In today’s Daily Alert, Louis Navellier recommends a new buy from the country that’s turning out to be this new year’s most popular investing destination: Mexico. You’ll receive your new Investment Digest issue this afternoon.
“My first recommendation for you this month is Fomento Economico Mexicano SAB (FMX, $109), which you may know as FEMSA, Latin America’s largest beverage producer. This company dominates the soft drink and beer market in Mexico in particular, and believe it or not, Mexico actually has a massive soft drink market; in fact, Mexican consumers drink more soda than any other country: 43 gallons per year! That’s at least partly due to concerns over the quality of drinking water. (I prefer to drink the high quality beer when I’m there, which helps me partake of that terrific Mexican tradition of a siesta.)
“FEMSA is in a great position to defend its market dominance: In addition to being the largest independent bottler of Coca-Cola products, FEMSA owns a majority stake in Coca-Cola FEMSA (KOF), the world’s second largest bottler. But that’s not all — the company also operates nearly 10,000 OXXO convenience stores across Latin America, the bulk of which are in Mexico. FMX is an industry leader in many respects. Of the 48 companies in the Brewers industry, FEMSA ranks second for long-term growth rate, fifth for return on equity, and sixth for sales growth. FMX also boasts the third-highest dividend — with a 1.3% annual yield. FEMSA typically pays its dividends each May and November.
“While FEMSA isn’t due to report fourth-quarter earnings until the end of February, we’ll want to keep this announcement on our radar. Analysts currently forecast 3.1% sales growth and 17.6% earnings growth followed by an even better performance for future quarters. That’s decent, but I expect growth to accelerate because of the weak dollar. Over the past year, the Mexican Peso has gained over 7% against the dollar. This has helped boost operating earnings for all Mexican multinational companies like FEMSA, and with the dollar showing no signs of strengthening anytime soon, we can expect this benefit to continue. I recommend that you pick up shares of this Conservative stock under $113 per share.”
- Louis Navellier, Blue Chip Growth Letter, February 2013