Betterware de Mexico

Betterware trades at roughly 4.5 times its cash flow, which is dirt cheap compared to similar companies that trade at 20 to 30 times cash flow. With projected earnings per share around 2.50 to 3.00 dollars, the stock could be worth 25 to 28 dollars per share, representing over 50 percent upside from current levels.

The company scooped up Tupperware's Mexico and Brazil operations at a fire sale price of just 3 times cash flow. This deal is expected to add about 58 cents per share in annual earnings and gives Betterware access to Brazil, the largest consumer market in Latin America. Management has a proven track record of turning around acquisitions after successfully integrating Jafra in 2022.

Recent cartel violence in Jalisco, where Betterware is headquartered, has rattled consumer confidence across Mexico. When major kingpins fall, history shows that discretionary spending can take a hit for months. Since Betterware relies on door-to-door sales by independent consultants, any disruption to normal daily life directly impacts revenue.

Betterware earns most of its money in Mexican pesos and Brazilian reais but reports results in US dollars. When these currencies weaken against the dollar, reported earnings shrink even if the actual business is doing fine. Emerging market currencies can swing unpredictably, adding an extra layer of volatility to returns.