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AT&T Inc. (NYSE: T) made big headlines with its agreement to buy DirecTV (Nasdaq: DTV) in a cash-and-stock deal worth $67.1 billion.
Takeovers can provide huge windfalls – if you own the stock beforehand.
But this deal offers you the rare chance to profit after the fact – if you know where to look.
South of the Border
If you pay too much attention to the pundits on CNN and talk radio, you might think of Mexico as a land of grinding poverty, drug-cartel wars, and people trying to sneak across the border to the United States. But if, like me, you know to look past all that Noise and gaze hard at the numbers, you know Mexico is a land of tech-investing opportunity.
To be sure, Mexico has its problems and still can't match the wealth and infrastructure of its neighbor to the north. But this is a nation on the rise, and – this is good news for us – it's increasingly tech focused.
In roughly the last decade, incomes in Mexico have increased some 60%, according to figures compiled by the World Bank. The agency says the country's gross national income (GNI) per capita was $16,140 in 2012, the last year for full data. That compares with $10,400 in 2003 – and is still well below the comparable figure of $52,340 for the United States.
But Mexico is moving in the right direction.
The nonprofit researcher Brookings Institution recently reported that the auto industry has added more than 100,000 new jobs in Mexico since 2010. That means the auto companies employ more people in Mexico than in the American Midwest, where Detroit once reigned supreme as the world's auto center.
And they're not done employing Mexicans and turning them into consumers who like to buy mobile plans, smartphones, and all the other trappings of middle-class life. Top global carmakers plan to expand production in Mexico over the next few years. It all adds up to about $10 billion in new investment, according to the Brookings report.
I see the auto industry's commitment as evidence of rising incomes in Mexico, where millions of young people are using higher education to enter the middle class.
The Mexican government sees this, too, and is taking steps to nurture the advance.
In July, for instance, the Mexican government announced an ambitious program to invest $300 billion in infrastructure projects through 2018. Of that, roughly $100 billion will go toward new highways, rail lines, and telecommunications facilities. The plan also calls for upgrading ports to spur the growth of Mexico's exports.
The Mexican government wants to increase economic growth to 6% a year compared with the 2.3% to 3.3% that Mexico's central bank is projecting for 2014.
As part of its growth agenda, Mexico wants to focus heavily on deregulating its telecom industry.
And that's where our "backdoor profit play" comes in …
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.