Wednesday, March 16, 2016

Seeking Alpha: Amid Many Challenges, FEMSA Keeps Executing

Nothing's particularly easy these days for companies that have to deal with South America, and likewise there is more than a little uncertainty about the near-term outlook for Mexico. Those are certainly challenges for FEMSA (NYSE:FMX), but the company's solid execution and organic growth continue to move the company forward, and it is clear that management is following a vision for a much larger retailing enterprise down the line.

I can understand why some investors won't want to bother with the currency and economic risks that go with a company operating in Mexico (not to mention Brazil, Chile, Colombia, and Argentina). I believe the rewards are worthwhile, though, and I think FEMSA's fair value is around $105 on the basis of high single-digit long-term growth fueled by the cash-generating Coca-Cola FEMSA (NYSE:KOF) operations and the growing Comercio Retail operations.

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Amid Many Challenges, FEMSA Keeps Executing

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