5 Hot Brazilian Stocks

By Investopedia Staff | October 27, 2010 AAA

Brazil, just like other emerging BRIC markets, seems to be well positioned for new growth opportunities. Brazil, Russia, India and China will likely have years, if not decades, of tremendous growth in their futures when compared with the developed markets. (For background reading, see Investing In Brazil 101.)


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The Brazilian economy is the 10th largest economy in the world. During the period 2004-2008, the economy grew at the rate of 4-5% on average. Many would consider this growth rate to be less impressive than those seen in China and India, but things really picked up in 2009; Brazil's stock market index, the Bovespa went up by 83%, barely beating China's Shanghai Composite Index return of 79% and India's 81% return as measured by the Sensex 30.

Brazil has a few key things going for it: It is is one of the few countries in the world that is self-sufficient in oil; it is a leader in alternative energy sources; it produces more ethanol than Asia and Europe combined; it is also the second-largest producer of iron ore in the world. So, all things considered, investors interested in Brazil should focus on commodities, infrastructure, and even housing. After all, as the nation changes its focus from rural to urban living, the basic demands of a growing middle class will need to be met.

Investors can generally invest in Brazil by holding sector ETFs. The most notable of these include iShares MSCI Brazil Index Fund (NYSE:EWZ), WisdomTree Dreyfus ETF BZ Real Fnd (NYSE:BZF) and Market Vectors Brazil Small Cap ETF (NYSE:BRF). For those who are interested in buying individual stocks, check out the following list of five hot Brazilian stocks.




Company

Market Cap

YTD % Gain

Cosan (NYSE:CZZ)

3.48B

+51.47%

Ultrapar Holdings (NYSE:UGP)

8.44B

+35.91%

Ambev (NYSE:ABV)

82.74B

+35.71%

Embraer (NYSE:ERJ)

5.22B

+28.43%

Braskem SA(NYSE:BAK)

8.25B

+26.05%



Bottom Line
Brazilian equities are not cheap. As such, they could easily suffer a pullback even as the Brazilian economy grows. However, Brazil is set to enjoy years of prosperity, and investors seeking direct emerging market exposure may want to keep Brazil on a close watch list. (For more, see Forging Frontier Markets.)

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