Crushed By Worries About Mexico's Transport Sector, OMA Looks Interesting For 2019

The election of Mexico’s new president, Andres Manuel Lopez Obrador (commonly referred to as “AMLO”), has effectively pushed many of Mexico’s infrastructure stocks over the edge of a cliff, and Grupo Aeroportuario del Centro Norte (OMAB) (“OMA”) shares have fallen 40% since early October on a host of worries related to the new administration’s policies. Although OMA has the longest to go before its Master Development Plan (or MDP) comes up for renewal (2021) among the three publicly-traded Mexican airport operators, there are nevertheless definite worries that the government will somehow disrupt their operations and that the administration’s plans for managing air traffic and airport needs within the country will create trouble.

As the most domestic-focused of the three airports, OMA has the most to lose if AMLO’s policies hurt air travel in Mexico, but I believe the current price reflects an excessive level of worry. Slower economic growth in the U.S. could filter into Mexico’s economy in 2019, and recent strength in air traffic looks hard to replicate, but I believe OMA can do just fine from here with long-term growth in the mid-single-digits.

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Crushed By Worries About Mexico's Transport Sector, OMA Looks Interesting For 2019