Email – #312
Urgent: Buy Fibria (NYSE: FBR) Today
Dear Reader,
Fibria is the global leader in market pulp. The company is the product of the merger between Brazilian producer Aracruz, the world market leader, and its close Brazilian follower, Grupo Votorantim. We played this merger beautifully last year, as we went into Aracruz before it was consummated, and our shares were converted into Fibria shares.
We took 40% profits in 73 days. And now it’s time to buy this stock again…
Fibria enjoys a 20 metric ton per hectare (per year) productivity advantage over the market’s second-largest producer, Chile’s privately held Celulosa Arauco. This structural competitive advantage is not going away. It is due to Brazil’s unique climate conditions that allow for the eucalyptus tree to thrive like in no other place on the planet.
And this permanent competitive advantage is also the product of some other strong factors that are extremely difficult to replicate:
* Fibria’s size gives it very large economies of scale;
* Fibria’s fast growth in the last 10 years gives it new and larger plants that are much more efficient than pulp and paper plants in the Northern Hemisphere; and
* Fibria’s plants’ closer proximity to its production lands and private ports further enhance its tight vertical integration.
All of this translates into a cash cost advantage of about 14% over its closest rival ($206/tn vis a vis $234/tn).
This, in an industry that is utmost cyclical, is incredibly important…
During hard times, like 2008 and 2009, their inefficient Northern Hemisphere competitors go bankrupt. Yet Fibria keeps making money. So we are seeing a secular migration of market share from the Northern Hemisphere to Brazil and Chile. And this migration is very likely to continue unabated.
In this light, Fibria plans to keep expanding capacity, using its strong cost advantage, to the point that in a few years it could reach a market share well up to 70% of the world’s pulp market.
So the question for long-term investors is not whether to own Fibria, but when to buy it and get into this pervasive long-term trend. Having corrected very strongly and sitting on strong support, Fibria’s stock is ready to continue its upward move. And with Germany looking to aid Greece, we should jump back on board before the train leaves the station.
Action to Take: Buy Fibria (NYSE: FBR) at Market.
Enjoy and profit,
Horacio Marquez
The Money Map VIP Trader Portfolio:
Stock: Corning (NYSE: GLW)
Current Price: $17.76
Comments: Buy
Stock: Rockwood Holdings (NYSE:ROC)
Current Price: $20.99
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NEW Stock: Fibria(NYSE: FBR)
Current Price: $19.24
Comments: Buy
