Editorial Director’s Note: This holiday week, we’re looking back on the past year and sending you some of the best content we published in the past 12 months. We hope you enjoy this special series. We’ll be back the week of Monday, December 30, with brand-new research from all of our experts. — Jessica Cohn
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.
Kind regards,
Jeff L. Yastine
Editor, Total Wealth Insider