Dealmaker’s Diary: The Mexican Powerhouse You Can’t Ignore

Alpesh Patel|May 1, 2025

When most investors hear “Mexican company,” they immediately think “tariff risk” and move on.

But that knee-jerk reaction means they’re missing one of the most compelling opportunities on the market today.

I’m talking about a $183 billion powerhouse that ranks among the 100 most valuable companies globally.

Not only does it trade at a ridiculously low 8.4x earnings (you’re paying just $8.40 for every dollar of profit), but it’s undervalued by 34%.

And here’s what most investors don’t realize: this isn’t just any Mexican company. It’s the world’s largest Coca-Cola bottler by volume, with operations spanning multiple countries.

Even better? It’s implementing AI across its entire business – from retail analytics to supply chain optimization and beyond.

Click on the thumbnail below for all the details – and ticker! – in my latest Stock of the Week.

Transcript

Hi, friends.

Welcome to our Stock of the Week segment in the Dealmaker’s Diary.

Today we’re focusing on FEMSA, which stands for Fomento Económico Mexicano.

You might wonder why we’re featuring a Mexican-based company when global trade tariffs are a concern.

Let’s explore this further.

FEMSA is a $183 billion company and ranks among the 100 most valuable companies globally.

Interestingly, I wasn’t familiar with FEMSA by its full name, but you might recognize it as Coca-Cola FEMSA, the largest Coca-Cola bottler worldwide by volume.

The company has an attractive P/E ratio of 8.4x, meaning you’re paying just $8.40 for every dollar of profit.

As we’ll discuss regarding its valuation, there are several reasons why this stock appears undervalued.

As part of our educational approach in the Dealmaker Diary, I want to highlight FEMSA’s AI initiatives. The company effectively employs artificial intelligence across multiple areas:

• Data and retail analytics
• Supply chain optimization
• Customer behavior insights through machine learning
• Health services
• Fraud detection
• Sustainability and energy efficiency improvements

Now, looking at our value-growth-income assessment, FEMSA scores an 8.

This high score is partly due to the company’s undervaluation and strong revenue growth. For context, my proprietary algorithm scans 10,000 stocks to identify those scoring 7 or higher on my growth-value-income criteria.

The forecasted P/E ratio stands at 22, which means you’re paying $22 for every dollar of expected future earnings. That’s solid.

You can see the stock price has underperformed the S&P 500 recently, creating a gap that will likely close through the stock rising rather than the index falling further.

The Sortino ratio is 0.3. While I would prefer this to be higher, it still meets my minimum criteria. The company shows below 20% volatility, which provides some reassurance.

We don’t have a cash return on capital invested figure, likely because it trades as an American Depositary Receipt (ADR) on US exchanges, but I’m not concerned about this.

What particularly attracts me is this beautiful upward pattern in the chart. This type of movement typically indicates significant upside potential.

The stock appears to be undervalued by 34.2%, suggesting considerable room for growth.

I hope you found this analysis helpful. Thank you for tuning in.