Since

Moody's Investors Service

upgraded Mexico's foreign debt rating to investment grade this week, the 60,000-peso question has been: "Is it a good time to put money into Mexico?"

One might think the answer to that is an easy "yes." After all, at the very least, an upgrade is a vote of confidence about the overall economic situation of a country. In addition, many institutional investors have rules that preclude them from investing in countries with sub-investment-grade ratings. Those investors can -- and will -- put their money in sovereign or corporate bonds once the ratings have risen. And when a nation starts receiving a huge influx of cash, it is good news for the overall investment picture in that country.

Yet many investors think the time to get into Mexico has passed. The smart ones got in six months ago before the

IPC

, one of the nation's key stock indices, doubled, a stunning rise that is still going on. On Thursday, it reached another record. The not-quite-so-fortunate got in a month ago when Moody's first announced it was considering an upgrade. They can't complain: the IPC is still up about 20% since then. Is it too late to get in, or will the boom continue?

"If I had a dollar, and had to make a decision, I'd probably choose Brazil," says Donald Elefson, portfolio manager for the

Excelsior

(UMEAX)

Latin America fund, although he says he isn't rushing to sell his Mexican stakes. His fund is the best-performing fund in the Latin America category, up 18% this year, against a category average of 5%, according to

Morningstar

. He likes Brazil because of its greater potential growth in telecommunications. And he worries that Mexican valuations are now too high and foreigners too prevalent. If U.S. interest rates rise or the

Dow

and

Nasdaq

drop, foreigners might be quick to sell Mexico.

Elefson has plenty of company in the institutional investing community. "There is more value in Brazil," says Heidi Andersen, who manages the

(TELAX)

Templeton Latin America fund, which is up 15.4%. "You might see heavier weighting in Brazil" in the fund, she suggests, although she concedes many Mexican companies will benefit from the upgrade.

Nevertheless, some investors believe Mexico still has room to run. "In our view, this does not spell the end of the recent enormous rally in Mexican equities," wrote Geoffrey Dennis, Latin American equity strategist at

Salomon Smith Barney

, in an analysis of the upgrade this week. "Certainly, a lot of the good news is now behind us, and many investors will use upcoming strength in the market to take some money off the table. However, the fundamental positives for Mexico that will flow from the upgrade are such that the market should have further upside over the short term."

After the upgrade,

Merrill Lynch

revised its estimate for the IPC, lifting the target to 10,500 from 9,000. It closed on Wednesday at 8,399. Merrill Lynch also reiterated its overweight opinion for the country.

In fact, while the upgrade may make Mexico as a whole look better, investors need to be careful about the companies they buy. "Some exporters may suffer," says Juan Villaneuva, a director at Merrill. "Overall,

the upgrade is good for the economy, good for the companies linked to the local market," who will benefit from strong domestic growth.

Salomon Smith Barney specifically likes

Telmex

(TMX)

, a telecom company that also makes for the largest position in both the Templeton and Excelsior funds. Salomon also recommends media play

Televisa

(TV) - Get Report

, cement company

Cemex

, and bank

Bancomer

, which should benefit from the increased lending that will come from lower interest rates.

In the end, Mexico may not prove as spicy as Brazil. But the fundamentals are stronger than they've been in years.

NAFTA

has led to a genuine transformation in the country, as witnessed by the rash of foreign acquisition and mergers with local banks. And virtually everyone is unflustered by the upcoming elections in July, which is remarkable only because every election in the last 25 years has been accompanied by a financial crisis. No one anticipates that this time.

While a lack of consensus on a country may add to the confusion about whether to invest there, it is actually encouraging to see such a debate about an emerging market. For too long, investors have rushed herdlike into emerging markets, and trampled herdlike out. Don't let the debate scare you. Mexico looks good.

David Kurapka's Global Portfolio, formerly known as Trade Winds, appears Wednesdays and Fridays on TSC. In keeping with TSC's editorial policy, he does not own shares in any companies or mutual funds mentioned in this column. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

dkurapka@thestreet.com.