Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.
America Movil (NYSE: AMX) is the top conservative idea for 2007 from Nick Vardy, editor of The Global Bull Market Alert. He notes, "Mexican billionaire Carlos Slim vies with India's Lakshi Mittal as the world's third-wealthiest man, just behind Bill Gates and Warren Buffett.
"Slim made his fortune through his Latin American telecommunications empire that includes American Movil. Spun out from Telefonos de Mexico five years ago, America Movil is Latin America's cell phone goliath with close to 110 million subscribers.
"Holding a 70% share of the Mexican market, its wireless network reaches about two-thirds of Latin America's population, and the firm continues to grow its already expansive footprint.
"Squeezed out of Venezuela by Hugo Chavez's anti-American campaign, U.S. operator Verizon is not only exiting that market, but also selling its assets in Puerto Rico and the Dominican Republic. But Verizon's loss is America Movil's gain.
"Meanwhile, America Movil is all about fast growth. It is set to grow its subscriber base by 32% this year, and a further 28% in 2007. With average penetration rates of 45%, compared with rates of more than 90% in Western Europe, America Movil still has plenty of growth left. Revenues were up 27% from last year, as operating profits skyrocketed 76%.
"Although the stock has had a good run, it is trading only at around 15 times 2007 estimates -- a significant discount to its projected long-term earnings growth rate of 31%. Indeed, its price to earnings to growth ratio is only 0.63. Anything below 1 is a screaming buy.
"Finally, America Movil also is a highly seasonal stock. It traditionally notches its best performance in Q4 and Q1 of each year. With the Mexican market hitting record highs, the global telecom sector on fire, and America Movil a strong relative performer, now is a particularly good time to get into the stock."
To see Nick's favorite speculative idea for 2007, click here.
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