Back to archive
The Money Map Advantage
Friday, April 21, 2006
By Horacio Marquez
#40
** Making Money While Watching the Soccer World Cup On TV… In Spanish
A weekend present for you: Peabody Energy (NYSE: BTU) is up “only 25% in the last three sessions .” Today alone, it is back up another 8% after some profit-taking yesterday. While some of you might be tempted to take profits and run away with the money to some far land (what’s wrong with taking profits, after all?), I strongly suggest you to keep BTU tightly in the bag. All the ingredients are there for the stock to reach the relatively short-term target of $72.55. Namely:
* Oil prices above $70 and strong, with some potential for a “super-spike” on account of Iran, Nigeria problems and growing global demand. I do not factor the potential super-spike in my expectations.
* Expanding energy demand in the U.S. and abroad, with a global economy accelerating.
* The rail problems that have plagued some western coalmines, especially for competitor Arch Coal (NYSE: ACI), have been worked around successfully. Notice the huge spike in Arch’s stock today.
* Consistent, huge price gains: As the contracts for coal supply are being renewed, the prices are going up dramatically by two to three times what they were in the expiring contract.
The rest of our portfolio is seeing good gains as well. Tenaris (NYSE: TS) is up another 5% today. There is speculation that one of its competitors in France, Vallourec, (120354:FR), which is up some 10% today , is an acquisition target for Exxon, although neither company will comment.
In Brazil, we are getting ready for a breakout in Unibanco (NYSE: UBB), which should follow Bradesco (NYSE: BBD) in its breakout from a recent profit-taking pattern. After the run these banks had up to the end of January, they have been in consolidation mode, motivated by both the replacement of the finance minister in Brazil and the rise in long-term rates in the U.S.
As I expected, the replacement Minister has continued the line of his predecessor, naming Brazilians who are top international bank economists as his main aides and maintaining the highly regarded president of the Central Bank, Henrique Meirelles. In addition, I have had confirmation of my views from friends in the top management of Fortune 100 companies doing very strong business in Brazil, as well as from other U.S. and Brazilian market contacts.
The Central Bank delivered yet another 0.75% rate cut this week to further spur growth, bringing rates down to their lowest level in five years – 17.75%. With options expiration out of the way today, Brazil closed for a national holiday, and the demand for commodities confirmed from foreign investors, our Brazil ETF (AMEX: EWZ) keeps making new all-time highs, as investors keep taking advantage of a cheap and accelerating Brazil. And banks should be re-testing those highs soon.
We should be building positions ahead of the Fed’s next meeting, which should occur on May 10. I expect that to be the last Fed rate increase. Like me, many market participants should be doing the same.
Buy Mexico Now
In that light, I have been following the Mexican situation very closely and debating it with international bankers and Mexican contacts. Mexico is going into its presidential elections in July. The bad news that has been depressing the stock market is that Manuel Lopez Obrador, the candidate of the left-leaning PRD, is leading in the polls. The good news is that his lead is shrinking, and I believe that the current government’s candidate, Felipe Calderón, will win. My call is way ahead of the market, although some of this is already slipping in. These are the dynamics that I have seen work in the past that will be coming in play as I write:
* The Mexican demand for cement goes through the roof in electoral periods from two sources: Federal and State government construction projects to boost the governing party’s chances in the election, and the Federal program to help the poor build their own housing. In the latter program, the government provides the raw materials and technical assistance and the poor provide their own labor in order to build their homes. The bottom line from both programs is a huge boost in employment, support for the ruling party and in economic activity in the quarter leading to the election, and a large increase in stock prices.
* Calderón, who had been campaigning in his traditional “good person” tone, has changed to negative campaigning. While some say that negative campaigning does not work in Mexico, the reality is that with more than 20% of the electorate undecided in a tight race (38% Lopez Obrador to 34% Calderón), Calderón is capitalizing on Lopez Obrador’s extremist views. Lopez Obrador is convincingly being characterized as a “Chavez-lookalike,” with all the negative connotations that it brings – namely the possible loss of confidence from U.S. multinationals and investors, which would seriously curtail jobs and trade. The strategy is working, and it is producing closer and closer polls for Calderón.
I am very confident that with a good economy that is getting much better (Banco de Mexico cut rates today, oil prices have increased, and public spending in construction and social programs will accelerate it even more), and with Calderón’s strategy being picked up by the media, we will see a Calderón victory in July.
The moment to buy into it is now, before it is a foregone conclusion. And the company that is on the move to benefit from all of this is Televisa (NYSE: TV). Televisa not only has about 50% of the Mexican viewing audience, which means that it will receive hoards of advertising money from the candidates desperate to win a tight race, but it also has the broadcasting rights in Mexico for the Soccer World Cup, which will take place in Germany this summer.
In addition, Televisa is run by one of the smartest media moguls in the world – “the tiger” Emilio Azcárraga. Armed with a type “A” personality and unflinching financial discipline, he keeps making inroads into the U.S. TV market, for which Televisa provides the most popular programming. He might be buying Univisión (NYSE: UNV) in the U.S., the fastest-growing U.S. TV network, together with none other than Telmex’s tycoon son, Carlos Slim Domit.
So, we are going to anticipate these favorable developments in Mexico and for Televisa, as well as the Fed’s conclusion of the rate-hiking process, by buying Televisa stock today.
Recommendation:
Buy Televisa (NYSE: TV) stock at the market today. Aggressive investors should buy the July $20 calls (TV GD) at no more than $2.65.
Enjoy and profit,
Horacio Márquez
P.S. If you missed the annual Investment U conference in Delray Beach, FL, and would like to participate in a live discussion regarding international investing, I urge you to learn more about this year’s Total Wealth Symposium in Panama City, Panama. From May 17 to May 20, I will be joined by 21 colleagues to examine the strongest international areas from which to profit. It is an exciting opportunity for us to meet and discuss the markets with the world’s leading investment experts. For more information about this opportunity, please click here .
I will also be attending the True Wealth Gold and Collectable Show in Long Beach, CA, May 31. For more information regarding this private meeting, click here .
Stock
Current Price
Comments
Telivisa (NYSE: TV)
New
Buy at market.
Unibanco (NYSE: UBB)
$79.88
Buy. Sell stop is $59.58.
Peabody Energy (NYSE: BTU)
$63.89
Buy. Move sell stop up to $47.
IShares Brazil Fund (Amex: EWZ)
$44.50
Buy. Sell stop is $33.79.
BHP Billiton (NYSE: BHP)
$45.81
Buy. Sell stop is $32.70.
Banco Bradesco (NYSE: BBD)
$38.84
Buy. Sell stop is $29.45.
Petrobras (NYSE: PBR)
$98.85
Buy. Sell stop is $75.47.
Mitsubishi UFJ Finan. (NYSE: MTU)
$15.71
Buy. Sell stop is $12.93.
iShares Japan Fund (AMEX: EWJ)
$14.83
Buy. Sell stop is $12.83.
Tenaris (NYSE: TS)
$232.15
Buy. Move sell stop up to $162.
MSCI Austria Fund (AMEX: EWO)
$32.83
Buy. Move sell stop up to $162.
Copyright – 2006 Monument Street Publishing. Monument Street Publishing does not act as an investment advisor or advocate the purchase or sale of any security or investment. Monument Street Publishing expressly forbids its writers from having a financial interest in any security recommended to its readers. All of our employees and agents must wait 24 hours after an Internet publication prior to following an initial recommendation. And for hard-copy-only publications, 72 hours after the publication is mailed. Investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Monument Street Publishing provides its members with unique opportunities to build and protect wealth, globally, under all market conditions. The executive staff, research department and editors who contribute to recommendations are proud of the reputation Monument Street Publishing has built since its inception in 1984. We believe the advice presented to its members in our published resources and at our meetings and seminars is the best and most useful available to global investors today. The recommendations and analysis presented to members is for the exclusive use of members. Copying or disseminating any information published by Monument Street Publishing, electronic or otherwise is strictly prohibited. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time.
Market Watch
NASDAQ
1528.95
0.00
SP 500
813.88
0.00
DJIA
7749.81
+89.84
As Of 6:12AM 3/26/2009
Attention Money Map Subscribers!
Money Map Report,
New China Trader
& Money Moves Alert
are now found at www.moneymappress.com
