Latin American stocks provide significant growth potential and diversification opportunities, fueled by large populations, abundant natural resources, and rapidly expanding economies like Brazil and Mexico.
Therefore, investors seeking to tap into this dynamic market should consider top stocks such as Petróleo Brasileiro S.A. - Petrobras (PBR), América Móvil, S.A.B. de C.V. (AMX), and Grupo Aeroportuario del Sureste, S. A. B. de C. V. (ASR).
Brazil's market shows promise, with projected GDP growth of 3.2% in 2024, fueled by resilient economic activity and a robust labor market. Key sectors like investment have exceeded expectations, highlighting the country's solid economic potential. Despite inflation concerns, Brazil remains a highly attractive market for investors seeking growth opportunities.
Meanwhile, Mexico's market shows a steady outlook, supported by cooling inflation, stable external accounts, and a resilient banking system. Potential interest rate cuts from the Bank of Mexico, combined with a solid economic foundation under new leadership, create favorable growth conditions. Mexico's GDP is projected to grow by 2.9% this year and 2.7% in 2025.
Furthermore, Latin American stocks, with their attractive valuations and strong dividend potential, offer compelling opportunities for long-term investors. Key sectors like telecom, mining, energy, and defense position the region as an appealing choice within emerging markets, making it a promising option for those seeking growth and value.
Given these favorable trends in the Latin American market, let’s take a closer look at the fundamentals of the three stocks mentioned above.
Petróleo Brasileiro S.A. - Petrobras (PBR)
Headquartered in Rio de Janeiro, Brazil, PBR explores, produces, and sells oil and gas both domestically and internationally. The company operates through three segments: Exploration and Production; Refining, Transportation, and Marketing; and Gas and Power.
In terms of the trailing-12-month net income margin, PBR’s 15.78% is 34.4% higher than the 11.75% industry average. Its 21.17% trailing-12-month Return on Common Equity is 63.9% higher than the 12.92% industry average. Moreover, its 7.44% trailing-12-month Return on Total Assets is 36.8% higher than the 5.44% industry average.
During the second quarter, which ended on June 30, 2024, PBR’s sales revenue grew 7.4% year-over-year to R$122.26 billion ($22.40 billion). Its gross profit increased by 5.8% from the prior year to R$61.05 billion ($11.18 billion). Moreover, the company’s adjusted EBITDA stood at R$49.74 billion ($9.11 billion).
Street expects PBR’s EPS for the quarter ended September 30, 2024, to increase 4.6% year-over-year to $0.89. It surpassed the consensus EPS estimate in three of the trailing four quarters. PBR’s stock has gained 9.6% over the past year to close the last trading session at $15.19.
PBR’s POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #17 out of 41 in the A-rated Foreign Oil & Gas industry. It has an A grade for Quality and a B for Momentum and Stability. Click here to see PBR’s Growth, Value, and Sentiment ratings.
América Móvil, S.A.B. de C.V. (AMX)
Based in Mexico City, Mexico, AMX provides telecommunications services throughout Latin America and internationally. The company offers wireless and fixed voice services, including airtime, local, domestic, and international long-distance services, as well as network interconnection services.
In terms of the trailing-12-month Return on Common Equity, AMX’s 9.06% is 162% higher than the 3.46% industry average. Its 32.81% trailing-12-month EBITDA margin is 80.7% higher than the 18.16% industry average. Also, its 8.76% trailing-12-month Return on Total Capital is 134% higher than the industry average of 3.75%.
For the fiscal second quarter that ended June 30, 2024, AMX’s total revenues came in at MXN205.52 billion ($10.66 billion) up 1.5% year-over-year. Its adjusted EBITDA rose 5.6% over the prior-year quarter to $83.11 billion ($4.31 billion). In addition, Its EBIT rose 12.9% from the year-ago value to MXN45.51 billion ($2.36 billion).
For the quarter ended September 30, 2024, AMX’s EPS is expected to increase considerably year-over-year to $0.38. Its EPS for fiscal 2025 is expected to rise 5.4% year-over-year to $45.72 billion. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 1.5% to close the last trading session at $16.39.
It’s no surprise that AMX has an overall rating of A, which translates to a Strong Buy in our proprietary POWR Ratings system.
It has an A grade for Stability and a B for Growth and Quality. Within the A-rated Telecom - Foreign industry, it is ranked #10 out of 44 stocks. To access the additional ratings for AMX’s Value, Momentum, and Sentiment, click here.
Grupo Aeroportuario del Sureste, S. A. B. de C. V. (ASR)
Headquartered in Mexico City, Mexico, ASR holds concessions to operate, maintain, and develop airports in the southeastern region of Mexico. The company operates airports located in the cities of Cancún, Cozumel, Mérida, Huatulco, Oaxaca, Veracruz, Villahermosa, Tapachula, and Minatitlán.
In terms of the trailing-12-month Capex / Sales, ASR’s 4.89% is 68.6% higher than the 2.90% industry average. Similarly, its 63.43% trailing-12-month gross profit margin is 100.7% higher than the industry average of 31.61%. In addition, its 42.80% trailing-12-month net income margin is 604.3% higher than the industry average of 6.08%.
In the third quarter ended June 30, 2024, ASR's total revenue stood at MXN7.26 billion ($376.43 million). Its comprehensive income came in at MXN2.89 billion ($149.84 million), or MXN5.73 per share, up 41% and 41.9% year-over-year, respectively. Moreover, its EBITDA stood at MXN4.58 billion ($237.47 million).
Analysts expect ASR’s revenue and EPS for the quarter ended September 30, 2024, are expected to increase 33.7% and 3.5% year-over-year to $444.16 billion and $5.37, respectively. Over the past year, the stock has gained 14.8% to close the last trading session at $278.22.
ASR’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system.
It is ranked #22 out of 71 stocks in the Air/Defense Services industry. It has a B grade for Stability, Sentiment, and Quality. Beyond what we stated above, we have also rated ASR for Growth, Value, and Momentum. Get all ratings of ASR here.
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PBR shares were trading at $15.29 per share on Monday afternoon, up $0.10 (+0.66%). Year-to-date, PBR has gained 2.35%, versus a 21.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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