Best International Stock: America Movil

Discover an entire world of compelling investing opportunities in our "Best International Stocks" series.

No stranger to competition, Mexico-based wireless service provider America Movil (NYSE: AMX) is used to going head to head in both the wireless market and the stock market. It's also used to winning -- America Movil followed a strong showing in our Best International Stock of 2007 contest with a 37% gain last year. But the best may still be ahead of this emerging giant.

I believe that America Movil is a terrific stock to own for two reasons: Great market opportunities exist outside the company, and great management resides inside the company.

Beyond its core market in Mexico, America Movil has successfully acquired and integrated a diverse set of local operators in many Latin American countries, and it has aligned each of them for strong performance even against formidable competition from Telefonica (NYSE: TEF). The stock's performance over the past five years -- 67% compound annual growth -- is testament to the success of that approach. The accomplishments of the management team make me confident that they can successfully exploit future opportunities wherever they exist.

Past success has brought America Movil more than 143 million wireless subscribers. Investors may believe that an operator of this size can't get much bigger, but consider that many of the markets in which the company operates have only recently passed a 50% penetration rate. Precedents abound for lucrative growth in emerging markets: Once small but now giant China Mobile (NYSE: CHL) and Russia's VimpelCom (NYSE: VIP), for example, have both proved tremendously profitable in underpenetrated, high-growth markets.

But what sets America Movil apart from many other wireless players is valuation. The company remains a cheaper call, even with recent gains in the stock. America Movil's forward earnings multiple sits below 16, but analysts expect the company to continue growing at a 27.5% rate.

America Movil also possesses an efficient operating structure. Operating margins have marched steadily upward over the past couple of years to just south of the 30% border, while the company's net margin has recently floated in the high teens. In such a capital-intensive industry, America Movil's impressive margins show tight management of resources and prudent expansion.

In addition, the company's aggressive deployment of next-generation high-speed networks and services leaves plenty of long-term opportunity ahead for high-margin revenues. So even when Latin American markets become more saturated, America Movil will continue to grow on the back of more advanced services the way operators such as AT&T (NYSE: T) and Verizon (NYSE: VZ) are doing in the more saturated U.S. market.

The combination of a fertile market, a great track record, and a reasonable valuation make America Movil a stock with huge potential. If you agree with me that America Movil will beat the market in the years ahead, head on over to America Movil's CAPS page and log your vote. I've already given the company the thumbs-up, as have more than 1,200 other investors in CAPS. I'm betting that it will continue its winning ways.