In this article we will take a look at 10 best Mexican stocks to buy now.
With a GDP of about $1.27 trillion, Mexico is one of the notable emerging economies of the world, with strong growth prospects. The coronavirus crisis hammered the Mexican economy. Deloitte projected the country’s GDP growth in 2020 to come in at a negative 9%. However, as economic activity comes back to normal, there are signs of recovery which suggest that Mexico would be soon back on track. Deloitte said that the economy rebounded by 12.1% in the third quarter of 2020. Due to its close proximity and strong trade relations with the U.S., analysts expect that manufacturing activity in Mexico would rebound faster than its peers. For example, after registering a 100% decline by April, automobile manufacturing in Mexico rebounded sharply in October and reached 347,000 units. Similarly, wholesale and retail trade and transportation services registered annual decline of 10.3% in September, compared to a 26.5% decline annually in April.
Should You Invest in Mexican Stocks?
Like all emerging markets, ecommerce is seeing a boom in Mexico. According to the National Institute of Statistics and Geography (INEGI), ecommerce sales in Mexico jumped a whopping 53% annually in April. In October, 48% of consumers reported using digital platforms for online searches to buy products.
Unlike major emerging markets and its peers in Latin America, Mexico’s economy is diversified. The country is a major exporter of oil. It is also the sixth largest electronics industry in the world. In 2018, the country exported a whopping $26 billion worth of computers to the U.S.
Mexico isn’t alone in this global crisis. Financial volatility is causing even the hedge funds to struggle maintaining their gains. The industry’s has already been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 88 percentage points since March 2017. Between March 2017 and February 5th 2021 our monthly newsletter’s stock picks returned 187.5%, vs. 75.8% for the SPY. Our stock picks outperformed the market by more than 111 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Mexico remains one of the major trade partners of the U.S., with trade between the two countries reaching $671 billion in 2018. Following the trade tensions between the U.S. and China, analysts said that Mexico would see a huge boost in jobs and businesses as U.S. companies would look to shift their manufacturing activity to Mexico from China. American companies prefer the tariff-free policies while doing business in Mexico, thanks to the United States–Mexico–Canada Agreement, also sometimes known as NAFTA 2.0. Several major U.S. companies already have facilities in Mexico, including Ford and Volkswagen.
With this economic outlook in mind, let’s start our list of the 10 best Mexican stocks to buy now.
10. Grupo Simec, S.A.B. de C.V. (BMV: SIMECB.MX)
Simec is a Mexican steel company that makes special bar quality (SBQ) steel and structural steel products. The company has plants in Mexicali, Guadalajara, Tlaxcala and San Luis Potosi. In the fourth quarter, the company’s net sales increased 5% amid higher shipments of finished steel products and higher prices.
9. Grupo Bimbo, S.A.B. de C.V. (BMV: BIMBOA.MX)
Founded in 1945, Bimbo is a Mexican bakery company which operates in over 30 countries and 196 bakery plants. The company’s shares have gained 30% over the last 12 months. In the fourth quarter, the company’s net sales in North America jumped 19.2%, while dollar sales increased 11.3%, driven by a rising demand of the company’s bakery products in retail channels, which offset the declines in the food service channel following the COVID-19 outbreak.
8. Gruma, S.A.B. de C.V. (BMV: GRUMAB.MX)
Ranking 8th on our list of 10 best Mexican stocks to buy now is Gruma. Gruma is one of the largest corn flour and tortilla manufacturing companies in the world. Some of its major brands include Mission Foods, Maseca and Guerrero. As of 2014, the company’s revenue stood at $3.8 billion. It has 79 plants worldwide, with main operations in Mexico, U.S. and Europe. Gruma’s revenue jumped after the coronavirus outbreak as the consumption of flatbread and corn increased following the stay-at-home trends. The company’s revenue jumped 25% in the second quarter and 16% in the first quarter on volume improvements.
7. Coca-Cola FEMSA, S.A.B. de C.V. (NYSE: KOF)
Coca Cola Femsa, a subsidiary of FEMSA, ranks 7th on our list of 10 best Mexican stocks to buy now. It is a Mexican beverage company and the largest franchise Coca-Cola bottler in the world. In the fourth quarter, the company’s consolidated volumes increased 1.4%, driven by business growth in Brazil, Central America and Argentina. This upbeat performance offset the declines in Mexico and Uruguay. Total revenue, however, decreased by 5.1%, while comparable revenue increased 1.9%. The stock is down 19% since the start of the year.
As of the end of the fourth quarter, 6 hedge funds in Insider Monkey’s database of 887 funds held stakes in Coca-Cola FEMSA S.A.B. de C.V. Bill & Melinda Gates Foundation Trust is the biggest stakeholder in the company, with 6.2 million shares, worth $286.5 million.
6. Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE: ASR)
Airport operator Grupo Aeroportuario del Sureste operates 9 airports in Mexico. It is the third largest airport operator with 23 million passengers annually. In the fourth quarter, the company’s GAAP EPS came in at Ps. 1.68. Total passenger traffic declined by 44.9% in the period due to the COVID-19 impact.
With a $33.4 million stake in Grupo Aeroportuario del Sureste, S. A. B. de C. V., Jim Simons’ Renaissance Technologies owns 202,683 shares of the company as of the end of the fourth quarter of 2020. Our database shows that 10 hedge funds held stakes in ASR as of the end of the fourth quarter.
5. Fomento Económico Mexicano, S.A.B. de C.V. (NYSE: FMX)
Fomento Economico Mexicano, or FEMSA, is one of the largest beverage companies and convenience store operators in the world. Its subsidiary operates Coca Cola franchise in Mexico, while the company is also the second biggest shareholder of Dutch brewing company Heineken N.V. FEMSA also owns Mexico’s most famous convenience store chain OXXO.
In the fourth quarter, the company posted GAAP EPADS of 15.12 Mexican Peso, missing the consensus by 1.08 Mexican Peso.
As of the end of the fourth quarter, there were 14 hedge funds in Insider Monkey’s database that held stakes in Fomento Económico Mexicano, S.A.B. de C.V., compared to 16 funds in the third quarter. First Eagle Investment Management, with 6 million shares of FMX, is the biggest stakeholder in the company.
4. América Móvil, S.A.B. de C.V. (NYSE: AMX)
America Movil is one of the largest mobile network operators with over 360 million subscribers. The Forbes Global 2000 company recently announced its plans to expand 5G coverage to 12 new cities in Brazil. In the third quarter, the company posted a GAAP EPS of 0.28 Mexican peso. Revenue in the period jumped 5.4%. The stock is down 20% over the last 12 months.
According to our database, the number of AMX’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 16 hedge funds that hold a position in América Móvil, S.A.B. de C.V. compared to 15 funds in the third quarter. The biggest stakeholder of the company is Jim Simons’ Renaissance Technologies, with 3.5 million shares, worth $50.7 million.
3. Grupo Televisa, S.A.B. (NYSE: TV)
Grupo Televisia is one of the 10 best Mexican stocks to buy now. The company operates a direct-to-home (DTH) satellite pay television system, offers DTH broadcast satellite pay television services and produces entertainment content in Spanish watched in over 50 countries. The stock is down 16% over the last 12 months.
As of the end of the fourth quarter, 20 hedge funds in Insider Monkey’s database of 887 funds held stakes in Grupo Televisa, S.A.B., compared to 17 funds in the third quarter. Harris Associates is the biggest stakeholder in the company, with 64.2 million shares, worth $528.9 million.
2. CEMEX, S.A.B. de C.V. (NYSE: CX)
Cemex is a building material company which sells cement, concrete and aggregates in more than 50 countries. With operations in four continents, 66 cement plants and over 260 distribution centers, the company was named in the 2020 Forbes Global 2000 list. In the fourth quarter, the company swung to a profit, with a net income of $70 million, compared to a loss of $238 million in the same quarter a year ago.
With a $33.4 million stake in CEMEX, S.A.B. de C.V., Oaktree Capital Management owns 24.5 million shares of the company as of the end of the fourth quarter of 2020. Our database shows that 22 hedge funds held stakes in CX as of the end of the fourth quarter.
1. Wal-Mart de México, S.A.B. de C.V. (BMV: WALMEX.MX)
Walmart de Mexico, or Walmex, is the Mexican arm of U.S. retail giant Walmart. It ranks 1st on our list of 10 best Mexican stocks to buy now. The company has over 2600 stores in the country, including 287 Walmart Supercenters. The company has been trading in the Mexican stock exchange since 1977. Walmex also had a restaurant division called Vips, which was acquired by Mexican restaurant company Alsea in 2013 for over $600 million.
Wal-Mart de México, S.A.B. de C.V. currently has a $54 billion market capitalization.
According to our database, the number of WALMEX’s parent Walmart’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 70 hedge funds that hold a position in Walmart, compared to 69 funds in the third quarter. The biggest stakeholder of the company is Fisher Asset Management, with 11.8 million shares, worth $1.7 billion.
You can also take a peek at John Rogers’ Top 10 Stock Picks and Value Investor Bill Miller’s Top 10 Stock Picks.
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Disclosure: None. 10 Best Mexican Stocks To Buy Now is originally published on Insider Monkey.
