Mexico City — Editor’s note: This is an article based on recommendations from analysts. Readers are recommended to consult a specialist financial advisor before making any investment decisions as a result of this article.
The second half of the year still offers some attractive investment opportunities in Mexico to continue taking advantage of the high interest rates in the country and the boost to companies in the industrial sector due to nearshoring, as companies relocate production chains in the north of the country.
The main factors that will continue to influence market performance will be interest rates, nearshoring and inflation, which will continue to decline. In parallel, the Mexican and US economies remain resilient despite the fight to reduce pressures by central banks, according to CiBanco stock market analyst Benjamín Álvarez.
“There will be a less accelerated pace of interest rates. Based on that, we must continue to pay attention to inflation and economic performance in general,” Álvarez told Bloomberg Línea.
Some analysts estimate that the Bank of Mexico (Banxico) will begin to cut the interest rate in November of this year, and fixed-income assets, such as Treasury Certificates (Cetes), will continue to look attractive, at least for the remainder of 2023.
“Cetes are still at elevated levels and although some market participants have begun to discount lows in the benchmark rate toward the end of the year, which would affect Cetes yields, this instrument still offers an interesting attraction,” said Signum Research economic analyst Alain Jaimes.
Which are the most attractive shares for H2?
Before making an investment decision, analysts recommend consulting with experts in order to create an investment portfolio appropriate to the horizons established and the particular profile of the interested parties.
The following list should not be considered as an investment suggestion.
Analysts maintain among their favorite stocks are those issued by companies in the airport, consumer, industrial and transportation sectors.
Monex Casa de Bolsa-listed Grupo Aeroportuario del Centro Norte (OMAB) are among its favorites, which registers a return potential of 25.8% for the next 12 months, according to Bloomberg data. The shares of the Monterrey-based airport operator have 11 ‘Buy’, three ‘Hold’ and two ‘Sell’ recommendations.
Chedraui, the supermarket chain, is also among the favorites with a return potential of 22.4% at a Bloomberg consensus price estimate 117.66 pesos ($6.98) per unit. The issuer’s main attraction is its growth due to its expansion in the US and the price competition it faces from other companies in the sector.
Monex expects the Mexican Stock Exchange issuer’s second-quarter results to be positive.
Cement giant Cemex is also expected to perform favorably. The consensus estimates that in the next 12 months the share will reach 14.10 pesos, so a potential return of 11.9% is expected.
Alejandra Vargas, stock analyst at BX+, estimates that, despite the complications due to an increase in costs and inflation, Cemex could benefit from the price scenario in all regions and with this, a 3.1% increase in sales at annual rate is projected.
Other issuers with potential are Alfa and Orbia Advance Corporation, according to the CiBanco analyst.
“For the second half of the year, we believe there will be a better performance of the industrial sector, particularly in the latter two companies,” Álvarez said. The companies will have better comparative figures in fundamentals where recoveries are expected.
For the Monterrey-based conglomerate Alfa, Bloomberg analysts estimate that the share price will grow 75.7% in the next 12 months, at a price per share of 17.89 pesos, according to consensus. Of the 12 analysts covering the issuer, eight recommend ‘Buy’ and four recommend ‘Hold’.
In the case of shares of Orbia, a Mexican company engaged in construction, infrastructure and communications, its shares are expected to grow about 54.2% at a price per unit of 60.54 pesos. Barclays said in a report that it remains convinced that Orbia has the conditions in place for growth opportunities to materialize. “As the share price does not yet reflect this, we continue to see this as a good entry point for investors”.
Companies benefiting from investment as a result of nearshoring continue to be industrial real estate investment trusts such as Prologis, Fibra Macquarie and Fibra Plus. Within the issuers segment, Grupo Mexico is listed, which will be favored by its railroad business Grupo Mexico Transportes.
On the benefit side of interest rates, and also due to the effect of the relocation of companies, CiBanco considers local banks such as Banco del Bajío and Banco Regional among the beneficiaries of these elements. The price of Banco del Bajío shares, with ticker BBAJIOO, is expected to increase to 66.52 pesos per unit, equivalent to a potential rise of 17.5% from 56.59 pesos on July 25, according to Bloomberg data.
Banco Regional shares are projected to rise 23.1% in the next 12 months at a price of 162.13 pesos, according to the Bloomberg analyst consensus. Of the 14 analysts tracking the issuer, 10 recommend ‘buy’ and the rest recommend ‘hold’.
“Regional banks can capture the benefit of nearshoring via payroll, corporate credit, as companies will need to make transactions to their home countries, and local banks have the capacity to capture this growth well in both the north and the center of the country,” said the CiBanco analyst.