In an effort to provide investors with a balanced perspective, we're presenting both sides of the investing coin and looking at three reasons to both buy and sell some of the market's most popular stocks. Today Austin looks at three reasons to consider selling ailing McDonald's franchisee Arcos Dorados (NYSE:ARCO). The way he sees it, this company has heavy exposure to Latin America, which can be a bit of a double-edged sword as a high-growth but tough-to-manage corner of the world. The company also has an expensive capital expenditure habit and has been spending more than it can realistically afford to expand and remodel its locations. Lastly, operating in multiple different countries, being based in Argentina, and having the currency of your largest market being different from your own home currency creates an exchange risk that Arcos can't plan for and is extremely difficult to hedge against. For these reasons, investors may want to look at selling Arcos today.
However, for all of the difficulties in investing in Latin American markets, the reality is that the risk is often worth the reward. That's why The Motley Fool's Top Stock for 2012 is a Latin American-focused company that, like Arcos Dorados, is taking a proven and profitable strategy from the U.S. and applying it to the rapidly rising emerging Latin American markets. Our chief investment officer has them pegged as his favorite company for the year. Click here to read more about this all-star -- it's absolutely free.
Austin Smith owns shares of McDonald's. The Motley Fool owns shares of Arcos Dorados, McDonald's, and Starbucks. Motley Fool newsletter services recommend Arcos Dorados, McDonald's, Starbucks, and Yum! Brands. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.