The telecom business is definitely not recession-proof, as those that have followed the industry have recently realized, but it is not a field that is going to fade into the horizon any time soon either. Simply put, people need to communicate and the telecom business is poised to continue rolling with the new technology and bringing people what they need. If you see the value of telecom companies and agree that their future is, perhaps not golden, but definitely strong, then an investment in an Exchange Traded Fund (ETF) is an excellent way to invest in the future of the telecom field without placing all of your trust in one specific company.
iShares S&P Global Telecommunications Sector ETF (NYSE: IXP) let's you own shares in some of the most noted and reliable telecom companies by simply purchasing shares of the one ETF. With IXP you'll find your investment basket is loaded with companies such as Amercia Movil, S.A.B. (NYSE: AMX) a fixed and wireless provider in Latin America, AT&T, Inc. (NYSE: T) a telecom provider for customers in the U.S. and worldwide, Verizon Communications (NYSE: VZ) a wireline and domestic wireless provider across the globe, as well as several other highly rated and well known telecom leaders.
iShares charges only a 0.48% fee to maintain IXP using computers rather than money managers. IXP also has typically paid about $1.50 per year in dividends -- IXP is down about (41%) this year so that's about a 4% yield -- and these companies seem to have the cash-generating ability to continue dividends.
Of the 44 stocks in IXP, the top 10 holdings total about 71% of all total assets. Take note of the global exposure you'll get by investing in the future of the telecom industry:
"Based in Mexico, América Móvil (NYSE: AMX) is the largest wireless service provider in Latin America," notes wireless sector expert Nikhil Hutheesing.
The editor of The Forbes Wireless Stock Watch notes that the company's largest stakeholder is billionaire Carlos Slim who holds a 30% stake. Here's the advisors's bullish assessment for the company.
"AMX, which was spun out of Mexico's Telmex in 2000, operates out of Mexico City, but only about 30% of its business is actually in Mexico. It has has been growing rapidly mostly by acquiring troubled Latin American operators that took on too much debt during the telecom bubble.
"Móvil then consolidates operations, changes management as necessary, and makes operations more efficient and profitable.
"With 3G networks in place, América Móvil will be able to boost revenue and profit by selling more data services. It's already offering 3G service in Mexico and plans to spend another $4 billion to upgrade its wireless networks to 3G in five or so more countries this year.
On Friday, French wireless operator Orange said it has signed a deal with Apple Inc. (NASDAQ: AAPL) to sell its iPhone in the Middle East, Africa and several European countries. Well, wasn't it just Monday that we've heard that Apple has signed deals with Singapore's Singapore Telecommunications Ltd and three of its affiliates to bring the iPhone to four Asian countries later this year? And wasn't it last week that Vodafone Group (NYSE: VOD) signed a deal with Apple to sell the iPhone in ten of its markets? That was just what I remembered offhand. Seems like Apple has pretty much signed deals with companies to sell the iPhone nearly worldwide. Let's check that:
From the Vodafone deal we have: Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey
From the SingTel deal we have: Singapore, India, the Philippines and Australia
From the Orange deal we have: Austria, Belgium, the Dominican Republic, Egypt, Jordan, Poland, Portugal, Romania, Slovakia, Switzerland and African markets
The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth reviewing is American Movil SA.
Analysts see 2008 revenue rising of 15-20%, after a 32% increase in 2007. Further, analysts also like the company's successful expansion to 13 other markets in the region, to go along with its two key markets: Brazil and Mexico.
Hence, analysts also really like AMX's current subscriber base -- a remarkable 153 million in 2007 -- and its projected subscriber growth rate of 12-15% for 2008, and 10-13% for 2009.
Mexican businessman Carlos Slim Helú is believed to be the richest man in the world. As chairman of Teléfonos de Mexico, better known as Telmex (NYSE: TMX) and América Móvil (NYSE: AMX), Slim has substantial influence over the telecommunications industry in Mexico, and much of Latin America as well.
The past year has been good to Slim. In the spring, with an estimated net worth of $53.1 billion, he overtook investing guru Warren Buffett as the world's second richest person. By the end of the summer, Fortune reported that Slim's net worth had grown to $59 billion, allowing him to overtake Microsoft founder Bill Gates as the world's wealthiest person.
Carlos Slim's personal wealth grew by $12 billion during the year, and he also controls a $150 billion business empire. His family's holdings represented more than 5% of Mexico's 2006 gross domestic product, and Slim-controlled companies made up one-third of the $422 billion Mexican stock exchange.
With his political connections and business savvy, Slim has managed to fend off accusations of monopolistic business practices for years, but the hammer may finally be about to fall. A probe of Carlos Slim's empire by Mexican antitrust regulators is scheduled to ramp up in the new year. Will 2008 see his empire crumble?
The New York Times raises an important question facing Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER) -- is the financial supermarket -- an idea pushed by former Citigroup CEO Sandy Weill -- an idea whose time is past? I think it's time to kill this failed concept -- it's bad for customers, employees, and shareholders.
Twenty-five years ago, I won a competition at the consulting firm where I worked to advise an insurance company about how it should respond to the financial supermarket idea. Back then, Sandy Weill had taken his brokerage firm -- Shearson -- and merged it with Lehman Brothers (NYSE: LEH) and ultimately American Express Co. (NYSE: AXP) to create a company where someone could get all their personal financial needs taken care of under one roof. My job was to find other companies that this insurance company could buy to implement the financial supermarket concept.
But the financial supermarket is a non-starter from the customer's standpoint. It doesn't even work inside the institution where it's housed. After Sandy Weill got kicked out of American Express, he tried to rebuild the concept from scratch -- starting with Commercial Credit and extending to Travelers Co. (NYSE: TRV) and ultimately merging it all together into Citigroup. This is all well described in Amey Stone's King of Capital.
CNet Networks (NASDAQ: CNET), a leading independent source of product information with detailed content on technology products, is expected to report EPS on 10/23. Over the last five years, CNET has been frequently mentioned as a buyout target of multimedia conglomerates. STFL says, "Moving to hold; still takeover upside; stand alone valuation less attractive." CNET November option implied volatility of 54 is above its 26-week average of 38 according to Track Data, suggesting increasing price risks.
America Movil (NYSE: AMX), provides wireless telecommunications service in Mexico, Argentina, Brazil, Colombia & Ecuador, announced on 10/10 its intention to pay a special dividend of US$1.85 ADR, shareholders will be called on or before 10/31 to approve the dividend. AMX is expected to announce EPS on 10/18. AMX has a market cap of $117 million. AMX overall option implied volatility of 34 is near its 26-week average according to Track Data, suggesting non-directional price fluctuations.
Daily options update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Each month, the Forbes International Investment Report includes a Q&A feature with a fund manager or analyst which editor John Christy has chosen for "exceptional insight into global markets and investing."
His latest interview is with Gonzalo Pangaro at T. Rowe Price. Based in London, Pangaro, with 15 years of experience in Latin America, manages $6 billion in Latin American equities, including the T.Rowe Price Latin America Fund (PRLAX). Here are some highlights.
Forbes/Christy: Latin American stocks are having a great year so far. Is it too late to get on board?
Pangaro: "I don't think so. There are still very attractive opportunities in Latin America.The performance has been extremely strong in the past three years, but before then, Latin America traded sideways for 10 years. So we are coming from a very low base, and the macroeconomic improvement in many countries has been significant.
"Back in 1994, at the time of the 'Tequila Crisis', countries had exchange rates that were fixed at artificially high levels, big current account deficits, poor fiscal positions, and very high dollar-denominated external debt. So they were very vulnerable.
"All of that has changed. All the key countries have paid down their dollar debt, inflation is under control, currencies are floating freely, and current accounts are in surplus. So I think the economic situation has improved meaningfully.
If you're reading this on 7/7/07, today is your lucky day. That's becauseReuters reports that today is the day that an organization called New 7 Wonders of the World is releasing its list of the 7 Wonders of the World in Lisbon. Europe's leading contenders are the Acropolis in Athens, Rome's Colosseum, and the Eiffel Tower. They are competing with Machu Picchu, Mexico's Chichen Itza ruins, India's Taj Mahal, Petra in Jordan, Christ Redeemer in Brazil, and the statues of Easter Island.
In honor of 7/7/07 and those 7 Wonders, I've picked 7 Wonders of the InvestmentWorld. Rather than select a stock from each of the countries where the 7 Wonders reside, I've decided to pick seven companies from around the world that I perceive as global leaders in significant industries that may make good long-term investments.
Here are my 7 Wonders of the Investment World -- listed in alphabetical order:
Microsoft Corp. (NASDAQ: MSFT) Chairman Bill Gates -- net worth: $59.2 billion -- is no longer the world's wealthiest person. According to the HeraldSun, Mexico's Carlos Slim -- net worth: $67.8 billion -- now sits in that throne. In April, Slim surpassed Berkshire Hathaway Inc.'s (NYSE: BRK.A) CEO Warren Buffett as the world's second richest person. And today, Slim surpasses Gates.
How must Gates feel? I don't know. He has commented in the past that he doesn't think about being the world's wealthiest person much. But he has occupied that throne since 1995. After 12 years, there could be a twinge of regret at having lost the crown. But Gates still has plenty of money, particularly since Buffett contributed a huge chunk of his fortune to Gates' foundation.
Meanwhile how did Slim climb so fast? A 27% surge in the share price of America Movil (NYSE: AMX), Latin America's largest mobile phone operator controlled by Slim, from March to June enabled Slim to surpass Gates by $8.6 billion. The 5.7% increase in Microsoft stock in the second quarter was no match for the sharp rise in valuations of Slim's companies. He also owns shares of Telefonos de Mexico (NYSE: TMX) up 11% and Grupo Financiero Inbursa S.A. (MXK: GFINBURO) up 20%.
While I don't have earnings forecasts to evaluate Inbursa, it's not too late to consider buying in to Slim's other companies.
American Movil. AMX's PEG of 1 -- based on a P/E of 26.2 on earnings growth of 26% to $4.22 in 2008 -- looks reasonable to me.
Telmex. TMX's PEG of 2.5 -- based on a P/E of 12 on earnings growth of 4.9% to $3.31 in 2008 -- looks expensive to me -- I'd avoid this one.
It's not every day that a king gets dethroned. The market is sending a signal that might be worth heeding.
Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.
Updating his outlook on AMX, the advisor says, "Mexico-based América Móvil has been my #1 blue chip play on the global cell phone megatrend. The Latin American markets have been the strongest performing region globally. But even in that context, América Móvil has been a strong relative performer, handily outperforming the broader Mexican market, itself up 18%.
"And América Móvil has done more than make money for investors. It's also propelled controlling shareholder Carlos Slim ahead of Warren Buffett as the #2 wealthiest man in the world. If América Móvil's stock price continues its torrid pace, Slim will dethrone Bill Gates as the world's #1 by the end of the year.
"Should you still buy América Móvil? Absolutely! The stock remains a favorite of some of the world's top hedge funds. With Latin American cell phone penetration rates still hovering around 40%, América Móvil still only has one way to go -- and that's up.
"The stock is still a very good value based on a PEG ( price earnings to growth) of .58. Thanks to América Móvil's fast growth, this number has barely budged since I first recommended the stock in December."
Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.
For his new favorite idea for the second half of 2007, the advisor looks to Millicom International Cellular (NASDAQ: MICC), which he calls, the "Indiana Jones" of the global cell phone industry. He explains, "Luxembourg-based Millicom is one of a handful of global players that are profiting by expanding in cell phone markets where others fear to tread.
"Its strategy has been unique and daring. While the Vodafones and América Móvils of the world slug it out in big cell phone telecommunications markets such as Brazil and India, Millicom has cobbled together a patchwork empire that consists of 16 countries in Central America, South America, Africa, and South and Southeast Asia.
"In total, Millicom's cellular operations are licensed to serve a combined population of approximately 278 million people -- roughly the population of the United States. Millicom has focused on offering prepaid cell phone services in countries where landlines are inadequate.
"Although most of Millicom's sales growth occurs in traditional Latin American markets, more than half of Millicom's customers are in Africa and Asia. And that's where much of Millicom's future growth lies. Given the relatively low cell penetration rates, Africa is the fastest-growing region of the world for cell phone use.
Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.
For his new favorite stock, the advisor looks south of the border, recommending América Móvil (NYSE: AMX). He explains, "Latin America has been one of the hottest regions for global investors in 2007. As of May 25, the Morgan Stanley Capital International Latin America index is up over 17% in U.S. dollar terms.
"But there's still plenty of money to be made south of the border. AMX is the dominant mobile phone service provider in Mexico. The company's reach extends beyond its home market to more than 125 million subscribers throughout Latin America, with operations in more than a dozen countries.
"Revenue topped $21 billion last year, about half of which came from outside Mexico. The company is controlled by Carlos Slim Helú, who overtook Warren Buffett earlier this year as the world's second-richest man.
Carlos Slim may be the second-richest man in the world, but he's tops with Jim Cramer.
The "Mad Money" host sang Slim's praises at length tonight on CNBC. He even said the shares of Slim's company American Movil S.A.B. (NYSE: AMX) are a buy even though they are trading at a 52-week high. The company has 80% of the Mexican wireless market and is expanding in Brazil.
Keep in mind that American Movil is up almost 100% off the lows of the year and the company has a market cap of $90 billion. This isn't exactly an unknown stock nor is it an unknown investment.
"Como se dice, el Cramero?"
Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.
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.
Mexican businessman 
CNet Networks
Nick Vardy, editor of the 
John Christy, editor of the 
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