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How would you like to get a cut of the take almost every time someone pops open a beer in Chile... or a bottle of juice or mineral water for that matter? When a Chilean says, "Una cerveza, por favor," seven times out of eight, he's getting a brew made by the most profitable company in Chile. It absolutely dominates Chile's beer market with an 85% market share. This brewing giant is not only the largest beer maker in Chile, it's the second-largest in Argentina, too -- thanks to its hugely popular Cordoba beer. And Argentina's market is four times bigger than Chile's. It is Chile's only bottler of Pepsi, Dr. Pepper, Snapple, Crush and Canada Dry. The company also distributes Heineken, Corona, Negra Modelo, and Guinness. The company also has 65% of the mineral water market in Chile, 45% of the market for pisco, a popular type of brandy ... and an astounding 100% of the fruit juice market. A company this dominant would be banned in most countries. This aggressive growth machine would be slammed with anti-trust lawsuits if it were U.S. based. Yet you can buy this virtual Chilean monopoly right here on the NYSE for only nine times earnings. Compare that to the average beverage industry stock, which is twice as expensive, selling for 18 times earnings. In my 21 years of scouting out special situations for investors, I've rarely seen a stock with so many things going for it. It's exactly the sort of locked-in profit play I've spent my career looking for. Its semi-annual dividend tripled between 2004 and 2007, and this year it rose another +45%. The stock yields 5.1% at current prices. The only thing different from a year ago is that the stock is cheaper for U.S. investors. That's because the Chilean peso has weakened against the dollar. Over the next year, I expect the peso to rally as investors slowly sell their U.S. Treasury bills and diversify into emerging markets again. In fact, I believe this stock could easily double within a year. Whatever Angle You Look at, It's Bullish The company I've found is in a sweet spot that most companies can only dream about. It's in a recession-proof business -- people drink in good times and bad. Take virtually anything people drink in Chile, and this company has a hand in it. Almost every time someone pops open a drink... a few more pesos end up in its coffers. The company has extremely well-established brands and superior distribution, making it difficult for competitors to make headway. With dominant market shares come very high profit margins -- sales have doubled over the past four years. Although the recession will dampen growth for the next two or three quarters, it should stay positive. In fact, sales should rise about +8% annually over the next several years thanks to population and income growth and rising sales for its higher-priced items. Earnings are estimated to continue growing at a +5% pace over the long term. This should help support steadily rising dividends. Through good times and bad, it keeps plowing ahead. Since listing on the NYSE in 1992, the stock has soared 333%--more than doubling the S&P 500. Here's the clincher. On top of solid growth it also gives you a CD-crushing 5.1% yield. The dividend has soared from 65 cents to over $1.50 in the past five years. And it's wallowing in liquidity, which means your dividends are secure. It's next dividend comes out in April, and I've positioned my "Reliable Income" portfolio from my newsletter, High-Yield International, to take it.
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