Our bias is neutral/bearish on S&P 500 and crude oil, and bullish gold, writes Bill Baruch, Pres...
On the Move for Global Growth
02/23/2007 12:00 am EST
In his workshop at the World Money Show, globe-trotting guru Nicholas Vardy found a Mexican mobile-phone operator and an Indian outsourcing company based in New Jersey. How global can you get?
From "The Top Ten Home Run Stocks at Home and Abroad" at the World Money Show Orlando 2007:
America Movil (AMX) is the third biggest mobile phone company in the world [and] the second biggest stock that is listed in the Mexican market. It has 110 million subscribers, is growing at around 27% to 30% a year and has been for the past few years. Mobile phone penetration in Latin America is around 40%, so there is plenty of upside growth in the stock. And its price/earnings-to-growth ratio is less than one: I think it is trading at about 0.58x [earnings growth], which means it is an incredible bargain.
In fact America Movil is a top holding in some of the top historically very best- performing hedge funds in the world, and it is held by a lot of hedge funds that focus mostly on US, domestic stocks.
It is actually [controlled] by the third wealthiest man in the world, a gentleman by the name of Carlos Slim [Helu], who if Warren Buffett keeps giving his money away, will become the second wealthiest guy in the world. AMX is trading around $48 right now, and it has been up about 40%-50% consistently for the past [few] years and it is something that I think will continue to do [well] in the future.
All of you have heard about outsourcing, about all of this business going to India. Well there is actually a US-based company called Cognizant Technology Solutions (CTSH). It is trading around $93 now. When I first began talking about this company about a year ago, it was trading closer to 50. So it has had a tremendous run.
Why is that? Because even though it is based in New Jersey, it derives all of its business from providing outsourcing services, and all of its employees are effectively in India. The number of employees has gone from about 18,000 to about 40,000 in the past 18 months. It is in a tremendous growth phase.
Now this isn't going to last forever, because of wage pressures in India and other issues. So it is not going to be something that you want to be holding five years from now. But I think for the next two or three years it is going to do very, very well.
This is a Nasdaq-company and it is part of the Nasdaq 100. So it is really is a completely US, company in [its] approach to shareholders and disclosure and accounting. But it really derives its tremendous growth from the Indian outsourcing mega trend. And India is, as I call it, the Saudi Arabia of outsourcing, because [it has] about an 85% market share in this fast growth sector.
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