As measured by the iShares MSCI Mexico Investable Market Index
), Mexican equities are enjoying some good times in 20012. The
$1.4 billion ETF has jumped almost 20 percent year-to-date. While
EWW represents an easy avenue for investors to gain
south-of-the-border exposure, those that prefer single stocks
will need to do a little more digging.
When it comes to Mexican equities, the name many American
investors are most familiar with is telecommunications giant
America Movil (NYSE:
). America Movil is EWW largest holding and the largest mobile
phone carrier in Latin America.
With a yield of just 1.3 percent, America Movil also is not a
credible alternative to AT&T (NYSE:
) and Verizon (NYSE:
) for income investors. The good news is that Mexico is home to a
fair amount of stellar performers, some of which are listed on
Grupo Aeroportuario del Centro Norte (NASDAQ:
Although oil prices have slipped recently, crude is still pricey
on a historical basis. That makes investing in airlines a risky
proposition. Not to mention, many airlines are not exactly
Both of those factors increase the allure of a stock such as
Grupo Aeroportuario del Centro Norte. The company is akin to a
master limited partnership of the airline business. Grupo
Aeroportuario del Centro Norte is not an airline. Rather, it
operates 13 airports in Monterrey, Acapulco, Mazatlan,
Zihuatanejo, Chihuahua, Culiacan, Durango, San Luis Potosi,
Tampico, Torreon, Zacatecas, Ciudad Juarez, and Reynosa.
The stock is beholden to passenger traffic through its
airports (the higher the better), but investors are compensated
for taking on the risk of this small-cap name to the tune of a
15.5 percent yield. On the basis of price-to-earnings (14.1 as of
July) and return on equity (11 percent over the trailing 12
months), Grupo Aeroportuario is attractively valued relative to
Coca Cola FEMSA (NYSE:
Coca Cola FEMSA is one of the dominant Latin American sellers of
beer and soft drinks with distribution centers in Mexico,
Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela,
Brazil, and Argentina.
Noteworthy is the fact that the company is looking to extend
its reach beyond its home region. Earlier this year, Coca Cola
Femsa made an
acquisition in the Philippines
in an effort to bolster its Asian footprint.
The bull case for Coca Cola Femsa revolves a sound financial
position, tolerable debt levels
and impressive profit margins
. The red flag is easy to spot. A forward P/E of 101.5 means the
shares would be vulnerable to even a slightly disappointing
earnings report or forecast.
Avoid the stock if it falls below $125 until it finds support
at $115. A yield of 1.5 percent is nothing to write home about,
but it is worth noting that Coca Cola Femsa has a lower beta than
the S&P 500.
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