Equity analyst Paulina Amieva explores opportunities in Mexico City.
Going out into the field, Paulina talks to management, suppliers, and customers to get a true sense of companies actively solving friction points that impede growth.
When a U.S. consumer makes an online retail purchase, the process is usually pretty smooth: click a couple of links, put in credit card information, and receive the order within a day or two. But in Latin America, e-commerce accounts for only about 3% of all retail sales, compared with about 10% in the U.S. Inadequate distribution and Internet infrastructure as well and underdeveloped credit penetration are a few of the “friction points” that weigh on e-commerce growth in Latin America, says T. Rowe Price investment professional Paulina Amieva. For these reasons, Paulina’s research takes her from computer spreadsheets directly to the consumer. “A lot of my work takes place behind my desk. However, my team and I are very engaged in traveling to the region where we can immerse ourselves in what’s going on locally. It is my opportunity to kick the tires.”
Going beyond the numbers reveals the full story
At T. Rowe Price, our investment approach is to go beyond the numbers when evaluating which companies offer the best future investment potential. By meeting with executives, employees, and customers firsthand, we can ask the right questions to get a deeper understanding of where a company stands and where it could go in the future. This rigorous research strategy is integral to Paulina’s analyses for the food, apparel, and e-commerce retailors she researches within emerging markets.
Field research yields deeper insight
On a relatively recent research trip to Brazil, Paulina visited Lojas Renner, a large clothing retailer that is transforming to a fast fashion business model. She liked that the store’s e-commerce site was ahead of many of its local competitors. She also sees the company producing merchandise that customers would find appealing and seek out online or in stores. She has spent a number of hours visiting stores, studying how the clothes were displayed and watching staff interact with shoppers. Paulina always tries to purchase an item on site visits to approximate the customer experience as much as possible. On her site trip to Renner, she bought several items that left her with a strong positive impression: “I think the store visit combined with the management meetings really raised the conviction level for me.” Several T. Rowe Price funds increased their exposure to the company based on Paulina’s recommendations. As an added bonus, Paulina remarks that she still gets compliments on the clothes she had purchased from the store.
Positioning for change
As consumers demand more goods via e-commerce, Paulina is keeping a watchful eye on shifts in the industry so she can get ahead of change for her clients. The pace of e-commerce penetration in Latin America is accelerating, she says, with one Argentina-based retailer, Mercado Libre, smoothing out many of these friction points. It successfully managed the migration from desktop to mobile, allowing customers to bypass expensive and unreliable broadband service. “It has been a very exciting story.”
The specific securities identified and described above do not necessarily represent securities purchased, sold or recommended by T. Rowe Price. This information is not intended to be a recommendation to take any particular investment action and is subject to change. No assumptions should be made that the securities identified and discussed above were or will be profitable.
This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.
The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.
Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of September 2018 and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.
The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.
It is not intended for distribution to retail investors in any jurisdiction.
USA—Issued in the USA by T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, MD, 21202, which is regulated by the U.S. Securities and ExchangeCommission. For Institutional Investors only.
© 2018 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc.