Rally in Mexican glass maker Vitro puzzles analysts

MX: Quote, Profile, Research) abruptly jumped on Aug. 10, and since then the shares have shot up to 14.07 pesos, from 9.52 pesos.

In late July, Vitro, pressured by heavy competition, said it expects to sell its stake in tableware division Vitrocrisa, which accounts for about 10 percent of total sales, to U.S. partner Libbey to pay down part of its heavy debt.

Analysts say the asset sale is a step in the right direction but not enough to explain the huge stock surge.

"Vitrocrisa is not sufficient (reason) for the stock to have risen so much," said Anibal Habeica, an analyst at Scotiabank in Mexico City. "There has to be something else the market is not seeing."

Vitrocrisa's earnings before interest, tax, depreciation and amortization (EBITDA) amounted to only 12 percent of its $233 million in revenues last year. By comparison, at Vitro's main glass container unit, EBITDA reached a more profitable 20 percent of sales last year.

Some traders have suggested the impressive recent turnaround stories of other industrials like Hylsamex and Alfa (ALFAA.MX: Quote, Profile, Research) may be rubbing off on Vitro's rising stock price.

But while analysts acknowledged investors in a bull market often need little justification to latch on to a stock, they warn the glass maker remains far from an ideal investment.