News and Facts about Cuba

3 Industries to Benefit From New Cuba Relationship

3 Industries to Benefit From New Cuba Relationship
By Ryan McQueeney

As Obama enters the last few months of his presidency, one of
his most impactful diplomatic decisions is finally starting to take
shape. After five decades of division, relations between the United
States and Cuba are beginning to normalize again.

Back in March, the Obama family visited Cuba, marking the first time a
sitting U.S. president has set foot in the communist nation since 1959.
Just a little over a month later, it appears that visits from average
American citizens are becoming more common.

Pipeline

On Monday morning, Carnival Cruise Line (CCL) and its Fathom Adonia
luxury ship arrived at Havana Harbor. Carnival’s voyage was the first
trip from Miami to Cuba in over 50 years, and the U.S. cruise business
to Cuba is officially back.

“It was a very special point of view and a very special moment – to feel
the emotions of everyone on the ship and then feel the emotions of the
people on shore too,” said Carnival CEO Arnold Donald, who stood at the
bow of the ship as it pulled into Havana.

Carnival’s Fathom Adonia line departs from Miami and circumnavigates
Cuba on its week-long route. The trip is a “people-to-people” trip,
meaning that passengers are encouraged to interact with local Cubans
while at port.

Besides Carnival, there are several other -related stocks that
should benefit. One example would be American Airlines (AAL), the
domestic carrier with the most charter flights to Cuba and a major hub
in Miami. American is in the process of launching a charter service from
Los Angeles, and the company says its ready to offer commercial flights
once they are allowed.

Another travel stock that could benefit from increased business in Cuba
is Panama-based airliner Copa Holdings (CPA). Copa is already the
largest foreign in Cuba, offering half a dozen flights to and
from the island every day.

Building Boom

Another logical result of increased economic activity in Cuba could be a
construction boom. One U.S. company that could cash in is Vulcan
Materials (VMC), the largest domestic producer of construction
materials. Vulcan operates a large quarry on the Yucatan Peninsula in
Mexico, potentially a fantastic location for exports to Cuba.

Vulcan just released its Q1 earnings, reporting EPS of 26 cents, which
crushed the Zacks Consensus Estimate of 6 cents. The company’s quarterly
revenues of $754.7 million also smashed our estimate of $710 million. As
a result, Vulcan bumped up its 2016 guidance, driven by improving
profits per ton in its Aggregates segment, as well as higher earnings in
the Non-Aggregates segments.

If Vulcan can beat the rest of the industry to Cuba, it should be able
to continue its solid performance.

Telecom Blitz

As Cuba begins to develop, the major telecom giants are also Cuba bound.
Verizon Partner Solutions, a subsidiary of Verizon Communications (VZ),
recently reached an agreement with Cuba’s state-run telecom company
Empresa de Telecomunicaciones de Cuba () to offer mobile roaming
services between the United States and Cuba.

Reports also indicate that AT&T (T) is looking for an agreement with the
ETECSA. Apparently, negotiations between the two entities are underway,
while AT&T is also pushing the FCC to drop its existing
nondiscrimination rules on the U.S.-Cuba route. AT&T believes that
dropping these rules will allow for cheaper communication between the
two countries.

On the TV side of things, streaming giant Netflix (NFLX) entered into
the Cuban market last year. While only 5% of Cubans had unfiltered
access to the when Netflix began service in the country, the
company expressed confidence that more citizens would subscribe “as
Internet access improves and credit and debit cards become more widely
available.”

Bottom Line

Simply put, the new relationship between the U.S. and Cuba should be
good business for a lot of publicly-traded companies. Hopefully for the
U.S.-based businesses, Cuba will open its doors to tourists, while also
modernizing its infrastructure and technology, allowing for more U.S.
economic impact.

Source: 3 Industries to Benefit From New Cuba Relationship – Yahoo
Finance –
finance.yahoo.com/news/3-industries-benefit-cuba-relationship-203108146.html;_ylt=AwrC1DGm2SlXGwMAfffQtDMD;_ylu=X3oDMTByNXQ0NThjBGNvbG8DYmYxBHBvcwM1BHZ0aWQDBHNlYwNzcg–

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