| As I believe there is money to be found in all sectors, | | | | shareholders of this company, some pessimism may |
| regardless of the events taking place in the economy, I | | | | be placed with the pact that earnings have had |
| focus today's article on the technology sector, closing | | | | negative growth on a quarterly level over the past |
| in on the wireless communications industry. With | | | | year. While this is an excellent observation, it is also |
| technology expected to perform quite nicely in 2007, | | | | important that much cost went into the investments of |
| despite the recent correction of worldwide stocks, I | | | | the recent acquirements of the various companies I |
| see companies, especially those that have interests | | | | listed earlier, and over time, as economies of scale are |
| abroad, to contain the necessary potential to help out | | | | created, the negative 26.30% quarterly earnings |
| investors. As the wireless industry is loaded with large | | | | decline will reverse. In the meantime, free cash flow, |
| capitalization stocks such as Vodafone and China | | | | although not available from Capital IQ, remains high |
| Mobil Limited, I have actually researched and found an | | | | from my calculations, and an investor should look at |
| excellent large-cap stock of 78 billion dollars in America | | | | more of the other positives American Movil has to |
| Movil S.A.B de C.V (AMX) to contain both the | | | | offer. One of the areas which really look impressive |
| fundamental and technical qualities of becoming an | | | | for this company is the current projected P/E ratio. |
| excellent asset for your portfolio. | | | | Even though, over the past twelve months, earnings |
| Before heading into the subject of America Movil's | | | | have not been tremendously strong for this company, |
| figures and charts, I always believe the most important | | | | the earnings multiple for the next twelve months is |
| component to look for in a company is exactly what | | | | signaling a decline from about 20 to 11. With a industry |
| kind of business it produces. Researching on Reuter's I | | | | multiple average of around 25 and having competitors |
| have discovered that America Movil "is a provider of | | | | such as Telemig Celular (12.85), Nll Holdings (18.24), and |
| wireless communications services in Latin America." | | | | Vivo Participacoes (N/A because of a negative EPS) |
| While the language may seem a bit rudimentary, the | | | | not completely up to par with American Movil in this |
| key phrase I found in this assessment is the availability | | | | regard, one of the most important components for |
| of communication services in Latin America. Providing | | | | fundamental analysis proves to add on to the optimism |
| access in over 14 countries south of the United States | | | | I have reserved for this company. In addition, while |
| border, there is going to be significant opportunities in | | | | other multiple ratios such as P/S (3.72), EV/R (4.01), |
| countries like Mexico, Colombia, and Brazil. As these | | | | and EV/Cash (11.9) may be a bit high for this company, |
| nations continue to develop, there is tremendous | | | | this is a result of a much higher market capitalization |
| growth potential in terms of new institutional and retail | | | | which has been inflated by debt, triggering a much |
| users of communication devices such as a cell phone. | | | | higher than liked enterprise value to its respective |
| In addition, with the added businesses of Smartcom | | | | competitors. There may also be some concern over a |
| and Verizon and AMX holdings in these various | | | | low current ratio (0.9) and the problem of insolvency. |
| companies, America Movil will only take a greater | | | | However, once again, these extra debt and liabilities |
| concentration ratio of this market--allowing for high | | | | can be traced back to the multiple acquisitions this |
| costs to its users, transcending into higher revenue and | | | | company has had over the past two years, and over |
| profit figures. Now while this scenario sounds brilliant, an | | | | time, once the debt is paid off, with higher earnings, |
| argument may be made that without a growing | | | | revenue, and cash, these numbers should correctly |
| economy in these Latin American nations, there will be | | | | align themselves with the numbers of America Movil's |
| no profit for America Movil. While such a consideration | | | | competitors. The question that may be asked, |
| is absolutely true, looking at the five year charts of | | | | however, is if the management team of this company |
| both Mexico and Brazil, two of the most populated | | | | will be able to produce the necessarily means to |
| nations American Movil serves, despite a few hiccups, | | | | continue to evolve its strong financial base. From the |
| growth has been amazing for these major indices, with | | | | research provided, there should be no disgruntled |
| little in the way to abate this optimism. Furthermore, | | | | emotions placed to CEO Daniel Hajj Aboumrad and his |
| more specifically to Mexico, with a new government | | | | staff which, over the past year, has managed to |
| spending more on infrastructure and resources, trying | | | | produce an ROE of over 44%, a return on assets of |
| to improve human capital, in the next ten to twenty | | | | 13%, and an ROI of nearly 26%. Compare these |
| years or so, there will be an absolutely different | | | | numbers respectively to the industry average of 10%, |
| perspective on how Mexico is perceived in an | | | | 3%, and 4% or with America Movil's competitor Vivo |
| economic manner. Thus, because of a large | | | | Participacoes's respective numbers of -14%, -9%, and |
| populations and growing economies, there is | | | | -13%, and there is definite evidence that this company |
| tremendous potential for America Movil to perform | | | | is taking advantage of the equity it spits out. Thus, |
| quite nicely as a long term investment. | | | | after going through what the management can do, and |
| Now, while this plan may seem ideal in theory, in order | | | | how America Movil stacks among its competitors, |
| for a company to even have a chance to perform at | | | | there is really no reason not to at least think of this |
| respectable rates in the future, a business must | | | | company. |
| already have strong fundamentals it can evolve from. | | | | Now while the fundamentals may look appealing, there |
| Nevertheless, to hold optimism in the ears of | | | | may be some misplaced pessimism concerning the |
| shareholders of this company, there is a definite base | | | | current US economy and how America Movil will fit |
| of strong figures, which I believe can only rise, in | | | | that structure. With the recent freefall of stocks over |
| dramatic fashion, over the next few years. Relative to | | | | the past week, because America Movil has a strongly |
| the top line, over the last year, America Movil has had | | | | correlated beta of 2.5, there may be some hesitation |
| revenue of nearly 21 billion dollars according to Capital | | | | investing in this company if the S&P 500 is looking |
| IQ. That number has transcended over to its shares, | | | | like it will decline more and more this year. However, |
| as its revenue per share value of 11.7 beats out | | | | while such may be this case, historically the S&P |
| competitors such as Vivo Participacoes who is now at | | | | and other broader indexes have faired well during the |
| about 3.6. In addition, revenue growth over a quarterly | | | | year prior to an election, and with a still solid economy, |
| basis has also remained solid with an over 20% | | | | there should not be too much emphasis placed on the |
| performance compared to other wireless rivals such | | | | recent trend of events--especially since America Movil |
| as Rural Cellular (0.36%) and Telemig Celular | | | | is not involved with China. In addition, America Movil is |
| Participacoes (4.30%). Such growth for America Movil | | | | still trading below is 50 day SMA, has a fairly high short |
| has helped many analysts on Wall Street reconfigure | | | | ratio of 2.5, and has a strong dividend payoff, which |
| their growth estimate for this company, as over the | | | | cannot be said of all technology companies. Thus, if |
| next five years, researchers determined that growth | | | | worries still plague your thoughts that the US economy |
| will be so high for this company that it's PEG of 0.44 | | | | is entering a depression, remember that this company |
| will easily beat out competitors like NII Holdings (0.72), | | | | is more specific to the foreign markets as a long term |
| and Telemig Celular (6.63). However, while these | | | | purchase instead of the presumed short term buy. |
| figures may be nice to look at for potential | | | | |