Canadian Pacific Kansas City Limited

Mexico is currently seeing an investment boom of unprecedented size. In a move nearly nobody saw coming, Mexico has attracted the most foreign investment of any emerging market country. Today, hundreds of companies, including Tesla, Samsung, Honeywell, Medtronic, and GM, have announced plans to open or expand manufacturing operations in Mexico.

The primary driver behind these investments is nearshoring, which involves companies moving production closer to the final consumer to reduce costs and, most importantly, avoid supply chain issues: Bottlenecks during the COVID-19 crisis, and more recently tariffs, blocked canals, and attacks on vessels in The Red Sea, have demonstrated the risk to companies that import goods via maritime ships. As a result, companies are looking to bring their manufacturing facilities to Mexico to mitigate these risks, helping Mexico surpass Canada as the top trade partner of the United States in 2023.

This begs the question, what companies stand to benefit the most from this new golden age of Mexican manufacturing?

Kansas City Southern was the first company that came to mind as they maintain the largest Mexico-U.S. cargo train rail network between the two countries. However, with Canadian Pacific acquiring Kansas City last year, the new company has a rail network that is far less dependent on Mexico as a primary driver of it’s revenue, compared to before the acquisition. Subsequently, they won’t benefit as much to Mexican manufacturing boom as they would’ve before.

However, research into Kansas City Southern led me to a Mexican airport operator called Centro Norte ($OMAB), which operates 13 airports in north-eastern Mexico and several manufacturing parks. The reason why Centro Norte stood out is because of the location of the company's properties which are overwhelmingly located in north-eastern Mexico, or more specifically, Monterey. Monterey is ground is ground zero for this manufacturing explosion. The Monterey Metro-Area is quickly becoming one of the largest manufacturing hubs in the continent, responsible for a quarter of Mexico's industrial industry. This is also where Tesla plans to build its Mexico Giga-Factory, which is scheduled to open as soon as 2026.

With Centro-Norte maintaining a massive industrial footprint in the area, as well as numerous airports utilized for both passenger and cargo transport, Centro-Norte stands to be one of the largest benefactors of Mexico's growing manufacturing industry.

Disclosure: The content is for informational purposes only; you should not construe any such information as investment, financial, or other advice. I have no business relationship with any company whose stock is mentioned in this article.