I was recently lucky enough to interview Raine Mahdi, the CEO and founder of Zipfox. Zipfox, if you're unfamiliar, has lofty goals and wants to be the Alibaba of Mexico. For those who don’t know, Alibaba is a huge business-to-business website that puts manufacturers in China together with buyers around the world.
If you want 1,000 chairs for your restaurant, 50 electric boats for lake rentals, or 5,000 Red Sox hats, you should look on Alibaba first.
Having a background as an international buyer, Mahdi saw an opportunity in Mexico just as its manufacturing sector was starting to boom. So he sold his old company and started Zipfox.
It was early morning West Coast time when the Google meeting started. Mahdi was wearing a backward baseball cap and a white, athletic-style T-shirt. He made some time for me while eating what must have been avocado toast.
It is perhaps telling that the first thing he did was compliment some old stock certificates I have framed and hanging in my office. You feel like this guy could sell just about anything to anyone; if Zipfox were public, I’d be buying. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
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All in Mexico
As we talked about the reasons he started the business, Mahdi got excited and the energy poured out with a Southern California ease.
He told me that everyone he talked to in manufacturing had a Mexico plan and people in the industry knew what was coming even if Wall Street didn’t. He pointed out that his network had signed more deals with companies and governments in Mexico than any other platform, adding that Zipfox was growing by 10% each week over the past few months.
He ticked off the normal reasons for the coming Mexico boom: diversification from China; a young, educated, and growing population; strong work ethic; and proximity to the U.S., which remains the largest economy on Earth.
The median age in Mexico is just 29 years old. Workers are about to enter their peak economic years.
Furthermore, Mexico has more free trade agreements than any other country (over 40!), taxes are low, and the country is business-friendly. It's also a part of the USMCA (the new NAFTA trade agreement). This means Chinese factories are moving to Mexico to avoid U.S. tariffs on Chinese goods.
On top of this, Mexico is a major oil producer. Energy is cheap at $0.19 per kilowatt hour, compared with $0.45 per kilowatt hour in Germany. Labor wages are comparable with China, and shipping is as much as 75% cheaper.
Mahdi also pointed out that the biggest driver most people miss when gauging Mexico’s potential is cash flow. If you contract with a Mexican manufacturer, your delivery is expected to arrive in five weeks. In China, it could take six months. The shorter time means you can put your money back into use more quickly, which in turn would generate more sales, faster turnover, lower inventory, and higher cash flow.
The upshot is that Raine Mahdi believes so much in the Mexico investment story that he went all-in with Zipfox. This backs my own investment thesis, which is why I’m recommending Mexican stocks in my Bull and Bust Report advisory service.
The country's strong economic growth, demographic trends, strategic location, energy sector reforms, and growing technology sector are all factors that make Mexico an attractive destination for investment. I’ve put together a special presentation about it that you can find here. But don’t wait — the rest of Wall Street is catching on.
All the best,