Six Ways To Invest In Mexico's Growth

According the the CIA World Fact Book, Mexico is the 13th largest economy in the world as measured in Gross Domestic Product in purchasing power parity. The World Bank considers the Mexican economy to be an Upper-middle-income economy [rated higher than Brazil and China, which are considered Lower-middle-income economies] and they have the highest per capital income in Latin America.

In 2005, inflation reached a record low of 3.3% in Mexico, and foreign debt was decreased to less than 20% of GDP. It has free trade agreements with the United States, Canada, the European Union, Japan, Israel and many other countries. With such a strong economy, there are several investment opportunities with Mexican stocks.

Unfortunately, many of the largest companies trade primarily in Mexico and only occasionally appear on the pink sheets in the United States. These include Wal-Mart de Mexico (WMMVY.PK) and Grupo Indl. Bimbo SA (GBBAF.PK), Mexico's largest bread maker. Probably, the best way to invest in these would be to use the Mexico Equity & Income Fund Inc. (MXE), which is a closed-end stock and bond fund that invests in Mexican stocks.

But fortunately, there are a few stocks of Mexican companies that have ADRs that trade on the New York Stock Exchange.

American Movil (AMX), a Mexico based company, is a provider of wireless communications services in Mexico, Argentina, Brazil, Chile, Colombia, Guatemala, El Salvador, Nicaragua, Honduras, Ecuador, Paraguay, and in Peru. Talk about Latin American diversification! Its P/E is 23.5 and the PEG is .53. It even pays a small yield of .7%. This is one of the companies controlled by Carlos Slim, the second wealthiest man in the world.

Another Carlos Slim company, Telefonos de Mexico (TMX), is the largest telephone company in Mexico. It also provides telecommunication services in Brazil, Chile, Argentina, Peru, Brazil, Argentina, and Colombia. The P/E is 13.5 and the PEG is 1.1. It has a decent yield of 2.3%.

Grupo Televisa SA (TV) is the largest television broadcaster in Mexico. Its programs are also rebroadcast in Latin America, Europe, Asia, Africa, the United States, Canada, and Australia. The P/E is 21.6 and the PEG is 1.3. Its yield is a tiny .5%.

Cemex S.A.B. de C.V. (CX), or just Cemex, is the largest cement company in Mexico, and the third largest cement company in the world. It has production facilities in 50 countries all over the world including North America, the Caribbean, South America, Europe, Asia, and Africa. The P/E is 10.3 and the PEG is 2.6. Its yield is 1.9%.

Fomento Econmico Mexicano, S.A.B de C.V (FMX), also known as FEMSA, is the largest beverage company in Mexico, and for that matter, in all of Latin America. The P/E is 21.3 and the PEG is 1.1. It has a yield of 1.1%.

Finally, there is Gruma SA de CV (GMK), which is the largest manufacturer of corn flour and tortillas in the world. It is also the largest manufacturer of corn chips in Mexico. The P/E is 11.5 and the PEG is 1.6. It pays a nice yield of 2.4%.

Disclosure: Author does not own any of the above.

Comments

[DavidJackson]

iShares Mexico Index Fund ETF (EWW)?

[stocker blog]

Yes, investing in the Mexico ETF is a good suggestion for a diversified play on Mexico stocks.