Premiere Latin American wireless provider America Movil SAB de CV (AMX), first mentioned here on June 24, 2009 at a price of $36.47, remains a new business titan with promise. Look America Movil to post 10-12% revenue growth in 2010, followed by 11-14% revenue growth in 2011, led by improving performance in two, key markets: Brazil and Mexico. Subscriber growth should remain in the strong 9-11% range.
AMX also has a presence in 17 other countries in the Americas, and should have about 205 million subscribers by mid 2010, up from 183 million at the end of 2008. Columbia and Peru appear to be the best new markets for AMX for this decade.
The First Call FY2010/FY2011 EPS estimates for AMX are $3.84 to $4.27. Each EPS estimate looks about 10% low, according to my analysis.
Technically, America Movil corrected roughly in-sync with the Dow's late January/early February correction, and has since moved back above the key, 50-day moving average, a sign that institutional investors (IIs) took advantage of the dip to add to/establish positions. AMX also will encounter psychological resistance at $50, but the calculation here argues the uptrend will prevail.
2010 Outlook: I view America Movil as a long-term play, but if investors are looking to sell AMX within the year, it's probably best to take your profits after it rises to $54-55, if it fails to clear $56.
Stock Analysis: I consider America Movil to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, and I wanted to buy the stock, I'd consider buying a 25% position in AMX now; then buy another 25% in one month, if Latin American economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my AMX position before April 2010 and I'd put a sell/stop loss at: $17.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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