10 Most Promising and 10 Most Declining Stocks on the Mexican Stock Exchange, Essay Example

The main goal of Mexican Stock Exchange (Bolsa Mexicana de Valores) as stated on its official web-site is to “contribute to domestic savings, productive investment and stock brokerage in the country, meeting the needs of companies, issuers and governments, as well as of domestic and foreign investors”. Some of the biggest and most well-known national companies that are trading their stocks on the Mexican Stock Exchange include: América Móvil (Telecom), Grupo Aeroportuario del Pacifico (Airports), TV Azteca (Television, Media), Grupo Modelo (Beverage), etc.

By the end of the last year (2008) almost all companies that were trading their stocks on the Mexican Stock Exchange were experiencing decline in their stock trading due to the depression of Mexican national currency (Mexican peso).

10 Most Promising Stocks

1. A very promising stock has Industrias Penoles SAB de CV, a Mexico-based holding company. Through its subsidiaries, the Company is engaged in mining, smelting and refining non-ferrous metals, as well as producing chemicals. As stated by Reuters the current price of the company’s stock is 153.53 MXN with a +1.50 positive price change. 52 weeks highest price for the stock of Industrias Penoles SAB de CV was observed to be $375.14. The company also has very high and promising earning per share (EPS TTM) – $17.02. This means that for each share of stock the stockholder gets $17.02. Another indicator of Company’s stability and effective operation is that its price-earning ratio is 8.93, it has a 0.78 positive difference with the price-earning ratio throughout the industry. This high ratio means that the Company’s stock is relatively expensive in relation to its current earnings, and it is known that the higher price-earning ratio the company has the better it is for its financial state.
2. One of the most stable stocks that is now being operated on the Mexican Stock Exchange has Coppel SAB de CV Company which is one of the largest department store chains in Mexico. Over the last 52 weeks the price of the Coppel’s stock was fixed at the same price that is 57.53 MXN which is in its turn quite a high one. And the stock of this Company also has quite good current earnings per share (EPS) – $7.12. The Coppel Company also has very good Current Ratio (3.32) which means that the Company has a good short-term debt paying ability.
3. Another very stable and promising stock on the Mexican Stock Exchange is the stock of the Kimberly-Clark de Mexico. It has been showing a very promising recent stock performance – over the last 4 weeks it has 10.0% price increase. According to the Wright Quality Rating the Kimberly-Clark de Mexico has not only very positive stock liquidity, financial strength, profitability and stability indicators, but also quite high growth factor, which means that the Company has very good possibilities for further growth and development, and thus its stock will be traded on a high price. Current price for the stock of Kimberley-Clark de Mexico is 80 in Mexican pesos (23/03/09).
4. One of the most promising stocks that are now being offered on Mexican Stock Exchange is considered to be the stock of Grupo Aeroportuario del Centro Norte, known as OMA. This company operates 13 international airports in nine states of the Central and Northern Mexico. The reason why the stock of this company is considered to be one of the most reliable ones is that in January of 2009 it was announced that the Mexican Stock Exchange (BMV) will include OMA’s shares in its IPC index, which is the broadest indicator of the BMV’s overall performance. Thus the liquidity and visibility of OMA’s stock will be increased, and the image of the company will be strengthened.
5. Another company that has one of the leading and most active stocks on Mexican Stock exchange is Axtel – national telecommunication company. As Reuters states for the last couple of years Axtel has been showing really great results in increasing the liquidity of its stock and creating a broader investor base which benefits all shareholders of Axtel.
6. Reuters predicts that very good financial performance and therefore quite a promising stock has and will continue to have Reaseguradora Patria SA. It has an excellent financial strength rating and the issuer credit rating, and the outlook for both ratings is rather stable, which means that the Company is able to pay out its short-term and long-term debts and to continue the running of its business with a very financial positive performance.
7. Another company that has outstanding liquidity, financial strength and profitability indicators (Wright Quality Rating, 2009) is Grupo Modelo S.A.B. de C.V. which specializes in production, distribution and selling of beer on the national market of Mexico as well as on international markets. Although the price of Grupo Modelo’s stocks recently has been showing a certain degree of instability the situation is improving now. The current percentage change is +4.24% and current stock price is 43.25 MXN.
8. Although the stock of Altos Hornos De Mexico SAB de CV (Mexico-base company active in the field of steel sector) is being traded now at quite a low price – 2.52 MXN – this price and therefore the stock of the company have been showing great stability over the last 52 weeks. The stock’s earning per share (EPS TTM) is quite a high one too – $13.69 (positive).

It is difficult to list two more promising stocks that are now being traded on Mexican Stock Exchange, because due to the financial and economical crisis almost all companies are going through the harsh times now. Especially it is seen in the Banking, Construction, Insurance and other major fields.

10 Most Declining Stocks

1. One of the most declining stocks on Mexican Stock Exchange is now considered to be the one of Telefonos de Mexico (Telmex), Mexican largest fixed-line Telephone Company. Parks states that Telmex is going to reduce its capital expenditures for 2009 by about a third to 8 billion pesos ($559.5 million) “due to a weak economy and regulatory red tape that is delaying its entrance in the pay-TV market”. For instance, Telmex’s shares traded on the Mexican Stock Exchange were recently down by 3.1%.
2. The main competitor of Telemex on the Latin America’s utility and telecommunication markets – America Movil SA – is also not experiencing the best times with its stocks. Despite the fact that earnings of the company were stably rising for the last several years, over the last several months (the end of 2008 and the beginning of 2009) the price for its stock has dropped in Mexican pesos from 30-35 to 20. Recent stock performance (4 weeks) is -4.7%.
3. Although Alfa SAB de CV is one of the biggest companies that now runs its business on the Mexican market its stock is quite a declining one. This company is a conglomerate comprised of four business groups: Alpek (petrochemicals), Nemak (aluminum auto components), Sigma (refrigerated food) and Alestra (telecommunications). According to the Reuters over the last four weeks Alfa’s stock has declined by 35.8% and over the last decade of 2008 its earnings has also decreased sharply. Over the last 52 weeks Alfa’s stock has dropped to -70.2%.
4. According to Wright Quality Rating Coca-Cola Femsa – company specializing in producing and distributing Coca-Cola trademark beverages in Latin America – although has excellent measurements for its liquidity, financial strength and profitability at the same time has a very low growth rating, meaning that the stock of this company will be declining over the next several years.
5. The stock of Carso Global Telecom is also not that promising. Over the last decade of 2008 and the first months of 2009 this company, which operates in the area of local telephony and long distance, has been experiencing strong declines in its earnings and in the price of its stock.
6. Quite a declining stock has Cia Minera Autlan SAB de CV. The Group’s principal activities are extracting manganese ore and producing and selling ferroalloys used mainly in the production of steel. In the last decade of 2008 and at the beginning of 2009 the stock of the company has fallen by 13.7%. And according to the Wright Quality Rating this stock has very low growth indicators. The Company also had poor earning per share (EPS) over the last year, it is estimated to be $-2.73.
7. Not very good position on the Mexican Stock Exchange has Farmacias Benavides S.A.B. de C.V. which operates a chain of pharmacies in Mexico and throughout Latin America. The Group’s principal activity is distributing products related to health, wellness and quality of life. It offers health and other services to satisfy customer basic needs such as prescription and over the counter medications. The company is presently experiencing huge losses in its earnings. And therefore the price of the stock is also declining.
8. Another telecommunication company that has bad indicators of its financial activity and as a result the declining stock is Megacable Holding. It includes basic, digital and high definition television cable services as well as digital video recording and video on demand services. Its recent stock performance can be summarized by the following data: 1 week – -6.5%, 4 weeks – -21.0%, 13 weeks – -14.5%, and 52 weeks – -46.4%. This data shows that in the long run the Company’s stock performance is much more declining than in the short run. Earnings per share are also declining.
9. Organizacion Soriana SAB de CV is going through the period of financial instability and decline. The Group’s principal activity is operating self-service retail stores selling clothes, general merchandise and supermarket items. According to the Wright Quality Rating Soriana has a very weak growth indicators as well as constantly declining price of the stock and earnings per share. 4 weeks stock performance is -21.4%.
10. After experiencing a very difficult financial year Qualitas Compania De Seguros’s stock is not that promising. Although throughout the year of 2008 the Company, which provides insurance and reinsurance services that cover civil and professional liabilities, fire, automobiles, earthquake and other catastrophes, and miscellaneous risks in Mexico, has greatly improved its earnings indicators, the price of its stock still continues to fall. Over the last 4 weeks stock performance has dropped by 26.6% and current price of the stock is 70 in Mexican pesos.

 References

Parks, Ken. Mexico’s Telmex To Reduce Capex To MXN8 Billion In 2009. 10 Feb. 2009. 24 Mar. 2009. <http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200902101210DOWJONESDJONLINE000564_univ.xml>.

“Corporate Information SnapShot”. Wright Quality Rating. 1 Jan. 2000. 24 Mar. 2009. <http://corporateiformation.com/>.

“Wright Quality Rating”. Wright Reports. 24 Mar. 2009.  <http://wrightreports.ecnext.com/>.

“Stock Quote”. Reuters. 24 Mar. 2009 <http://www.reuters.com/finance/stocks/>.