Four Ways to Cash In on Emerging Wireless Growth

Editor's note: This column was submitted by Stockpickr member Martin Guerrero.

The stock prices of wireless-handset makers such as Research In Motion(RIMM) and Apple(AAPL) have been soaring. While buying the stocks of handset makers would be one way to profit from the wireless boom, there are other, overlooked ways to profit from the growth.

One such route is to invest in emerging-market wireless telecom companies, which are enjoying better growth than their peers in developed nations. According to CTIA - The Wireless Association, the United States had a 72% wireless penetration rate as of late 2006. Many nations such as Italy, Sweden and the U.K. already have more than 100% wireless penetration -- that is, multiple phones per person. As a result, it becomes more difficult to grow revenue in these countries.

In emerging markets, however, wireless penetration is much lower, allowing more opportunities to grow revenue. As an example, in Latin America and South America, wireless penetration is expected to be 60% by 2010.

In emerging markets, landline phones can be very limited and wireless can be the only way to make calls. Wireless telecommunication is becoming more important worldwide, and people in emerging markets like India are more willing to use technologies like text messaging. Mobile phones are becoming part of the worldwide culture.

Here are four ways to profit from the boom in emerging-market wireless telecom.

1. America Movil(AMX). Mexico-based America Movil is the dominant player in Mexico and the Latin America and South America region.

This $107 billion company has a forward price-to-earnings ratio of 14.5 and a five-year estimated growth rate of 32.1%, giving it a very cheap PE-to-growth (PEG) ratio of 0.45 (less than 1 is very cheap). According to research from Research and Markets, key drivers for America Movil are low wireless penetration in Latin America, increasing demand of mobile Internet and revenue growth from mobile content.

America Movil is also the company that made Carlos Slim Helu one of the richest men in the world. Jim Cramer has said that we should "start copying the best guy with the best stock ... Carlos Slim." To see all of his holdings, check out the Carlos Slim Helu portfolio on Stockpickr.com.