4 Margin-Growing Latin American Stocks Trading Below GF Value

GuruFocus.com

January 28, 2021 at 5:06 PM·3 min read

- By James Li

According to the All-in-One Screener, a Premium feature of GuruFocus, four Latin American stocks with high operating margin growth and are trading below GF Value are Bolsa Mexicana de Valores SAB de CV (MEX:BOLSAA), CIA Saneamento Do Parana-SANEPAR (BSP:SAPR3), Cydsa SAV de CV (MEX:CYDSASAA) and Jamaica Producers Group Ltd. (XJAM:JP) based on results retrieved on Wednesday.

The "Margin Growth Screen" applies several key value investing concepts from Berkshire Hathaway Inc. (NYSE:BRK.A)(BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio). Key criteria for "good companies at fair prices" include predictable revenue and earnings growth, increasing profit margins and an attractive share price. GuruFocus' business predictability rank measures the strength and consistency of a company's revenue and earnings growth over the past 10 years.

4 Margin-Growing Latin American Stocks Trading Below GF Value

To find stocks with attractive share prices, GuruFocus developed its exclusive method of determining intrinsic value. The GF Value branches from legendary Fidelity Magellan Fund manager Peter Lynch's price-earnings valuation concept by considering a company's historical price multiplies and adjusting for past performance and future business growth.

The following video revisits the discussion of the customized "Margin Growth Screen" and "Margin Growth Rank" from the beginning of the "World Travels" video series and applies them to the Latin American region.

Bolsa Mexicana de Valores

Shares of Bolsa Mexicana de Valores (MEX:BOLSAA) traded around 46.61 pesos ($2.31). The stock is fairly valued based on Thursday's price-to-GF Value ratio of 1.02.

The Mexico City-based company operates a public securities exchange with services ranging from trading and clearing of securities to counterparty services and data sales. GuruFocus ranks the company's financial strength 8 out of 10 on several positive investing signs, which include a double-digit Altman Z-score, a safe Beneish M-score of -3 and debt ratios that outperform over 80% of global competitors.

Bolsa Mexicana's profitability ranks 9 out of 10 on the back of profit margins that are near a 10-year high and outperform over 82% of global competitors.

CIA Saneamento Do Parana-SANEPAR

Shares of CIA Saneamento Do Parana-SANEPAR (BSP:SAPR3) traded around 4.66 reals (86 cents), showing that the stock is fairly valued based on Thursday's price-to-GF Value ratio of 0.95.

GuruFocus ranks the Brazilian water sewage collection company's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that has increased approximately 8.2% per year on average over the past five years and is outperforming over 90% of global competitors.

Cydsa

Shares of Cydsa (MEX:CYDSASAA) traded around 17.84 pesos, showing that the stock is undervalued based on Thursday's price-to-GF Value ratio of 0.64.

The Mexican chemical company produces and sells plastic pipes, fittings and irrigation systems. GuruFocus ranks the company's profitability 8 out of 10 on the back of a high Piotroski F-score of 7 and an operating margin that outperforms over 86% of global competitors.

Despite high profitability, GuruFocus ranks Cydsa's financial strength 4 out of 10 on several warning signs, which include a weak Altman Z-score of 1.37 and debt ratios that underperform over 70% of global competitors.

Jamaica Producers

Shares of Jamaica Producers (XJAM:JP) traded around $19.62 Jamaican dollars (13 cents), showing that the stock is modestly undervalued based on Thursday's price-to-GF-Value ratio of 0.80.

GuruFocus ranks the Jamaican defensive retailer's profitability 7 out of 10 on the back of profit margins outperforming over 90% of global competitors despite three-year earnings growth rates underperforming over 78% of global defensive retailers.

Disclosure: No positions.