• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Energy

Mexico's Resurgence Gains Momentum

Reforms will affect a large swath of the economy.
By BRET JENSEN
Aug 20, 2013 | 11:00 AM EDT
Stocks quotes in this article: CX, TV, DIS, FOXA, HAL, SLB

 In Monday's column, we discussed Mexico's improving long-term economic prospects. Political parties have come together since the election of President Nieto late last year. They have started to push through reforms that cut across a large swath of Mexico's industries and economy.

These efforts should result in better economic growth in the years ahead. We looked at how the initiatives will be good for the country's long term future.

We will discuss today some individual companies that should benefit from the results of these reforms.

Cemex (CX) is one of the largest cement producers in the world. The stock has quadrupled off its low since the market nadir in March 2009. It is still down, however, by two-thirds from its pre-financial crisis levels. The company is benefitting greatly from a turnaround from its U.S. operations where earnings before interest, taxes, depreciation and amortization almost tripled year on year during its last quarterly report.

The company will be buoyed from improving long-term growth prospects in its home base of Mexico. The company also is poised to be one of the primary beneficiaries if a proposed $300 billion plus five-year government infrastructure spending bill passes the Mexican legislature.

The one caveat on this firm is its substantial debt load. It has used the low interest rate environment, however, as well as its improving business fundamentals to push back debt maturities and to lower its overall interest rate. It should be able to use its improving cash flow to pare debt even further in the years ahead.

Grupo Televisa (TV) is Mexico's biggest media conglomerate and its networks own approximately 70% of the country's prime time audience. It also controls roughly 75% of the country's pay TV market. Other assets include a 50% stake in cell phone carrier Iusacell and almost 40% of Univision. The Univision stake is particularly interesting. This network is benefitting from the rapidly growing Hispanic audience in the United States and the broadcaster is even starting to win some time slots against the more established networks such as CBS, ABC and NBC.

From an Enterprise Value/EBITDA basis, Grupo Televisa is cheaper than American media players Disney (DIS) or Twenty-First Century Fox (FOXA) even though it controls a higher percentage of its domestic market. Mexico should also grow faster than its neighbor to the north over the next few years. There is a possibility longer term of a spinoff of its Univision stake, which could unlock substantial shareholder value. Revenues are growing in the high single digits and the stock is a reasonable value at 9x operating cash flow.

In addition to these domestic plays, big oil service firms like Halliburton (HAL) and Schlumberger (SLB) should benefit from additional demand triggered by Mexico's energy reforms. Bank of America came out with comments within the last week stating reforms could mean $2.5 billion in annual revenue for the big oil service firms that can help Mexico develop its substantial oil reserves.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Jensen was long HAL and TV

TAGS: Investing | U.S. Equity | Energy | Economy

More from Energy

What's the Next Move for Crude Oil?

Bruce Kamich
Jul 5, 2022 3:30 PM EDT

A temporary break in oil prices, along with lower interest rates, could be a near-term positive for equity prices.

As Oil Hits the Fan, I See a Trading Opportunity

Mark Sebastian
Jul 5, 2022 2:48 PM EDT

Let's look at how to play Devon right now.

Exxon Mobil Could See Its Shares Decline Even Further

Bruce Kamich
Jul 5, 2022 10:40 AM EDT

Let's check out the charts.

This Energy Play Should Turn Out A-'OKE'

Bret Jensen
Jul 3, 2022 7:30 AM EDT

Let's learn how to make an enhanced yield trade in Oneok.

Welcome to Second Semester on Wall Street, Here's How to Make the Grade

Jim Collins
Jul 1, 2022 4:36 PM EDT

Think you can own big tech? You might just get an 'F' for that. Here's what will get you on the other side of this year.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 12:01 PM EDT PAUL PRICE

    A Recent Director Buy in Children's Place (PLCE)

    Four of the most recent insider trades in Children...
  • 07:34 AM EDT PAUL PRICE

    A $525,000 Vote of Confidence on Macerich (MAC)

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login