Natura Brasil

Natura shares have risen over 500% since the BOVESPA debut in 2004; they trade as SAO:NATU3

What do you get when you combine top quality health and beauty products, competitive pricing, a direct sales model, a commitment to sustainability, a broad social media presence and robust sales channels in some of Latin America’s youngest and fastest-growing markets? You get the stock chart to the left. Sao Paulo-based Natura originally listed on the BOVESPA in 2004, and the shares have risen over 500% compared to a 250% gain for the BOVESPA.

Cronista’s Gabriela Helman says Natura is cleaning up in Argentina’s perfume, cosmetics and personal care sector where the company’s main competitors are L’Oreal, Unilever, P&G and Avon. Natura is now the number three preferred cosmetics brand in Argentina where sales rose 27% last year compared to 8.8% back home in Brazil.

CEO Alessandro Carlucci tells Cronista that Natura plans to start production in Mexico and Colombia this year and replicate the local production model they have carefully crafted in Brazil. Natura outsourced some production in 2010 to Argentina where the company already has a Distribution Center and dedicated business units based in Buenos Aires.

One of Natura’s greatest qualities for the uninitiated is the breadth, depth and transparency of their online presence: the Natural Ingredients site, the Twitter page with 27,000 followers, their Investor Relations site, their YouTube channel, the Natura blog, the list goes on. Obviously this is a great company with a great story, and that is reflected in market share gains in countries like Argentina, Brazil, Chile, Mexico and Peru.

For more information on Natura, check out this Company Presentation PDF from the Credit Suisse 2011 Brazil Equity Ideas Conference.

Aerolineas Argentinas flight crew

Market Predictions, Anyone? We could all use some "Comfort y Musica para Volar" this year.

Latin America is a region of the globe where pessimism springs eternal when it comes time for annual economic forecasts.

From a BA perspective, it’s a little like making a reservation with Aerolineas, the state-owned airline: You know you will eventually reach your destination, but you’re just not exactly sure how or when.

Similarly, economists and regional analysts know Latin American countries will make it to the end of the year, but bearish forecasts are the norm given the abundancia of unknown macro and political variables. The Wall Street Journal’s Nicholas Casey says 2009 was no exception, “Investors began 2009 bracing for more drops in Latin American stocks as global markets plummeted in the worst economic crisis in generations.”

Now fast forward to December 31, 2009, and see how bracing and fence-sitting worked out for regional investors: Argentina’s Merval Index surged 115%, Brazil’s Bovespa rose 83% and Mexico’s IPC rallied a respectable 43%. With such “heady gains,” we should hit our knees praying for another round of dire predictions; yet, Casey warns us, “Forecasts are now for an optimistic 4% economic growth for Latin America given its performance in the past year.”

For now, we’ll just have to sit back, relax and see if 2010 is ultimately defined more by unexpected turbulence or friendly skies. Bienvenidos A Bordo.

For more information about Buenos Aires investment opportunities, download the new issue of InvestBA Privada.

 

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