In the March Issue of The Oxford Communiqué, Alexander Green set his sights on a South American country that’s experiencing a radical shift in power.
What country? Argentina, of course.
New President Javier Milei recently clinched a stunning victory there – with a pledge to rip up the entire system.
For these reasons and more, Alex sees an exciting way to play the rise of Argentina. More on that soon – first, here’s a snippet of his research…
Like you, perhaps, I don’t generally follow Argentine politics that closely.
But last fall, I couldn’t help but overhear the mainstream media in the U.S. warn about a “crackpot” with crazy hair in Argentina who was running for president and – while waving a chainsaw in the air at rallies – promised to slash the country’s bloated government bureaucracy.
Only after Javier Milei won a crushing victory over his Peronist rival Sergio Massa late last year did I start paying closer attention.
And I really liked what I heard.
Milei is intent on igniting an economic revolution in Argentina by sharply reducing the size and control of government through deregulation, privatization and dollarization.
Argentine stocks leapt on news of his victory.
Yet given the country’s many long-term problems – and the skepticism of many investors and commentators – they are still among the cheapest in the world. Therein lies opportunity…
Argentina is home to one of the world’s leading oil and gas producers. Sales nearly doubled in the most recent quarter. And profits are likely to more than double in the year ahead.
Despite this torrid growth, the stock is a terrific value – trading at less than three times prospective earnings.
The upside here is considerable. And the stock gives us economic, political and international diversification.
But after experiencing decades of decline, certain aspects of the Argentine economy can be considered unfavorable.
A reader wrote in to ask about one major problem the country faces: inflation.
Reader Question: I see Mr. Green’s latest research surrounds the economic rise of Argentina. One question that I’ve seen in the headlines is the country is experiencing sky-high inflation… the highest in 30-plus years. Does this concern you at all? I’d love to hear The Oxford Club’s thoughts. – D.W.
Fair question! Let me turn things over to our Senior Markets Expert Matt Benjamin for a detailed response…
(For those unfamiliar with Matt, his claim to fame is that he’s interviewed two U.S. presidents and spoken with five Federal Reserve chairs, from Paul Volcker through Jerome Powell. So he’s just the guy you want to ask about the economy.)
Matt Benjamin: Argentina’s economic history since 1816, when the country gained its independence from Spain, has had its ups and downs, but it’s been terrible over the last eight decades.
Despite massive resources, the country has defaulted on its external debt nine times. And everything got worse after the 1943 military coup by Juan Perón. His economic and political philosophy, known as Peronism, embraced nationalization of banks and companies and massive spending programs.
In addition to defaults, these drove inflation through the stratosphere.
A more recent president, Néstor Kirchner, embraced price controls and nationalization of the largest energy company and the private pension system.
Milei is promising to go in a different direction altogether from these leftists. He wants a dramatic restructuring of the economy – and wants to get the state out of the business of running it.
There are already signs it’s working. Inflation cooled markedly in his first full month in office, falling to 20% in January from 26% the month before. And Milei remains popular with the population, a good indication that the people, too, want to try something different and are giving him a mandate to do it. It just might work.
The jury’s in… For the first time in a long while, Argentina’s economy has momentum on its side. And now’s the time for investors to grab a stake in its potential.
If you’re interested in reading the full March Communiqué and getting Alex’s Argentine stock recommendation, go here now.
Note: Here’s a hint…
The company engages in oil and gas upstream and downstream activities in Latin America – and is also a big player in renewable energy.
It also has interests in more than 100 oil and gas fields, with proven and probable reserves of 606 million barrels of oil and 2.8 billion cubic feet of gas.
If you’re interested in accessing the recommendation, go here for more information.