as Copa Holdings. This Latin American airline has daily flights in/out of Havana. Other related companies in the fund - Carnival and Royal Caribbean Cruises. Or, you could invest directly in Copa Holdings, a New York Stock Exchange company. Leisure Time Large international hotel chains, like the cruise ship industry, undoubtedly regard Cuba as a rich tourist destination. So will casino operators. In fact, Time magazine once went so far as to write: "When the U.S. lifts the restriction, the Bahamas and Puerto Rico may as well close their doors." European chains have already built some 70,000 hotel rooms in Cuba, attracting over 2 million visitors last year. France's Club Med was one of the first on the island -- it opened a resort way back in the 1990s. Then there's Leisure Canada, the world's only publicly traded pure Cuban venture. Traded on the Toronto Exchange, its focus is resort development, time shares, golf properties and the like. Two other possibilities Also on the Toronto Exchange, Sherritt International Corporation has partnered with the government in Havana in a nickel and cobalt mine and a refinery while Repsol of Spain is involved in oil and natural gas exploration off the coast of Cuba. The latter's ADRs trade on the New York Stock Exchange. Note: A good source of continually updated, unbiased information on individual stocks and various industries is ValueLine Investment Survey. Details: http://www.valueline.com. - Nancy Dunnan
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Like what Nancy has to say? you might be interested in the new edition of her book:
How To Invest $50 To $5,000: The Small Investor's Step By Step Plan for Low-Risk, High-Value Investing |
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