No. 10: Arcos Dorados
Return as of 3/30: -11.9%
Investor: Josh Brown
As Josh Brown wrote in his original ARCO stock recommendation, Arcos Dorados is a play on four key themes:
- Expanding consumer spending in Latin America
- The ferocity of McDonald’s as a global brand
- Growth within a defensive sector
- 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.