Invasion is out of the question! The US army can't even keep law and order in Baghdad with a few million people. Imagine what hell it would be in Mexico City (top 5 of the worlds most populatted cities), with a population over 15 million!
Annexation is also impossible. If you annex Mexico, you create another 100 million plus mexicano americans! If you are wondering why the us would want to annex n the first plce...oil
Ofcourse, with proper leadership, the above don't need to be a problem...
Installing a puppet government is the best option...the US controls Mexico, an yet, doesn't.