Since 1976, every time the Mexican presidency has changed hands, the country's economy has hit the wall and crumbled. So profound has the link between elections and economic crisis been that a term has been coined for the curse that befalls the country every six years: the

sexenio

.

The last time around gave rise to the Tequila Crisis, which drove the peso to a poorly managed devaluation, inflation to a sky-high 52%, and the country into recession.

So with elections slated for July 2, it's understandable that investors are nervous -- particularly because the ruling

Institutional Revolutionary Party

, or the PRI, is facing the first real challenge to its power in seven decades. PRI candidate

Francisco Labistida

currently has a narrow lead over opposition candidate

Vicente Fox

in the polls.

Fears of political volatility following the elections, trouble with U.S. tech stocks, and worries about the effects of higher U.S. interest rates on the economy have proved a deadly cocktail for Mexican stocks. The benchmark

IPC

index remains more than 20% below its March highs.

A perfect time to buy, according to some strategists.

The election jitters are just a lot of noise, they say, and Mexican stocks are poised for a nice rally once elections pass. While the elections are going to be close, they're going to be cleaner than they have ever been, which should stave off any political scuffles. The Mexican economy is booming, with expected GDP growth of 5% this year, a pickup in domestic demand is fueling consumer businesses and loans, and current tight monetary policy should help keep it on track.

"Recent underperformance in currency and equities due to noise ahead of July 2 elections has created an opportunity to buy these assets," said Carlos Asilis, a Latin American strategist for

J.P. Morgan

. Asilis sees 40% to 50% of upside on the IPC if everything goes perfectly, but suggests 25% may be a more reasonable estimate.

If there is a barrier to such a rally, it may depend on what's going in the U.S. The U.S. is Mexico's biggest trading partner, buying some 80% of Mexican exports and, as a result, Mexico's economic fortunes often ebb and flow with the U.S. If the

Fed

is close to done, and the U.S. is on the verge of cooling down again to Goldilocks status (not too hot, not too cold), no sweat. But if this current perception on the U.S. economy is wrong?

One way to protect against such trouble is to avoid exporters and companies with heavy dollar debt and revenue in pesos. Consumer-sector stocks such as beverages, retail and media, as well as some of the other most-liquid names, may be the best protection against any snags in the U.S. And, as it turns out, they may be the place to be in any case.

Unlike in the U.S., where consumer demand seems finally to have eased a bit, in Mexico it is just starting to pick up. According to recent data, domestic spending in Mexico is finally driving economic growth after years of dependence on exports. Private spending in the January-March quarter grew 9.2% vs. a year ago, strength the likes of which has not been seen since before the 1994-95 peso crisis. That means the companies best positioned for accelerating growth are those catering to local consumers.

Deustche Bank

Latin American strategist Renato Grandmont, whose "election-proof portfolio" focuses on consumer stocks, recommends brewer and bottler

Femsa

as a strong buy, as well as beverage company Coca-Cola FEMSA, or

KOF

,

(KOF) - Get Report

, food company

Bimbo

, retailer

Elektra

and supermarkets

Comerci

and

Wal Mex

, controlled by U.S.-based Wal-Mart stores, as buys.

Grandmont also recommends banks

Banacci

and

Bancomer

as strong buys, because of consolidation in the sector and because strong consumer demand should give a boost to lending.

J.P. Morgan's Asilis also recommends Wal Mex, and likes media company

Televisa

and Mexico's largest industrial conglomerate

Grupo Carso

(GPOVY)

.

Fidelity

Latin American strategist Robert Burgess is another Wal Mex fan. He also likes beverage companies such as brewer and bottler

Femsa

and Corona beermaker

Modelo

as well as highly liquid names like telecom

Telmex

( TMX) and cement company

Cemex

(CX) - Get Report

.

"This may a good entry point on some of the more liquid names. They could be very attractive at this point," concludes Burgess.