Once the darlings of emerging market investors, Latin America seems to be losing steam of late. Growth is expected to drop below 1% this year. Aside from a brief recession during the financial crisis, this year will be the continent’s slowest growth in more than a decade. Looking at Latin America’s growth as a whole would be a mistake though, because troubles in the region’s largest economies overshadow progress in smaller ones.

Three of the region’s largest economies —Brazil, Argentina and Venezuela—are becoming hotbeds of dissent.

In Brazil, protests against the administration of Dilma Rousseff have become commonplace, a result of her populist economic policies failing to revive growth in the country.

Argentines are dealing with a bizarre scandal involving their own president, Cristina Fernández de Kirchner. In January, a top state prosecutor was apparently murdered before he could bring charges against the president for conspiring with Iran to cover up a terrorist attack against a Jewish center in Buenos Aires.

And in Venezuela, President Nicolás Maduro is resorting to increasingly draconian measures to maintain control of the country.

Against that bizarre and macabre backdrop, which would have made excellent literary fodder for William Golding, George Orwell or even Edgar Allan Poe, more uplifting stories are rising out of the region.

Although plunging oil prices pinched Mexico’s economy a bit, activity in the country’s energy patch is picking up. After spending more than 76 years as a state monopoly,  the energy industry has finally been opened to more private investment. Last year the Mexican government realized that to overcome declining and inefficient production, private players would have to be allowed in the field.

Thanks to labor reforms, Mexico is also enjoying something of an industrial renaissance. Auto makers in particular are flocking to Mexico; Ford Motor Company (NYSE: F) announced it will spend $2.5 billion to build and expand engine and transmission factories in the country, while Toyota Motor Corp (NYSE: TM) is spending $1 billion to build a new factory in central Mexico.

The country’s key proximity to the North American market, cheap labor and tax-saving free-trade agreements have prompted a growing number of industrial and manufacturing concerns to relocate there, boosting the economy. So although a significant amount of drug-related violence still persists primarily in the country’s northern states, Mexico’s economy should grow between 3.3% and 4.3% this year.

Colombia, which is perhaps most famous for its long-running communist guerilla insurgency, has also experienced an economic revival of sorts. The nation is a major crude oil exporter, and its economy grew 4.6% last year, with 3.4% growth expected in 2015. Although oil exports are down, the weakening Colombian peso vis-à-vis the U.S. dollar is boosting demand for other exports from the country. That’s cushioning the blow of oil prices just when crude product is expected to grow now that the government is negotiating a truce with the guerillas.

This doesn’t mean we should all go rushing headlong into Latin America, and I certainly won’t be vacationing in Caracas any time soon. The political uncertainty in many parts of the region is why we don’t have many Latin America-specific investments in our Global Income Edge portfolios. Still, if your focus is quality, there are opportunities to be found.

WisdomTree Global Equity Income ETF (NYSE: DEW) allocates about 3% of its assets to the region, a percentage that has fallen largely thanks to global market dynamics.

The fund selects its holdings largely on the basis of yield, with higher-yielding companies receiving greater weightings. It’s actually a good sign that the portfolio features companies from other countries more prominently because rising yields are often a sign of falling share prices.

Still, the fund’s holdings include multinational powerhouses such as Brazil-based Ambev (NYSE: ABEV) and Vale (NYSE: VALE). The former is a beverage powerhouse, producing everything from soda to beer, while Vale is a global mining behemoth. Ambev currently yields just less than 3% and has been posting rapid volume growth in response to Latin America’s growing beer consumption. Vale is one of the lowest-cost producers of iron ore in the world, so it has weathered falling ore prices quite well.

Those are just two of the fund’s holdings in the region, but they’re excellent examples of why investors in Latin America shouldn’t throw the baby out with the bath water.

Portfolio Updates

Philip Morris International (NYSE: PM) announced first-quarter revenue fell 4% to $6.62 billion while adjusted earnings per share (EPS) dropped 2.5% to $1.16 compared to last year. The company continues to suffer from the negative effect of a stronger U.S. dollar. Although currency fluctuations shaved $939 million from its revenue and about $0.31 per share from earnings, Philip Morris still topped analysts’ estimates of $6.13 billion in revenue and $1.01 in EPS.

Despite the weaker dollar, the company’s numbers showed strong growth. Revenue and earnings grew 9% and 24%, respectively, and cigarette volume sales rose 1.4% to 198.8 billion units, with Europe showing the biggest increase in demand.

The better-than-expected cigarette sales and higher prices prompted management to raise its full-year earnings estimate. The company now expects full-year EPS in the range of $4.32 to $4.42, about five cents better than its prior estimate. This represents a 9% to 11% EPS growth compared to the prior year.

After the positive earnings report, shares rose 8.7%, the stock’s biggest one day gain since 2008. At current prices the GIE conservative holding yields 4.7%. Philip Morris International is a Buy up to $90.

Unilever (NYSE: UL) reported better-than-expected revenue in the first quarter from a 5.4% increase in its emerging markets business and overall price increases of about 1.9% during the quarter. The company generates about 59% of its revenues from emerging markets, especially Brazil, Russia, India and China.

After China’s slowing economy hurt Unilever’s revenue in 2014, conditions there appear to be stabilizing. Although Unilever’s business in India improved, that was offset by decreases in Brazil and Russia.

For the first quarter, revenue rose 12.3% to EUR12.8 billion ($14.4 billion), driven by a 10.6% positive effect from currency exchange rates. Internal revenue rose 2.8%, beating analysts’ estimates of 2.1% growth.

Unilever should continue benefiting from a stronger dollar because the United States accounts for about 14% of the company’s annual revenue. This year, the effect of the higher dollar should boost revenue 8% to 9% after exchange rates reduced it 4.6% in 2014. Management expects full-year revenue growth at the upper end of an earlier estimate of 2% to 4%.

Paul Polman, Unilever’s chief executive officer, had this to say:

We have had a good start to the year, helped by favorable currency movements but also an improvement in underlying sales. This is despite a continued challenging trading environment in many parts of the world. The actions we have been taking to put us on track for higher levels of growth are starting to pay off. 

– Khoa Nguyen