Corriente - your second chance

I hope nobody is kicking themselves for not taking my recommendation of Corriente when it was trading around 4.08 (see "Cheap Copper"/ 3/14/2006) but we won't play that game!
Instead, let's focus our energy on the current situation, which, according to me, is still quite promising. I should tell that when I discovered CTQ.TO (now ETQ on AMEX as well), it was trading at 2.45, and, when I recommended it the first time, it was around 4$, so let's not worry about its appreciation potential - this stock has more dynamite than the "Die Hard" series.

The principle reason why I'm encouraging investors to take a serious look at CTQ or ETQ (depending on your exchange) is because of its newfound exposure. Whereas in prior periods it was a bargain because of its lack of exposure, it is now a good buy because of its newfound exposure. In other words, the laws of demand and supply are simple - given a fixed level of outstanding stock (supply), a much, much larger market (demand) will inevitably push the stock price up. Just imagine if you were a small business owner, and instead of delivering 30,000,000 flyers to potential customers, you delivered 330,000,000 flyers - in which case do you think you'd generate the most business? Of course, that is a very simplified and exagerated example, because capital does flow across borders, but the fact is that their was very little analyst (only 2) coverage, and thus little institutional investing in this stock. In some ways, it's like taking the georgeous farm girl from Kansas to L.A. - she was promising in Kansas, and she generated some buzz, but in L.A., she will be discovered and her true worth will be uncovered!

The beauty of the situation, however, is that the stock went up mostly because of Canadian investors expecting to see benefit from the growing U.S. market - none of the stock appreciation, or little of it, has stemmed from increased buying from Americans. Just imagine when J.P. Morgan or Bear Sterns initiates coverage - this will really put Corriente on the map.

In terms of political situation, this remains the big X factor for this stock. Although Ecuador's political situation is relatively stable, the same cannot be said about its neighboring countries, especially Peru, Venezuala and Bolivia. In Peru's elections, which were held yesterday, there will most likely have to be a revote for the top 2 candidates, since no-one gathered over 50% of votes. However,the leader, Ollanta Humala, is an Inca decendant who wants to 'redistribute wealth to the people' - Che anyone? If he gets into power, it will be a real downer for foreign companies in Peru. In Bolivia, the horse on the flag has been turned around so that instead of running to the right, it is running to the left - enough said. Lastly, we all know about Chavez in Venezuala and his nationalization of several foreign-owned natural ressource companies. As for Ecuador, there is turmoil - don't get me wrong. Anytime there's 7 different presidents in 9 years that'll drive up the cost of capital for any project. Moreover, the party in charge is quite liberal - however, the people of ecuador, unlike those of peru and venez., are sure of one thing - that their debt is out of control and that it must be paid off. As long as Corriente is keeping the gov't happy with its taxes, they're shouldn't be too much of a problem for now; sometimes corruption can work in your favor.
Just ask De Beers.