Posted on April 27, 2005

Stocks that Will Ride the Wave of Immigration

Michael Brush, MSN Money, Apr. 27

Vigilantes worried about foreigners sneaking into the United States can send all the Minutemen they want to patrol the Arizona-Mexico border, but there’s no denying one simple fact.

The U.S. is in the midst of the biggest immigration wave in history. And barring an overhaul of U.S. immigration policy — which admits 1 million legal immigrants a year — that’s not changing anytime soon.

So while Americans lock horns in the immigration debate, cool-headed investors are quietly figuring out what companies will benefit.

Some hold shares of leading Spanish-language TV and radio companies like Univision Communications and Entravision Communication. Others own California-based banks catering to Chinese-Americans — such as East West Bancorp, Cathay General Bancorp, and UCBH Holdings. Another play is First Data Corp. Its Western Union division is used by immigrants to wire money to families back home.


Spanish-language media companies

Univision is the leading Spanish-language media company — dominating major markets like New York, Los Angeles, Miami and Chicago. Entravsion is in smaller but faster-growing markets like Tampa and Orlando in Florida, El Paso, Texas, Denver and Phoenix. Univision and Entravision have alliances — and share programming — around the country.

Hispanics already are the largest minority in the U.S., about 40 million strong. That fact is not lost on advertisers, who are certain to spend more of their budgets at outlets such as Univision and Entravision.


Banks catering to Chinese-Americans

The Chinese-American population is growing at a rapid clip. It was up by more than 50% in the 1990s. And about 40% of Chinese-Americans live in California. So it’s no surprise that three banks catering specifically to this group — East West Bancorp, Cathay General Bancorp and UCBH Holdings — are based in the Golden State.

While generalizing about cultures can be a minefield, bank analyst Brian Conn, of Sandler O’Neil & Partners., says some statistics show why Chinese-Americans are profitable bank clients. Compared to the general population, Conn says, this group has higher savings rates, higher employment levels and higher education levels. Chinese-Americans also have a strong entrepreneurial spirit, an affinity for owning real estate and an appreciation for personal relationships in business.

These qualities help explain why some California banks take special steps — like hiring bilingual staff — to win over immigrants’ business.


Sending money home

Immigrants don’t forget the folks back home. In fact, they send them lots of dinero. An estimated $18 billion to $20 billion goes to Mexico alone each year. To send money home, many immigrants turn to Western Union, a division of First Data Corp.