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A Toast to Chilean Beer
The ADR Alert
Monday, October 29, 2007
By Alexander Green, Investment Director
Email – #181
** A Toast to Chilean Beer
Last week we hit our sell stop in Aegean Marine (NYSE: ANW) after the company announced that two shareholders plan to offer 6.8 million shares.
I suggest you put your proceeds to work in Compania Cervecerias Unidas (NYSE: CU).
Based in Santiago, CCU operates in both Argentina and Chile, offering seven proprietary brands of beer, including its flagship brand Cristal.
It also acts as an exclusive producer and distributor of brands like Heineken, Budweiser, Paulaner, Austral, and Kunstmann beer – and distributes soft drinks for Pepsi, Schweppes, and Watt’s Alimentos.
On Friday, Chile’s largest brewer announced that net profit rose 23.8% in the first nine months of the year, on an 8% rise in revenue.
Future earnings prospects are even brighter.
A few weeks ago, CCU agreed to buy Argentine brewer Inversora Cervecera for $88 million. That will boost both top and bottom line growth.
In the U.S., beer makes up more than 75% of alcohol sales by volume. And sales in South America’s emerging markets are rising sharply, too.
In the past twelve months, revenue at CCU has surpassed $1.15 billion. The company enjoys expanding double-digit profit margins. And management is earning a generous 18% return on equity.
Bear in mind that beer sales are relatively immune to the business cycle. If the economy slows, sales may even increase.
With the stock in a pronounced uptrend and institutional investors just beginning to accumulate the stock, there is plenty of short-term trading potential here.
***Action to Take***
Buy Compania Cervecerias Unidas (NYSE: CU) at $42 or better. And place a sell stop at $34 for protection. There are no options on this one for speculators to consider.
Elsewhere in our ADR portfolio, we’re up 32% in Sadia (NYSE: SDA) in a month and a half. Raise your sell stop to $61 to protect your profits here.
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com , or contact Pillar One Advisor Rick Pfiefer at 800.438.3040 or 407.667.4729
Stock
Country
Current Price
Comments
Compania Cervecerias Unidas (NYSE: CU)
Chile
New
Buy at $42 or better. Set sell stop at $34.
Aegean Marine (NYSE: ANW)
Greece
Sell
Stock hit sell stop.
Infosys Tech.(Nasdaq: INFY)
India
$49.22
Hold. Sell stop is $46.
Sadia S.A.(NYSE: SDA)
Brazil
$67.07
Buy. Raise sell stop to $61.
Sanofi-Aventis (NYSE: SNY)
France
$43.13
Buy. Sell stop is $38.
Bi Alexander Green is the Investment Director of The Oxford Club. A Wall Street veteran, he has over 16 years experience as a research analyst, investment advisor, and professional portfolio manager. Under his direction, The Oxford Club’s portfolios have beaten the Wilshire 5000 Index by a margin of more than 3-to-1. The Oxford Club Communique, whose portfolio he directs, is ranked third in the nation for risk-adjusted returns over the past five years by the independent Hulbert Financial Digest. Mr. Green has written for Louis Rukeyser and several other leading financial publications. He has been featured on “The O’Reilly Factor,” and has been profiled in Forbes, Kiplinger’s Personal Finance, and Marketwatch.com. He is also Chairman of Investment U, an internet-based research service with over 300,000 readers. He currently writes and directs the twice-weekly Oxford Insight e-letter and three elite trading services: The Momentum Alert, The Insider Alert and The ADR Alert. Mr. Green is also a top-rated speaker at financial conferences around the world.
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