Not long ago I was in Cuba.
I’ve been there three times now. Each time 10 to 15 years apart.
The biggest change I notice now is the same phenomenon sweeping the rest of Latin America…
Internet addiction, pure and simple.
Walk around Havana, turn a corner at a known Wi-Fi hotspot near a park or plaza — and suddenly you see dozens of people leaning against buildings or sitting on benches — all of them staring at their smartphones, same as here.
The visit puts an exclamation point on the growth of internet usage that most of us overlook.
According to a recent survey of online habits, Brazil and Colombia ranked among the top 5 countries in the world in terms of “screen time.” (The Philippines was ranked No. 1, where web surfers spent an average of more than 10 hours a day on their phones.)
The part I find so exciting is that the “internet ecosystem” — cheap, powerful devices, faster internet connections, communities of web entrepreneurs — is just getting started in Latin America and the rest of the emerging market sector.
Exploring off the Beaten Path
U.S. e-commerce rises around 12% to 15% a year. But it annually grows by 30% or more in emerging market countries:
- Turkey, 37%.
- Mexico, 50%.
- Indonesia, 78%.
And that’s just naming a few.
I already have three positions based on this gigantically disruptive trend in the Total Wealth Insider portfolio, and they’re all pushing nicely higher by double-digit amounts.
Here’s something else to think about: The U.S. market is largely tapped out when it comes to finding investment ideas that aren’t already at or past their peak growth, and fully (or over-) valued in price.
On the other hand, if you’re willing to explore a bit off the beaten path, you find plenty of undervalued, little-known stocks growing by leaps and bounds if you extend your vision beyond just the U.S. (and perhaps China and Europe).
Latin America is a great example.
Latin America Embraces the Internet
In the U.S., household broadband penetration is 82%. It’s growing at 3% a year.
Among Latin America’s five largest countries — Brazil, Mexico, Argentina, Chile and Colombia — broadband penetration is roughly 50% … but growing as fast as 10% a year.
It’s the same story for wireless broadband.
In the U.S., about 90% of mobile phone users subscribe to high-speed 4G data networks (with 5G on tap in the next few years).
Yet among the five largest Latin American countries, only 27% of mobile users have access to high-speed wireless data.
In short, Latin America — and emerging markets in general — are hitting their sweet spot for embracing the internet.
U.S. investors are wise to pay attention and start taking advantage of this disruptive years-long trend in the making.
Jeff L. Yastine
Editor, Total Wealth Insider