Investing in Cuba
How to Get Rich in Cuba
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 hotels.
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.
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 operations.
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 is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor's page.
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