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Feb.08

10:54 AM ET

Friday, 8 Feb 2008

America Movil's Profitable Network

Posted By:Tom Brennan

Topics:Mexico | Brazil | Stock Picks | Stock Market

Sectors:Telecommunications

Companies:Cia Vale do Rio Doce | Petroleo Brasileiro S.A.- Petrobras | America Movil, S.A.B. de C.V.

The best play on Brazil’s prosperity isn’t Brazilian, Cramer said Thursday, it’s Mexico’s America Movil.

This week the Mad Money host has been extolling the virtues of Brazil’s economy, trumpeting the success of miner Vale [RIO Loading... () ] and oiler PetroBras [PBR Loading... () ]. But the money from those exports has to go somewhere, and Cramer said the middle class is seeing a good chunk of it. Since cell phones are a status symbol among this growing group, business is booming for America Movil [AMX Loading... () ].

The specs: Brazil is home to 30 million of AMX’s 153 million subscribers and growth there is the highest among the countries America Movil serves. The most recent quarter was full of estimate beats: earnings per share were 8 cents higher than expected, new subscribers 1.7 million more, and sales outperformed as well. The best part for investors? AMX is trading below where it was before the announcement.

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And the stock’s multiple cheap, too. Despite tremendous growth – 53% for earnings in U.S. dollars – America Movil trades at a paltry 14 times this year’s earnings. Cramer was convinced that an American company with the same numbers would fetch a much bigger number.

If this isn’t enough, take note of one of AMX’s largest investors, Carlos Slim. The richest man in the world owns 33% of the stock, “and he knows what he’s doing,” Cramer said.

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