Which Is Your Best Bet On Latin America: Banco Santander SA, SABMiller plc Or Ocean Wilsons Holdings Limited?

G A Chester puts Latin American growth-story bets Banco Santander SA (LON:BNC), SABMiller plc (LON:SAB) and Ocean Wilsons Holdings Limited (LON:OCN) under the spotlight.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Latin America is one of the regions of the world investors based in developed countries look at with envy, due to its tremendous growth potential. If you’re interested in tapping into this potential, London-listed companies Banco Santander (LSE: BNC), SABMiller (LSE: SAB) and Ocean Wilsons (LSE: OCN) all have substantial exposure to Latin American markets.

Banco Santander

Banco Santander was founded in the port city of Santander on Spain’s northern coast in 1857. Today, the bank is a global giant, and a familiar name on the UK high street.

However, we have to look beyond Europe to find Santander’s biggest market. Last year, 46% of the group’s net operating income was generated in Latin America, breaking down as: Brazil (30%), Mexico (8%), Chile (6%) and other (3%).

Santander has recently bulked up its capital with a €7.5bn share placing and a rebasing of this year’s dividend to one third of last year’s (giving a safe, if modest, 2.9% yield). On a current-year forecast P/E of 12.7, and with mid-teens earnings growth expected this year and next, the shares seem to offer good value.

SABMiller

World number two beer company SABMiller was formed in 2002 when South African Breweries acquired Miller Brewing Company of the USA. The combined group has subsequently gained substantial exposure to Latin America with major acquisitions and joint ventures.

In its latest results, for the six months to September 2015, SABMiller reported that 22% of group revenue and 47% of operating profit come from Latin America. The money rolls in from Argentina, Chile, Colombia, Ecuador, El Salvador, Honduras, Panama, Paraguay and Peru.

SABMiller’s shares — like those of other top drinks groups — are highly rated: the forecast P/E for the company’s fiscal year just ended (31 March) is 23, falling to 21.5 for the upcoming year, and 20 for the year after. However, earnings are forecast to grow by high single digits annually, so the rating is not totally bonkers.

Ocean Wilsons

Ocean Wilsons will be less familiar to most investors than Santander and SABMiller. However, this £300m company has more exposure to Latin America — albeit that exposure is concentrated entirely on Brazil.

Ocean Wilsons’ principal subsidiary Wilson Sons Limited is a Brazilian maritime services company (container terminals, towage, shipyards and so forth), and accounts for 78% of Ocean Wilsons’ assets. The other subsidiary is simply an investment fund, holding global equities, bonds and other assets.

Ocean Wilsons’ shares are trading at a good discount to the combined net asset value of the two subsidiaries, suggesting there is decent value in the shares.

The substantial exposure of all three companies to the potential strong, long-term economic growth in Latin America could pay off for investors. Businesses with powerful consumer goods brands — such as SABMiller — are among my personal favourites as buy-and-hold investments. As such, I’d be inclined to have a larger weighting in the beer group than in Santander, and perhaps a lower weighting still in Ocean Wilsons, with its riskier single-country focus.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended Ocean Wilsons. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »