7 Hot Mexico Stocks (CX, KOF, FMX, RC, SIM, IBA, TMX)

Mexico is the 11th most populous nation in the world, with the 15th largest area of any country and the 13thlargest nominal GDP on the planet. So why is it that U.S. investors often overlook economic opportunity south of the border? There are a lot of companies there with big potential — including blue chip telecom stock Telefonos de Mexico (TMX), beverage giants Coca Cola Femsa (KOF) and Fomento Economico Mexicano (FMX) and construction leader Cemex (CX).

In fact, at the end of April the International Monetary Fund said it now expects Mexican growth in 2010 of 4.2% — an upwards revision of 0.2% — thanks to broader economic recovery. This means that Mexican stocks could be on the upswing.

Cinco De Mayo is the perfect opportunity to identify some profitable opportunities in Mexico stocks, so here you are: 10 of Mexican’s largest companies that trade on U.S. exchanges via American Depositary Reciepts. ADRs allow American investors to invest safely in foreign stocks because it means the same SEC safeguards that apply to domestic companies also apply to these foreign companies. ADRs also provide an ease of trading, since there are no exchange rates to calculate or foreign markets to watch.

If you’re looking to invest in Mexico, here are 7 Mexican stocks you might want to investigate:

Mexico Stock Cemex CX

Industry: Construction Materials
Market Cap: $10.8 billion
Profile: Cemex SAB (CX) sells of cement, ready-mix concrete and other construction materials. Though based in Mexico, Cemex has operations in North America, Europe, South America, Central America, the Caribbean, Africa, the Middle East, Australia, and Asia.
Why CX Stock: Yes, the housing market and commercial real estate market have been battered both at home in the U.S. and elsewhere around the world. But we are very near to the bottom by some estimates, and that would mean now is the best time to jump into construction giant Cemex.

Mexico Stock Coca Cola Femsa KOF

Industry: Consumer Staples
Market Cap: $12.3 billion
Profile: Coca-Cola Femsa (KOF) is a bottler of Coca-Cola (KO) trademark beverages in Latin America. The Company operates in Mexico, as well as Central America.
Why KOF Stock: Because the company has posted three straight earnings surprises on strong beverage sales, topping Wall Street forecast by an average of about 30%. KOF shares are up 22% in the last six months, almost double that of the S&P 500 index.

Mexico Stock Fomento Economico Mexicano FMX

Industry: Consumer Staples
Market Cap: $16.2 billion
Profile: Fomento Economico Mexicano (FMX) sells various beverage products including juices, energy drinks and alcoholic beverages. The company is behind many beers you might recognize from your local bar or liquor store – including Tecate and Dos Equis.
Why FMX Stock: On March 2, HSBC Securities upgraded FMX stock to neutral from overweight. Also, Fomento Economico Mexicano has grown its earnings in each of the last four consecutive quarters.

Mexico Stock Grupo Radio Centro RC

Industry: Media and Broadcasting
Market Cap: $143 million
Profile: Grupo Radio Centro (RC) is a radio broadcasting company in Mexico. RC mainly produces and broadcasts music, entertainment, news and special event programs on 14 AM and FM stations in and around Mexico City.
Why RC Stock: Be warned – RC is not only a foreign stock but a micro-cap with ultra-thin volume. But this company also offers a generous 5.5% dividend yield and can generate big profits in a hurry since it can surge on low trading volume. Use a limit order and trade during market hours if you buy this stock, and expect a wild ride.

Mexico Stock Grupo Simec SIM

Industry: Manufacturing
Market Cap: $1.2 billion
Profile: Grupo Simec (SIM) is a diversified manufacturer and distributor of steel products for use in the United States, Mexico and Canada. SIM makes axles, hubs and crankshafts for automobiles as well as construction materials.
Why SIM Stock: Unlike many other Mexico stocks, SIM has actually outperformed the broader U.S. markets since Wall Street bottomed out last year. SIM stock has tacked on nearly 100% gains since the March 2009 lows. As demand for steel products picks up thanks to the global recovery, Grupo Simec should continue to profit.

Mexico Stock Industrias Bachoco IBA

Industry: Agriculture
Market Cap: $1.1 billion
Profile: Industrias Bachoco (IBA) mainly profits from breeding, processing, and marketing of poultry products such as chicken and eggs. It also has limited pork and beef operations.
Why IBA Stock: One thing that the recession has proven to investors everywhere is that consumer staples like food and drink always see sustained demand even in tough times. This makes IBA a fairly-low risk stock despite its small market capitalization and relatively low trading volume. It’s 2.5% dividend yield is also a bonus.

Mexico Stock Telefonos de Mexico TMX

Industry: Telecommunications
Market Cap: $13.3 billion
Profile: Telefonos de Mexico (TMX) provides local fixed-line services, long-distance and data services in Mexico. It also has operations elsewhere in Latin America, such as Brazil, as well as in the U.S.
Why TMX Stock: Share have dropped sharply since earnings on April 27, with Telemex stock off 12% as of this writing. But TMX profits fell only 2.1% in Q1 so this could be a gross overreaction. While Mexico has suffered in the recession with its biggest trade partner (namely America), it should also see a surge as the recovery takes shape.

Remember, these are not buy recommendations per se, but only the case that there are some decent investments in Mexico for investors depending on your tastes. Please remember to look into each of these stocks carefully before buying — and in the case of thinly traded stocks like Grupo Radio Centro (RC), protect yourself by placing a limit order and buying shares during regular market hours.

As of this writing, Jeff Reeves did not own positions in any of the stocks mentioned here.

Tell us what you think here.

Related Articles:

Your Guide to Profiting From Asia’s Explosive Growth
For access to the best-kept secrets about investing in China and the rest of Asia, plus the hottest stocks to buy and sell, sign up now for Robert Hsu’s FREE Investing Newsletter, Asia Insider. It’s sent right to your email inbox every week — absolutely FREE!