Wireless, Wireless, Read All About It…

America Movil (NYSE:  AMX) is one of the leading wireless communications companies in Mexico.  The amount of wireless phone and Internet users in Mexico has been growing by over 50% per year for the last 5 years.

Mexico’s economy is expected to grow at a 4.2% rate in 2007, higher than the 3% growth experienced in 2006.  Mexico’s economy seems to be bouncing back from the recession of 2001-2002, when gross domestic product averaged 0.5%.

This country is on the up and up, not only are they doing the right things economically, but it seems that they have secured a solid leader in Felipe Caldron. 

This guy has moxy.  As soon as sat down in his newly elected office, Caldron mobilized the Mexican army, went into every police precinct in Mexico, and cleaned house. 

He has raised the salaries of police official and implemented a zero tolerance policy in order to curb corruption.  I think we are going to see a great turn around in Mexico over the next couple years; it is the perfect time to take advantage and American Movil is going to be our vehicle.

This company has an almost identical chart correlation to the Mexican EFT and it’s an extremely strong organization – fundamentally.  I have provided some statistics below:

As you can see from the numbers above, America Movil is strong compared to the S&P 500, which is a quite acceptable proxy of the American market.  Movil has a return on equity of 43%; which is really incredible.  It’s raking in the money for its investors – totally blowing the S&P 500 out of the water.

We have a very similar situation with the profit margins.  Movil is pulling in more income per dollar sales than the average S&P 500 stock.  This is a key indicator of great management, good market presence, and overall solid fundamentals.

I think we are looking at a real winner with America Movil.  This coupled with an economic turn-around in Mexico could slingshot American Movil to $100 per share by the end of 2008. 

This is a long-term stock position – for those of you that what to play the options for the short term – feel free.  I would suggest buying January or February 2008 $65 calls.

Action to Take:  Buy America Movil (NYSE:  AMX) up to $65 per share.  This is long-term investment.  Look to hold onto this stock well into 2008.  The fundamentals are all there. That’s how IBM and GE were built…

Cheers,

Mitchell Sachs
Senior Equity Analyst, Wall Street Elite