Outside the Box: Searching for Profits in Cuba
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April 9, 2008
Given the recent resignation of the longtime leader of Cuba, Fidel Castro, many investors are now taking a close look at this country for future profits. With the reins being handed over to his brother Raul Castro, there are talks of big changes ahead for Cuba. For instance, President Raul has indicated much of the bureaucratic red tape will be eliminated. In addition, he has publicly acknowledged that Cuba’s economy needs structural changes and has called for a nationwide debate on Cuba’s economic future, which includes more private ownership of land.
Analysts who follow Cuba closely assert that when the changes do come, they will be swift and very impacting, catching most investors off guard. Consequently the investors will probably miss out on the opportunities altogether. Also, given that Cuba has a population of only 11 million, it is a relatively small market, which makes small cap stocks a better play.
One of the key profit areas within Cuba will certainly be the travel industry. With the likelihood of travel bans being lifted, look for an abundance of tourists and businesses to flood the island. Companies like the big cruise liner Royal Caribbean will most definitely add Cuba as one of its ports of call.
In addition, the shipping business should be huge because the first wave of trade will certainly be humanitarian supplies and materials to rebuild the nation. Also, infrastructure companies should profit as well, given that the country’s water distribution and sewer lines have been severely neglected. For instance just 15 percent of the aqueducts have been built or repaired since 1959 and 64 percent of the remaining ones can only be depended on to provide water for a few hours a day. Given that the average life of such systems is 50 years, not much time remains
Telecommunications should also see growth, as Cuba is behind all the other countries in the Caribbean in terms of availability. The country is in dire need of updating to facilitate today’s technologies. Wireless providers and wire-line services companies should see some very profitable opportunities. All of these new developments and changes within Cuba are worth monitoring as some money making opportunities will certainly be presented. This of course does not even take into account the tremendous political changes that will more than likely manifest within Cuba, creating even more opportunities.
Happy Trading.
Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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Listen to Jeff at www.ProfitStrategiesRadio.com
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