"America Movil (NYSE: AMX) is the premier telecom choice in Latin Americao," says Rudy Martin, editor of the recently launched newsletter, Latin Stock Investing.
The advisor explains, "With the shares down 44% over the last year, the stock is dirt cheap. Buy, buy, buy." Here is his review.
"Investors have overly discounted this company's franchise, its growth prospects and cash generating ability. Here are three reasons why America Movil is still on my Focus List.
1. It's the leading telecommunications operating company in Latin America. Ccontrolled by billionaire Carlos Slim, management streamlined a large bureaucracy and refocused on coming to market with new products quickly.
2. Financial strength will be a competitive advantage. Management has made it clear that no acquisitions and no special dividends are under consideration now. Maintaining capital adequacy is the first priority in these turbulent times.
3. The best AMX acquisition may be its own stock. Slim and his management team put AMX into a dominant position in Mexico and the rest of Latin America with an active acquisition and investment program. They certainly know how to spot a deal and right now the most attractive use of capital is AMX share repurchase.
"New products and deals will add to this growth story. One way AMX competes is by focusing on applications and services, such as multimedia. Recently, the company launched higher-priced 3G services in several major Latin American cities, including Mexico, Brazil and Chile.
"For the third quarter of 2008 AMX reported earnings per ADR of $.71 up 46% from the $.49 in the third quarter of 2007. Nine month results were $2.43 per ADR up 23.7% over the same period last year. Last quarter, America Movil's revenues grew 9.8% and service revenues gained a faster 10.4%.
"AMX is the lead wireless player in its home country. But the biggest growth opportunity is in the highly-competitive Brazilian market.
"America Mobil has gained a 26% market share in Brazil, and expects Brazil's wireless market to increase by more than 20-25% in 2008. It also expects to continue to gain share at the expense of other carriers with its new 3G services.
"The price of this stock is supported by a high return on equity and solid double-digit growth rates. The stock trades at 7.5 times 2009 estimates which are 17% above 2008 EPS estimates. Where can you find a company generating 25-35% return on equity selling at less than 50% of its growth rate?
"Further, it is likely that the earnings multiplier for AMX and other telecommunications companies could rise in response to stronger earnings, very strong cash flows and acquisition speculation.
"With earnings estimates of $3-4 per share for the next two years, this stock is dirt cheap. Buy, buy, buy."
