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Ranking the 10 Best Stocks for 2012 — Through Q1

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No. 10: Arcos Dorados

Arcos Dorados ARCOReturn as of 3/30: -11.9%
: Josh Brown

Arcos Dorados (NYSE:ARCO) — as its Spanish-translated “Golden Arches” name would suggest — is the largest McDonald’s (NYSE:MCD) franchisee in the world and operates primarily in Latin America.

As Josh Brown wrote in his original ARCO stock recommendation, Arcos Dorados is a play on four key themes:

  1. Expanding consumer spending in Latin America
  2. The ferocity of McDonald’s as a global brand
  3. Growth within a defensive sector
  4. The comeback potential for emerging-market equities in 2012

Arcos Dorados has completely missed the bus on emerging-markets stocks, as seen by the iShares MSCI Emerging Markets Index ETF‘s (NYSE:EEM) 15% year-to-date gains. The company was hurt by a disappointing earnings report in late February. Arcos Dorados’s fourth-quarter earnings of 22 cents per share and full-year earnings of 54 cents per share fell shy of analyst expectations of 26 cents and 58 cents, respectively, though both were improvements year-over-year.

At the March 30 closing of $18.09, ARCO is trading about 15% below its 2011 IPO.

Article printed from InvestorPlace Media,

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