Three Emerging-Market Gems
All transactions in the company's systems involve two cards and a point-of-sales terminal -- nothing goes through a host mainframe as in banking and credit/debit card systems, because all the relevant information is stored on the smart cards. This cuts out the need for a merchant to have a telephone or Internet connection.
Net1's systems also provide a secure channel for social welfare agencies to distribute funds to beneficiaries and for businesses to pay their employees.
The company has shown operating income growth for the past three quarters on a quarter-over-quarter basis and year over year for the past three years. With no debt and $183 million in cash on the balance sheet, it is in a great position, not to mention that it has generated more than $60 million in operating cash flow over the trailing 12 months. At an EV/EBITDA of 13, this is a great opportunity.
Our last company is in Mexico. America Movil is a wireless communications company that has more than 90 million wireless subscribers in Latin America and the U.S. The company also offers fixed-line and wireless services and sells prepaid wireless services and wireless phones throughout the U.S., Puerto Rico and the U.S. Virgin Islands. The company has grown its operating income and cash flow from operations year over year for the past three years. With an EV/EBITDA of 9, this is a great way to play the growth in wireless communications across Latin America.With the global economy reaching maturation, the key to investing success is in finding undervalued opportunities domestically and in countries that nobody wants to touch. I think these three companies will track the growth of their home markets and will attract foreign investors looking for gems. P.S. from TheStreet.com Editor-in-Chief, Dave Morrow:
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