These Stocks Beat Mexican Stocks

Free trade in North America and abundant natural resources have made investors in Mexican companies plenty of pesos over the years. But I've found investments from another sector that are beating the pants off Mexican stocks ... and I know where you can find out more about them.

Would the real hot stocks please come forward?
The 5,400 stocks that our Motley Fool CAPS community members have rated include descriptive "tags" that group them with other companies sharing similar qualities -- a country of origin, a sector, or an end product, for example. Clicking the Mexico tag pulls up a list of 24 stocks that collectively have risen by a market-beating 7.2% in the past year.

But CAPS tags can also lead you to stocks that have outpaced the returns from the Mexico group: CATV Systems. These 23 companies have more than tripled the gains of the Mexico group, with a 24.3% return in the past year.

Each group has its share of winners and losers, of course, but CAPS can be a great resource for zeroing in on potential opportunities in each area.

From macro to micro
You can sort tag groups by their CAPS ratings, from one to a maximum five stars, and then see which players -- from Wall Street to Main Street -- are bullish or bearish on the company, and why.

For instance, here are a few of the stocks in the Mexico group:

Now, here's a sampling of CATV Systems stocks that investors may want to consider -- judging by interest in the CAPS community.

Nothing but net
While the cable TV segment has delivered outstanding returns in the past year, the CAPS community generally maintains a bearish outlook on many companies in the group. One exception is five-star-rated Net Servicos, a provider of broadband and pay television services in Brazil.

Net Servicos offers three main products -- pay TV, broadband Internet access, and digital voice telephone services. Currently in a phase of high growth, its pay-TV subscriber base grew 16% in 2007 while broadband subscriptions leapt 65% and the number of voice subscribers more than tripled. The company dominates the pay TV segment with nearly half the market and continues to increase average revenue earned per subscriber, as macroeconomic factors in Brazil boost growth.  

With a long-term growth rate estimated to be above 65%, more than a few investors are wide-eyed about Net Servicos' future prospects. In CAPS, investors are overwhelmingly bullish, with 282 of the 285 investors rating the company believing it will beat the S&P in the future. No wonder, then, that it earned the honor of the best South American stock from our CAPS community six months ago.

A smarter charter?
The story is a little different farther north, where Charter Communications offers its services to the more-developed United States. Intense competition from Comcast and Time Warner Cable makes it much harder -- and more costly -- for Charter to capture new subscribers. The results this year have been pretty bleak -- while the company continues to grow revenue at nearly a 10% clip, the bottom line is still swimming in red ink. Even its latest quarterly numbers looked mediocre at best compared with its peers.

One aspect that weighs heavily on Charter is a crushing load of debt -- nearly $20 billion worth. In fact, many CAPS investors cite this debt load and the resulting interest expense from it as reason to be bearish on the company -- even after the stock has plummeted roughly 80% since its peak last summer. A sizeable group amounting to 25% of the 50 CAPS All-Stars rating the company has given the stock the thumbs-down, believing it will underperform the broader market in the future.

Before you buy ...
Of course, investors shouldn't look in the rearview mirror to see where they should be investing now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify macroeconomic trends that may significantly affect investments. Just make sure to do your own due diligence rather than following crowds or individual recommendations.