Fomento Economico Mexicano - Bull of the Day

Fomento Economico Mexicano (FMX) is the largest Coca-Cola bottler in Latin America and commands a strong portfolio of well-established brands. The company's earnings from continuing operations jumped 29.7% y-o-y in the second quarter of 2010 driven by higher sales and robust gross margin growth.

Moreover, the recent divestiture of brewery operations offers FEMSA greater financial and strategic flexibility to pursue opportunities in its core businesses. Furthermore, the company is taking initiatives to diversify its product portfolio and rapidly expand its convenience store chain, which augurs well for future operating performance.

Accordingly, we upgrade our long-term recommendation on FEMSA to Outperform from Neutral as we anticipate it to perform well above the broader market.
 
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