Backing Out of Brazil Telecom
Brazil's telecom sector stock call has paid off--now it's time to take profits.
On June 11, 2010, we recommended investors move back into the Brazilian telecom names, "given the merger and acquisition potential, bullish macroeconomic backdrop, and relative upside (compared with America Movil (AMX) and NII Holdings (NIHD))." These words came to fruition over the past year with all of the publicly traded Brazilian telecom stocks easily outperforming not only their Mexican peers, but the Bovespa Index as well.
Despite the impressive performance from fixed-line player Telmex (TMX) (which was a function of America Movil buying them out through their corporate consolidation), the Brazil-based stocks have pumped out more than twice as much share price appreciation on average than the Mexican-based names. It's also worth noting that NII is technically listed in the U.S., and although it's becoming increasingly exposed to Brazil, its core legacy subscriber base has always been in Mexico.
Imari Love does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.