(FORTUNE Magazine) – Hey, gringo, want to add some Latin American flavor to your dull portfolio? You're in luck: A band of Wall Street analysts says the stock of Panamerican Beverages (PB, NYSE) is a south-of-the-border bargain that should deliver piquant returns without a hint of indigestion.

Panamco, as it's called, is one of the largest bottlers of Coca-Cola soft drinks outside the U.S., with operations in Mexico, where the company is based, Brazil, Colombia, and Costa Rica. Annette Franqui, an analyst at J.P. Morgan Securities, says Panamco's long history of successfully operating outside of its home country gives it a leg up on less experienced competitors in the increasingly cutthroat and consolidating Latin American soft drink market.

Carlos Laboy, an analyst at Bear Stearns, recently upgraded Panamco to "buy," partly because Coke has made the company one of its elite "anchor" bottlers, a status that formalizes Coke's long-term faith in the company. As part of the deal, Coke increased its voting stake in the company to 16% from 10% and said it may boost the level to 25%. Laboy says the deal will help Panamco finance acquisitions of more bottling franchises, enabling it to grow. That growth, he adds, will translate into profits, thanks to the company's managers, whom he credits with having the depth to run a large network of bottlers. (For more on Coca-Cola, see cover stories.)

Panamco stock--which trades solely on the Big Board and not as an ADR--has fallen 17% since late last year, partly due to the Mexican peso devaluation and a strike in Colombia. At $28.38, the stock trades at a price/earnings multiple of 13 based on Franqui's estimate of 1996 earnings per share, vs. an average P/E of 17 for the other Latin American bottlers she follows. Laboy says the stock is also significantly cheaper than its peers when measured in terms of the company's enterprise value (market capitalization plus debt, minus cash) per unit case of soda it sells. Franqui says the stock should hit $41 in the next 12 to 18 months. Laboy's target: $38 in a year.

What about the political and economic turmoil in Mexico, where Panamco earned some 47% of its profits last year? Laboy says that although the company's Mexican soft drink sales volume fell 16% in the third quarter, operating profit margins held up.

In the meantime, Franqui notes that much of the slack created by Mexico has been taken up by Brazil, whose soft drink market is growing fast; Franqui expects the country will account for 53% of Panamco's profits this year and next, up from 29% in 1994. Also, the company's managers are used to weathering the economic storms that have been a regular feature of Mexico's history, Laboy observes. Says he: "They've gone through dozens of financial crises, and they've grown to be a monster in the industry."

--A.J.M.