If you’re like me, the mere mention of the term “Pink Sheets ” induces skepticism. There’s good reason for this. The Pink Sheets are essentially unregulated. Trade volumes are thin. And financial information can be skimpy.

But while buying stock on the over-the-counter market is certainly not for the faint of heart, there are several good reasons for US-based Africa-investors to give the Pink Sheets a look.

1. They offer a wider universe of African stocks

ADRs for nearly 50 South African stocks trade on the Pink Sheets. Most don’t trade in significant volume, but a few boast average daily volumes in excess of 1000 shares.

Here’s a list of the most liquid South African ADRs on the Pink Sheets:

Anglo Platinum Ltd (AGPPY.PK )

Impala Platinum Holdings Ltd (IMPUY.PK )

Kumba Iron Ore Ltd (KIROY.PK )

Massmart Holdings Ltd (MMRTY.PK )

MTN Group Ltd (MTNOY.PK )

Murray & Roberts Holdings Ltd (MURZY.PK )

Nedbank Group Ltd (NDBKY.PK )

Pretoria Portland Cement Company Ltd (PPCYY.PK )

Sanlam Ltd (SLLDY.PK )

Shoprite Holdings Ltd (SRHGY.PK )

Standard Bank Group Ltd (SBGOY.PK )

Telkom S.A. Ltd (TLKGY.PK )

Tiger Brands Ltd (TBLMY.PK )

There are some very interesting companies here, and many of them possess continent-wide reach.

2. Pink Sheet listings can be traded through most US-discount brokers

If you’re interested in only the very largest stocks on the Johannesburg Stock Exchange, there’s no need to go through the hassle of opening a South African brokerage account. Trading Pink Sheet stocks is nearly as convenient as buying and selling stock on the main board. Orders can be placed online and commissions are typically the same.

3. No currency exchange costs

In order to purchase shares of South African stock, you would normally be obliged to change dollars into rand. Depending on the amount exchanged, the spread between the bid and ask price can be significant. In fact, one US-based discount broker that does allow its customers to trade on the Johannesburg Stock Exchange charges a 1% fee on the total amount of currency converted. That’s nothing to sneeze at. Pink Sheet stocks trade in US Dollars, allowing investors to avoid such costs.

Of course, you should carefully consider your bid and offer prices before making a trade on an illiquid stock. Use limit orders to avoid an unpleasant surprise when reviewing your trade confirmation. You should also ensure that you can easily locate and interpret financial information pertinent to your investment.

If you’re comfortable with these caveats, a Pink Sheet ADR might be a worthy addition to your portfolio.