The Latin American stock market is poised for growth, driven by effective macroeconomic policies that have reduced inflation, mitigated pandemic impacts, and lowered interest rates to stimulate economic activity. With vast populations, abundant natural resources, and booming economies like Brazil, Mexico, and Colombia, the region offers growth and diversification opportunities.
Amid this backdrop, top stocks catching the attention of global investors include América Móvil, S.A.B. de C.V. (AMX), Ambev S.A. (ABEV), and Ecopetrol S.A. (EC).
Mexico and Latin America show economic promise, with Mexico projecting 2025 GDP growth of 2-3%, outpacing IMF estimates. Strong labor markets and investments drive optimism despite budget cuts. Similarly, Brazil remains attractive for growth-focused investors, boasting a historic 6.4% unemployment rate and robust job creation, signaling a positive economic outlook despite inflation concerns.
Emerging markets economies are projected to grow at an aggregate rate of 3.8% in 2025 and 2026, with varying performances across regions and countries. Key sectors like energy, telecom, and food and beverages present compelling opportunities for long-term investors. Furthermore, driven by innovation, favorable policies, and robust domestic demand, these markets offer attractive diversification prospects.
Given these favorable trends in the Latin American market, let’s take a closer look at the fundamentals of the three stocks mentioned above.
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 9.45% is 131.3% higher than the 4.08% industry average. Its 33.18% trailing-12-month EBITDA margin is 79.9% higher than the 18.44% industry average. Also, its 8.54% trailing-12-month Return on Total Capital is 122.5% higher than the industry average of 3.84%.
For the fiscal third quarter that ended September 24, 2024, AMX’s total revenues came in at MXN223.46 billion ($10.98 billion) up 9.6% year-over-year. Its adjusted EBITDA rose 13% over the prior-year quarter to $89.15 billion ($4.38 billion). In addition, Its EBIT rose 14.2% from the year-ago value to MXN47.44 billion ($2.33 billion).
For the quarter ending December 31, 2024, AMX’s EPS is expected to increase 11.5% year-over-year to $0.37. Its EPS for fiscal 2025 is expected to rise 6.2% year-over-year to $44.70 billion. It surpassed the Street revenue estimates in three of the trailing four quarters. Over the past month, the stock has declined 10% to close the last trading session at $15.18.
It’s no surprise that AMX has an overall rating of A, which translates to a Strong Buy in our proprietary POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Stability and a B for Value and Quality. Within the A-rated Telecom - Foreign industry, it is ranked #15 out of 43 stocks. To access the additional ratings for AMX’s Growth, Momentum, and Sentiment, click here.
Ambev S.A. (ABEV)
Headquartered in São Paulo, Brazil, ABEV produces, distributes, and sells beer, draft beer, carbonated soft drinks, other non-alcoholic beverages, malt, and food products.
In terms of the trailing-12-month Capex / Sales, ABEV’s 6.68% is 107.5% higher than the 3.22% industry average. Likewise, its 23.96% trailing-12-month EBIT margin is 154.2% higher than the 9.43% industry average. Furthermore, its 28.60% trailing-12-month EBITDA margin is 120.7% higher than the 12.96% industry average.
ABEV’s net revenue for the fiscal third quarter ended September 30, 2024, grew 4.9% year-over-year to R$22.10 billion ($3.81 billion). The company’s gross profit amounted to R$11.12 billion ($1.92 billion), an increase of 8.7% compared to the prior-year quarter. For the same period, its normalized profit was R$3.58 billion ($617.25 million), or R$0.22 per share.
Street expects ABEV’s EPS for the quarter ending December 31, 2024, to increase marginally year-over-year to $0.06. Its revenue for the same quarter is expected to rise 9.2% year-over-year to $4.39 billion. Over the past month, ABEV’s stock has declined 6.1% to close the last trading session at $2.15.
ABEV’s favorable outlook is reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system.
It has an A grade for Quality and a B for Stability. It is ranked #12 out of 32 stocks in the Beverages industry. Beyond what we have stated above, we have also rated ABEV for Growth, Value, Momentum, and Sentiment. Get all the ratings of ABEV here.
Ecopetrol S.A. (EC)
Headquartered in Bogotá, Colombia, EC operates as an integrated energy company. The company functions through four segments: Exploration and Production; Transport and Logistics; Refining, Petrochemicals, and Biofuels; and Electric Power Transmission and Toll Road Concessions.
In terms of the trailing-12-month levered FCF margin, EC’s 9.10% is 31% higher than the 6.95% industry average. Similarly, its 20.10% trailing-12-month Return on Common Equity is 64.4% higher than the industry average of 12.23%. In addition, its 9.96% trailing-12-month Return on Total Capital is 42.2% higher than the industry average of 7%.
In the third quarter ended September 30, 2024, EC’s total sales were COP34.61 trillion ($7.86 billion). Its operating income and net income attributable to EC amounted to COP9.31 trillion ($2.11 billion) and COP3.65 trillion ($828.94 million), respectively. Additionally, its EBITDA was COP13.98 trillion ($3.17 billion).
Analysts expect EC’s EPS for fiscal 2025 to increase 3.1% year-over-year to $1.79. Over the past month, the stock has gained 1.5% to close the last trading session at $8.19.
EC’s strong fundamentals are reflected in its POWR Ratings. It is ranked #22 out of 39 stocks in the A-rated Foreign Oil & Gas industry. It has a B grade for Value, Momentum, and Stability. Beyond what we stated above, we have also rated EC for Growth, Sentiment, and Quality. Get all ratings of EC here.
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AMX shares were trading at $15.18 per share on Friday morning, up $0.20 (+1.34%). Year-to-date, AMX has declined -15.57%, versus a 26.05% 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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