India and Japan have dominated international stock headlines, but 2024’s real foreign star could be Latin America. The S&P Latin America 40 index rose 34% in 2023, and valuations still are cheap with a price-to-earnings ratio of just about 6.2 versus 23 for the S&P 500.
Countries like Mexico will benefit as US corporations try to secure their supply chains by pulling out of China and opening factories closer to home. Moreover, central banks in Latin America are cutting short-term interest rates, which will boost the region’s economic growth. And the US dollar is likely to weaken this year when the Fed almost certainly begins reducing interest rates, and that will enhance returns from foreign stocks for US investors. Latin American stocks to consider now…
B3 (BOLSY) operates the largest financial exchange in Brazil, trading the stocks of more than 400 companies, as well as making markets in commodities, futures and over-the-counter stocks. It benefits in the long run from the growth of capital markets in Brazil and in the short run from investors returning to the stock market as interest rates in the country fall. Recent share price: $8.09.*
Fomento Economico Mexicano (FMX) owns the largest Coca-Cola bottling franchise in Latin America and Mexico’s largest convenience-store chain. Last year, FEMSA raised about $7.5 billion in cash for future acquisitions and to bolster core businesses. Recent share price: $136.10.
MercadoLibre (MELI) is known as the Amazon.com of Latin America, but its secret weapon may be its digital-payments service, Mercado Pago, which offers cash, credit and merchandise accounts to consumers. Recent share price: $1,777.43.
*Performance figures from Morningstar, Inc., are through January 29, 2024.
