Wednesday, March 25, 2015

How to Get Rich in Cuba

How to Get Rich in Cuba
By Jeff Siegel
Wednesday, March 25th, 2015

I love this headline...
"Tourists Flocking to See Cuba Before the Americans Come"
Boy, if that doesn't make you feel all warm and fluffy inside.
Of course, by Americans, they're talking about U.S. companies — not
loud, fanny pack-wearing retirees from New Jersey who will be disgusted
by the lack of air conditioning and English-speaking bellmen at their
You see, purists and romantics want to see the real Cuba. They want to
see the tobacco plantations of Pinar del Río, the lush tropical forests
of Baracoa, and the warm white sands of Santa Lucia.
They want to drive through the streets of Havana in a 1957 Chevy Bel Air
convertible. They want to smoke authentic Cuban cigars, dance in the
streets with beautiful Cuban women, and retrace the steps of a drunken
Ernest Hemingway while reciting lines from "The Old Man and the Sea."
And they want to do all of this before there's a McDonald's on every
corner and an obnoxious cruise ship in every port.
It's hard not to disagree. After all, I'm planning a trip to Cuba now,
and I'm looking forward to wandering through the "land stuck in time."
I'm looking forward to hour-long philosophical conversations with locals
while sipping real Cuban coffee. I'm looking forward to touring the
urban organic farms that kept the Cuban people well fed after a food
crisis gripped the island nation in the 1990s.
That being said, with the thawing of relations with Cuba will come an
influx of U.S. dollars, U.S. influence, and a wave of opportunities for
those who are eager to invest.

Tourism is Booming!
Once all restrictions are removed, it's estimated that 1.5 million U.S.
travelers will visit Cuba every year. Right now, it's about 600,000.
This would actually put the U.S. ahead of Canada as Cuba's top source of
tourism and result in about $2 billion a year for the Cuban economy.
New hotels, condo developments, and modern supermarkets will likely be
built quickly. New ports will also be constructed to accommodate a wave
of new cruise ship destinations, and in an effort to meet the demands of
a booming tourism industry, a lot of Cubans will find good, steady work.

Big Ag's Coming...
Agriculture giants such as Cargill, Monsanto, and DuPont have been very
aggressive in their quest to have the embargo lifted. After all, Cuba
represents a multi-billion dollar opportunity for them in both import
and export opportunities.
Sadly, this could ultimately undermine the vibrant organic agricultural
system in place right now. And it is likely that Cuba could become the
next big dumping ground for Big Ag's toxic cocktails of pesticides and
herbicides — including glyphosate, which the World Health Organization
just recently declared a probable source of cancer in humans.
But my concerns about this are irrelevant. The fact is, the Big Ag
machine has already conquered Cuba on paper. It's just a matter of time
before those plans are put into action.
And of course, there's enormous opportunity for energy investment.
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The Sun Shines in Cuba
U.S. oil producers, now sitting on a wealth of cheap oil and natural
gas, are eager to sell it to Cuba at a significant discount. And I
suspect Cuba is just as eager to buy it.
Cuba has also set a goal of producing 24% of its own electricity with
renewable energy by 2030. This will be a combination of biomass, hydro,
solar, and wind.
Cuba actually has very strong solar and wind resources available.
Companies like GE (NYSE: GE), SunEdison (NYSE: SUNE), SunPower (NASDAQ:
SPWR), and First Solar (NASDAQ: FSLR) are likely to benefit. I also
wouldn't be surprised to see a well-capitalized installer/financier like
SolarCity (NASDAQ: SCTY) getting in on the action.

Cafe Cubano
If you're a regular reader of these pages, you also know that I see huge
opportunity in coffee.
Due to extreme weather events and geopolitical drama, African producers
of coffee are struggling to keep pace with demand. Continued drought
conditions, uncommon fluctuations in weather, and the consistent threats
and realities of war are irreparably harming centuries-old coffee
Meanwhile, the demand for coffee continues to rise.
Now, due to its climate and elevation, Cuba actually has the ability to
produce particularly good coffees. With strong demand from U.S.
consumers, Cuban coffee growers could revitalize the island's coffee trade.
Other commodities Cuba can capitalize on include cacao, coconuts,
pineapples, mangoes, papayas, plantains, and ginger. With its close
proximity to the U.S., there's a huge opportunity here for distributors
to improve margins. And what a great opportunity for job creation in Cuba.
All in all, I'm quite bullish on Cuba going forward.
I knew this ridiculous embargo would eventually be lifted and
free-market principles would ultimately facilitate a peaceful
relationship between the U.S. and Cuba. We're now at the earliest stages
of this relationship, and the opportunities for friendship and
prosperity are enormous.
I will definitely be taking part in both.
To a new way of life and a new generation of wealth...

Jeff Siegel

@JeffSiegel on Twitter
Jeff is the managing editor of Energy and Capital and contributing
analyst for the Energy Investor, an independent investment research
service focusing primarily on stocks in the oil & gas, modern energy and
infrastructure markets.

Source: Investing in Cuba -

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