More Profits from South of the Border

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

This week’s pick — NII Holdings — is another Latin American cellular company, one that combines the region’s fast growth markets with the bonus of U.S. business savvy and branding.

Formerly known as Nextel International, NII emerged from bankruptcy a few years ago after the telecom bubble burst. Based in Reston, Virginia, and listed on Nasdaq, NII offers wireless services under the Nextel brand throughout Latin America. It also has a regional strategic relationship with Motorola.

While its principal operations are in Argentina, Brazil, Mexico, and Peru, NII has recently expanded its wireless coverage by purchasing companies with analog-specialized mobile radio licenses in Chile.

NII’s potential in Latin America is huge. It has wireless licenses for 12 of the world’s 25 largest cities, covering markets with a total population of over 390 million people. That’s 35% larger than Nextel’s entire U.S. market, which is one of the reasons that NII has outperformed its parent by almost 2 to 1 over the last 12 months. It’s also on the verge of overtaking Nextel in terms of both top-line revenues and market capitalization.

By some measures, NII is an even better value than America Movil. With a torrid 71.8% annual growth rate, NII has a price-to-earnings-growth ratio of just 0.5, compared with America Movil’s 1.31.

NII recently announced third-quarter earnings of 65 cents per share, more than double the year-before figure of 32 cents. It announced a two-for-one stock split for mid-November.

NII closed above $45 for the first time last Friday. In late October, Legg Mason put a target price equivalent to $62.50 on the stock ($125 prior to the stock split).

So buy NII (ticker: NIHD) at market today, and put in a stop at $36.50. If you want to play options for quick and potentially higher profits, buy the March $45 options (QHQCI.X)

Portfolio Update

The fourth quarter is traditionally strong for global stocks, and this year is proving no different.

Banco Bradesco (BBD) announced a two-for-one stock split on Friday. It’s up over 15% since we recommended it three weeks ago, so move your (adjusted) stop up to $28.40.

Sell your remaining America Movil (AMX) options for triple-digit gains. With the stock up more than 14%, adjust your stop up to $26.00.

Our China Mobile (CHL) options are up 42.50% in two weeks. But hold on for more profits and move your stop up on the stock to $22.50.

Both Austrian market and Norwegian oils are both up this past week. Adjust your stops upward on the Austria iShares (EWO) to $25.40, and to $97.50 for Norsk Hydro (NHY).

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