Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20
Gold Gann Angle Update - 10th Jan 20
Gold In Rally Mode Suggests Commitment of Traders (COT) Data - 10th Jan 20
Disney Could Mount Its Biggest Rally in 2020 - 10th Jan 20
How on Earth Can Gold Decline During the U.S. – Iran Crisis? - 10th Jan 20
Getting Your HR Budget in Line - 10th Jan 20
The Fed Protects Gamblers at the Expense of the Economy - 9th Jan 20
Last Chance to Get Microsoft Windows 10 for FREE! - 9th Jan 20
The Stock Market is the Opiate of the Masses - 9th Jan 20
Is The Energy Sector Setting Up Another Great Entry? - 9th Jan 20
The Fed Is Creating a Monster Bubble - 9th Jan 20
If History Repeats, Video Game Stocks Could Soar 600%+ - 9th Jan 20
What to Know Before Buying a Land Rover Discovery Sport in 2020 - 8th Jan 20
Stock Market Forecast 2020 Trend Analysis - 8th Jan 20
Gold Price at Resistance - 8th Jan 20
The Fed Has Quietly Started QE4 - 8th Jan 20
NASDAQ Set to Fall 1000pts Early 2020, and What it Means for Gold Price - 8th Jan 20
Gold 2020 - Financial Analysts and Major Financial Institutions Outlook - 8th Jan 20
Stock Market Trend Review - 8th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Investing in Mexico: Latin America’s Next Largest Economy

Companies / Mexico Nov 02, 2012 - 11:50 AM GMT

By: Investment_U

Companies

Best Financial Markets Analysis ArticleMike Kapsch writes: I’ve noticed people go to great lengths to travel the world, but inexplicably ignore sites in their own backyard.

Take me, for example.

I have lived in the United States for over 25 years.


And while I have visited a total of 23 states and other foreign countries, I have never been to Mexico. It’s not like I haven’t had the opportunity…

I’ve just always taken a pass. Admittedly, I’ve been a bit spooked by all the headlines on border, drug and gang violence.

This type of thinking is unfortunately keeping many investors away from Mexico – a big mistake.

Because while Mexico’s challenges make headlines, its strengths are making money for investors.

Already this year, Mexico’s Stock Exchange, the Bolsa Mexicana de Valores, has been the second-best performing stock market in the world, lagging only Germany’s.

And over the past 12 months, its stock exchange is up roughly 20%.

But this could be just the beginning of something even bigger…

As Nomura Holdings (NYSE: NMR) analyst Benito Berber relayed in a recent report, “In the next decade, Mexico is likely to become [Latin America’s] largest economy and one of the most dynamic among emerging markets.”

In this report, you’ll discover exactly what two industries are set to benefit from Mexico’s continued growth. You’ll also see how you can gain access to some of Mexico’s best companies right here in the United States.

Let’s get right to the details…

Industry #1: An Emerging Manufacturing Superpower

For years, China has always been the go-to place for outsourcing, especially when it comes to manufacturing.

According to a JP Morgan (NYSE: JPM) study, in 2002, Chinese workers earned half of what Mexican workers earned at that time.

Today, however, because of rising Chinese wages, they earn just 12% less than Mexican workers.

In fact, in just the last two years, 200 Chinese companies have expressed interest to the Chinese government that they’d like to move their operations to Mexico to save on costs.

In addition, companies in 41 different countries are also looking to set up multi-million and -billion dollar manufacturing facilities in Mexico right now.

Italian tire maker Pirelli is just one example. It’s looking to set up its first-ever plant in Mexico as you’re reading this.

Other companies building or planning to open new plants in Mexico include…

  • Audi
  • Volkswagen
  • Honda
  • Whirlpool
  • Chrysler
  • Hershey
  • Mazda
  • Rolls-Royce
  • Ferrero
  • Nissan

The list goes on and on…

You see, Mexico’s competitive advantage is being supercharged by a weak peso policy that has pushed the peso down an unbelievable 1,500% against the U.S. dollar since 1987.

Not to mention, Mexico also has more free trade agreements with other countries than any other nation in the world. This explains why Mexican exports hit a record high in April of this year.

It also explains why American, European, Japanese, South Korea and, yes, even Chinese companies are practically falling over each other to invest in Mexican production facilities.

So who’s best set to gain from this rapid increase of manufacturing in Mexico?

Look no further than Mexican construction companies.

If companies from all over the world are coming to Mexico to build new manufacturing facilities, who do you think they’re going to have to do business with to make their new manufacturing facilities a reality?

That’s right, construction companies with an established reputation in Mexico. And Mexico itself will also need to build out the proper infrastructure to support new facilities.

In fact, we recommended a company by the name of Empresas I.C.A., S.A.B. de C.V. (NYSE: ICA) in Investment U Plus on June 6 of this year. Since then, Plus subscribers have had the opportunity to cash in gains as high as 51%.

Empresas is Mexico’s largest construction company and has been business for over 60 years. For the last three years, the company’s backlog has remained at record levels.

But just recently, our very own Global Equities and Emerging Markets Specialist, Carl Delfeld, recommended taking a look at Grupo Simec S.A.B. de C.V. (NYSE: SIM).

Simec provides the finished steel that goes into manufacturing plants being built hand over fist by global companies taking advantage of Mexico’s edge. In the last six months, the company has gained a full 40%.

But there’s still plenty of room to run. That’s because the company is still trading barely above its book value and at only 2.41 times forward earnings.

Yet, this is just one of two industries set to benefit from Mexico’s growing presence in Latin America.

Industry #2: The World’s Most Energy Secure Nation

According to a recent report from the U.S. Chamber of Commerce, believe it or not, Mexico is actually the world’s most energy secure nation among the 25 largest energy-consuming countries.

Even more unbelievable, except for a few years in the early 2000s, Mexico has consistently been the most energy secure country for the past 30 years running.

The trouble for investors, however, is that investing in Mexican energy isn’t the easiest thing to do.

Petróleos Mexicanos, or Pemex, is Mexico’s largest enterprise in terms of total sales, assets, personnel employed and tax payments.

Not only does the company fuel Mexico’s cars, it represents 40% of the Mexican government’s revenue. It’s undoubtedly one of the world’s largest petroleum companies, as well.

But it’s state-owned by the Mexican government. Therefore, it doesn’t have shares that trade on a public exchange like the companies previously mentioned.

How can you possibly benefit from Pemex without actually being able to invest in the company?

It’s actually pretty simple.

Pemex works with many companies to help make its operation run smoothly.

For instance, Pemex just awarded McDermott International Inc. (NYSE: MDR) a $50-million contract to build three pipelines to help transport its oil from offshore to onshore.

More opportunities are opening up, as well.

As Bloomberg reports, in Mexico, “Oil reform in 2008 opened exploration and production projects to private and foreign companies for the first time since 1938… Morgan Stanley is preparing to invest millions of dollars in Mexican energy companies as the nation opens up the industry to private capital and state-owned oil producer Petróleos Mexicanos boosts spending to a record.”

Just last year, Schlumberger Limited (NYSE: SLB) and its partner Petrofac were awarded the rights to develop Northern Mexico’s Panuco Field, one of six properties being auctioned off by Pemex.

In the first quarter of 2012, the company announced revenue of $10.61 billion, up from $8.72 billion in the first quarter of 2011. The company even largely contributed its growing numbers to offshore production and exploration in Mexico and the Gulf of Mexico.

The Bottom Line

Mexico still exports 80% of its goods to the United States.

Yet, being so close the world’s largest economy hasn’t necessarily been much of a burden.

Last year, Mexico earned $277 billion exporting goods to the United States. And that number is set to only increase now that doing business in Mexico is arguably even cheaper than in China.

You see, what could take month to receive goods from China, only takes a few days from Mexico. There are no trade wars to worry about, no tariffs, no fees.

Add in the fact that Mexico currently has 43 other free trade agreements with other nations, the most out of any country in the world, and you can see why there may be no better opportunity than right now to cash in from Mexico’s budding global presence.

Good Investing,

Mike

by , Investment U Research

http://www.investmentu.com

Copyright © 1999 - 2012 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules