With more and more tourists making Mexico's Yucatan Peninsula a vacation destination, Zacks senior Latin American markets analyst Claudio Freitas, CFA now sees fit to upgrade shares of airline Grupo Aeroportuario del Sureste, S.A. de C.V. (ASR) from Hold to Buy. Here's why:

We are changing our current recommendation on Grupo Aeroportuario from Hold to Buy. Second quarter results were positive, including strong commercial revenues and positive passenger traffic. The company has a long history of impressive results and strong cash flow generation. The short-term outlook is now positive, mainly after the recent opening of the terminal 3 of the Cancun airport.

In the second quarter 2007, total traffic in ASR's airports increased 15.3% year-over-year. Particularly encouraging is the continued growth in traffic for the Cancun Airport. In fact, the Cancun airport represents over 75% of ASR's revenues and we do not expect this situation to change in the short-to-medium term.

Despite the hurricanes in recent years, Mexican tourist destinations like Cancun and Cozumel continue to be highly attractive, and we do not believe this situation will change anytime soon. The relative attractiveness of the locations ASR serves is dependent on many factors, some of which are beyond ASR's control. These factors include promotional activities and pricing policies of hotel and resort operators, weather conditions and natural disasters (e.g. hurricanes), and the development of new resorts in the region.

Read the analyst note on ASR