Alexander Green is pitching a teaser for his new service, claiming to have identified “Three Stocks to Lead the Recovery.”
And April 29 is just a few days away, so I thought I should finally have a look at this big teaser ad for the Oxford Club’s New Frontier Trader. The Oxford Club is one of the bigger “entry level” financial newsletters (their letter is actually called The Communique), and probably serves as the introduction for many folks to the vast octopus of newsletters published by or partnered with Agora.
So this is yet another of the “upgrade” newsletters that are always available for subscribers to basic $50-$100 newsletters — in this case, The New Frontier Trader is “regularly priced” at $2500 but available now for $995. It seems rare to run across anyone who has actually paid “retail” for the more expensive newsletters, but that’s neither here nor there.
What is here is a pitch for three companies that the New Frontier Trader is touting for us potential “charter members” (and yes, “Charter Members” can also be interpreted to mean, “we don’t have a track record yet”). With this “trading recommendation” service, Alexander Green is said to be looking for international “momentum stocks” and the “headline-making” stocks in foreign consumer markets.
Green throws some charts and graphs into the ad, making the case for this current market as a potential repeat of the 2002 V-shaped recovery, at least for his foreign stocks — essentially telling us that “the worst is over,” which is, of course, exactly what we want to hear (or what I want to hear, anyway).
And he’s picked out “three companies to lead the recovery,” so we’ll be scoping out the clues provided and telling you who they are — assuming, of course, that you weren’t planning on being a charter subscriber to his newsletter and finding out on your own.
But first, I have some bad news. That April 29 date? Apparently that’s just the deadline for this “special offer” from the newsletter — Green does think that these three companies will make headlines “in the next few weeks,” but as far as I can tell the specific date is otherwise meaningless.
So we’re told that…
“… right now, Alex is looking at three companies that he considers to be perfect candidates – each one could give you the chance at triple- or even quadruple-digit gains in just a few short months. ”
And then, the teasers … clues, please!
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“Frontier Play #1: Latin America’s Telecom Explosion
“Expected Gain: 567%
“This Latin American Company began operating only eight years ago. But they’re quickly becoming the largest communications provider in Latin America.
* “In Brazil, they bought up two small wireless companies and merged with another. That gave them a nice base of 2.2 million subscribers…which they promptly turned into 30.2 million.
* “In 2003, they acquired a controlling interest in an Argentine mobile service provider with 1.3 million users. In just five years, they’ve expanded that number to 14.3 million.
* “Just last year, they decided to tackle the Caribbean market. Acquisitions in the Dominican Republic and Jamaica delivered a base of 3.5 million that could easily double in the coming year.
“Shareholders are reaping the benefits. In 2008 alone, investors raked in $3.15 billion in shareholder distributions.
“With plans to target other rapidly expanding frontier markets like Nicaragua, Ecuador, and El Salvador this year, the payoffs could only get bigger. “
This is America Movil (AMOV on Nasdaq, AMX on the NYSE for the ADRS, NYSE has higher volume), the engine of wealth for Mexican billionaire Carlos Slim Helu — yes, the same guy who has spent the past couple years jousting with Bill Gates and Warren Buffett for “richest man in the world” honors. He’s third this year, but that gazillionaire trio still holds a pretty good lead on fourth-place Larry Ellison and the crew of “20 billion” guys like the dude who founded Ikea, the reclusive German supermarket guy, and a handful of Indian conglomerate founding families.
America Movil (forgive the absence of accent marks throughout, please, I never get those right) has also been one of the real darlings of emerging markets investors for the last several years — well, until 2008, at least, when they got cut in half like everything else. They are the dominant Mexican cell phone company, as well as a growing force throughout Latin America — they do indeed have a big presence in Brazil now, and they bought a Jamaican wireless telecom back in 2007 and an Argentinian wireless company (CTI) back in 2003. The numbers are a bit off in the teaser above, but that’s probably because the ad recycles some slightly stale data — subscribers in their Argentinian business now number 16.6 million.
And that April 29 date? That’s the deadline for this “special offer” from the newsletter — Green does think that these three companies will make headlines “in the next few weeks,” but it’s also the day after America Movil reports earnings, their earnings release for the first quarter is expected tomorrow.
This is the third largest wireless telecom company in the world, as measured by number of subscribers (after China Mobil and Vodafone), and it probably is a good way to play the continuing growth of wireless in Latin America. Whether or not it will show great earnings tomorrow and send the stock higher is another question, the short term expectations of investors appear muted, at least if we’re to take today’s drop in the share price as any indication.
America Movll does pay a dividend, though not one that predictably grows as we expect from large US companies (foreign stocks tend to change their dividend amount each year, up or down based on earnings and other considerations), and has put a lot of capital into share buybacks in recent years (the total “return to shareholders” was 3.78 billion in 2008, not 3.15 billion, but they could have either used a 2007 number or a different exchange rate). Which also serves as a reminder that this company reports (and makes a lot of its money) in Mexican Pesos, so you’re also implicitly making a bet on the Peso (and the Real and a few other South American currencies) when you invest in America Movil. That’s part of diversification, of course, and part of why people want to buy foreign stocks — but it can add some volatility and surprises from time to time.
The PE for AMOV is about 12, and growth has certainly tailed off a bit — Morningstar, for what it’s worth, thinks they’re getting down close to their “buy” price but are far below fair value (they put in a big buffer for uncertainty). Their debt might be more of a problem if their operating currencies continue to depreciate against the dollar (though that won’t worry folks who think the dollar is about to collapse more than the peso or real). On the positive side, they generate plenty of cash to pay for their growth — but on the negative side, they might pay too much for that growth if they keep acquiring companies so briskly. They’re also subject to lots of different regulatory regimes, some of which are quite a bit less predictable than the US (they also have a tiny US business — TRACfone, I think it’s called), and I think there’s been some concern in the Mexican government about AMOV’s near monopoly (they also own the big fixed-line telecom there). So there’s probably some unpredictability to go along with your big cash flow and the growth of mobile voice and data services south of the border.
So … if you missed the big run in America Movil, are you dying to get in now that it’s a bit cheaper (down to the price it traded at in early 2006)? or is it too uncertain in this crazy world, or topping out on growth? Let us know what you think with a comment below.
I’ll move on to the other two Frontier Trader stock picks later this afternoon or tomorrow morning, but It’s getting late so I’ll publish this now for you … keep your eyes peeled for the next bit of Gumshoe goodness, we’ll be looking at a steel maker and an oil company for a bit more of a touch of “old economy” potential growth.