Today I’m focusing on answering some questions from readers about a few stocks, some that I own and have suggested to Irregulars in the past, some that are new to me. As might not surprise you, much of this is about some of the royalty and streaming stocks, including one that several folks are whispering about as maybe the “next Sandstorm” or the “next Royal Gold,” but since I write about those kinds of companies pretty regularly I thought I’d first check in on an entirely different stock, the Brazilian payment processer Cielo.
(And no, despite the overwhelming impact of Hurricane Sandy I’m not going to focus on a “hurricane play” in insurance or timber today, though I am keeping an eye on my insurance stocks and on Greenlight Re (GLRE), which we wrote about last week … and I recently almost jumped on Acadian Timber (ADN.TO, ACAZF) a couple days ago as an extremely Northeast-exposed timber play with an admirable yield, though I don’t yet own that one.)
Cielo (CIOXY) was suggested as an “Idea of the Month” two years ago and was last covered in my annual review in January (I called it a “hold” at that time, around $32 — it later spiked up to $36 and then fell back down, it’s now around $25 … it was around $22, split adusted, when I first wrote about it in August, 2010, so it has done OK and paid a good yield but has still done a bit worse than the S&P, thanks in part to the weakness of the Brazilian Real vs. the Dollar). So what’s going on?
Well, I have no idea what will happen with the Real — in times of concern, the Dollar still wins even if everyone thinks it’s ultimately junk because we’re printing so many of ’em … everyone else’s junk is just a bit junkier. So I’ll focus on the company itself — if Cielo can grow as electronic payments in Brazil grow, and maintain a strong position and decent pricing power and pay a good dividend, I’m happy to let it ride as my dividend-paying exposure to the Brazilian consumer economy, which I expect to continue to grow nicely over time even if it gets beaten down every now and then.
Cielo used to be a monopoly, but that was ending before I wrote about them so it’s been ...