Monday, May 9, 2011

America Movil SAB de CV (NYSE: AMX) Q3 2011 Price Target

Recent price: 51.72$
P/E Ratio: 13.35
3 Months Target Price: 46$

Company Description
America Movil S.A.B. DE C.V. is a provider of wireless communications services in Latin America. The Company had an aggregate of approximately 3.8 million fixed lines in Central America and the Caribbean as of December 31, 2009. The Company’s principal operations are in Mexico, Brazil, Southern Cone, Colombia and Panama, Andean Region, Central America, United States and Caribbean. Through Radiomovil Dipsa, S.A. de C.V., which operates under the name Telcel, the Company provides mobile telecommunications service in all nine regions in Mexico. The Company operates in Brazil through its subsidiaries, Claro S.A. and Americel S.A., under the unified brand name Claro. The Company provides wireless services in Argentina, Paraguay, Uruguay and Chile.

Confidence Margins
Strong resistance $59.40 (-15%)
Light resistance $57.49 (-11%)
Light support $49.63 (+4%)
Strong support $46.04 (+11%)

Shares of America Movil SAW were hit after the company overturned by a ruling of Mexico's Antitrust Commission. The company had been showing a slowing growth over the last few quarters but it seems that this decisions will have a lasting impact on the company, thus justifying a bearish position on securities of this company.

Entry strategy
For the cautious investor:
Sell short the stock for 52$ or more.

For the risk-taking trader:
The November 2011 50$ out-of-the-money put option contract seems to be the right position to take, they can be acquired for about 3.10$ per contract.

Exit Strategy
For the cautious investor:
Buy when the stock reaches 46$, or keep it until 45$ if you are more bearish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 46$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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