I’ve been telling you a lot about U.S. utilities this summer, so now let’s switch gears and take a quick look at Latin American’s largest wireless telecom carrier, American Movil (NYSE: AMX), which is one of the new positions in my recommended ten-stock StrataGem portfolio for August.

The Mexico-based firm offers excellent growth opportunities with 259 million customers in 16 different countries via a wireless network that extends from the American South all the way to southern Chile.

American Movil was launched in 2001 when the company was spun-off from billionaire Carlos Slim’s telecom giant, Telmex. American Movil grew to dominate the Mexican market with a 72% market share in Mexico because its customers were forced to pay extra fees to call people on different networks.

Imagine if your friends were on AT&T (NYSE: T) and had to pay an extra fee every time they called you on Verizon (NYSE: VZ). They would push you to switch pretty quickly. This interconnection expense discourages competitors in Mexico, and has allowed AMX to achieve one of the highest profit margins of any global telecom.

Earlier this year, AMX reversed the spin-off and purchased Telmex. The consolidated firm now provides integrated products including wireless, landline, internet, television, and data services. This array of products will allow American Movil to compete against bundled services from Spanish telecom titan Telefonica (NYSE: TEF) in the region. The Mexican behemoth, with a $103 billion market cap, now generates $32.5 billion in annual sales.

Shares of emerging market telecoms like AMX have dominated American giants Verizon and AT&T since 2002. Last week, we looked at Telekom Indonesia (NYSE: TLK) for another example. I expect both AMX and TLK to continue to dominate their developed nation peers.

Nearly 90% of Latin Americans already have wireless service, which means AMX’s growth must come from other sources than an increase in its customer base. American Movil officials are betting that demand for data services will skyrocket as wireless netbooks and smartphones become affordable for Latin American consumers.

The firm’s thesis is supported by the numbers. Second quarter data usage in Mexico increased 25% as AMX’s customers used more services on their iPhones and Blackberries. Revenue from its Mexican segment jumped 8.1% and average revenue per user (ARPU) increased by 2%.

The firm’s recent auction purchase of radio spectrum will allow American Movil to be the first telecom to provide 4G service in Mexico that is 4x faster than rivals’ 3G service.

American Movil is quickly growing throughout Latin American despite its large size. The company added 4.9 million customers in the second quarter or 30.7% more than last year. Year over year revenue is up 11% and while debt is down 13%.

Brazil is the firm’s second biggest market and has been a key area of revenue growth. Its data cards, which enable internet connectivity for PCs and laptops, have sold very well in Brazil. The company has increased its subscriber base by more than 15% every quarter despite a very high penetration rate. American Movil was also able to expand profit margins in Brazil even though ARPU dropped by 9.8%.

AMX is now the largest operator in Colombia, Argentina, Nicaragua, Ecuador, Puerto Rico and the Dominican Republic. It is growing quickly in Chile, Paraguay, Peru, Uruguay, Panama, and even the United States.

Morningstar analyst Imari Love argues that AMX has significant experience in handling the nuisances of the Latin American market. This advantage combined with a strong brand name and reliable network should keep growth rates above 7% for the next five years.

American Movil only trades at 11.4x forward earnings despite strong growth prospects. Historically, the stock has traded at 13x earnings. I expect the premium to return as Latin American growth remains robust. If you do not already own AMX as part of your StrataGem portfolio, buy it on weakness for a one-year $58 price target.

For more ideas like this, check out my Trader’s Advantage or Strategic Advantage investment advisory services.

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