While investor awareness of Brazil is certainly viable, sometimes this country may suffer from hiding in China's wings. For obvious reasons, everyone mentions China, China, China when looking at investing abroad. However, Brazil is no sleeping giant; this resource-rich country has transformed itself into a nation exceptionally worthy of long-term investment consideration. Over the next five years, Brazil will host the two largest sporting events in the world: FIFA World Cup in 2014 and the Olympics in 2016.
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Best To Bet On The Country
Unless you have the time and resources to visit with Brazilian businesses, most investors will find participating in Brazil's quality and well-established businesses a very productive way to benefit from this country's wonderful future. After all, one would have done exceedingly well betting on companies like Coca-Cola (NYSE: KO) and General Electric (NYSE: GE) some 50-60 years ago in the U.S.
For investors, Brazilian stocks are relatively cheaper when compared to China and India. However, Brazil's investing climate should be viewed with a greater degree of caution namely due to political risks. (For related reading, check out Go International With Foreign Index Funds.)
Titans Of Brazil
Brazil, like Latin America in general, is known for its abundant resources like arable land, water and other commodities. Petroleo Brasileiro (NYSE:PBR) is Brazil's largest oil company, trading at 7.5 times earnings. It was part of the huge oil discovery in recent years off the coast, considered one of the biggest in years. Cosan (NYSE:CZZ), a lesser-known company, makes and sells sugar and ethanol and trades for book value, although debt may be a little high. (For more, see Sugar: A Sweet Deal For Investors.)
Mining giant Vale (NYSE:VALE) is a great play on commodities in one of the most resource-rich nations. This $172 billion giant produces iron ore, aluminum, copper, coal and other lesser-known but essential commodities. Finally, Brasil Foods (NYSE:PDA) sells processed foods and is the major player in Brazil. The company is a combination of two Brazilian food rivals. It is a dominant producer of processed meats in Brazil, but its product line stretches from frozen vegetables to dairy to pizzas and lasagnas.
Here To Stay
Brazil's economy is expected to grow around 4.5% in 2010, according to IMF estimates. It's a resource-rich country with a growing middle class. As long as the politics don't take a change for the worse, it should not be ignored from an investment perspective. (For related reading, see Forging Frontier Markets.)
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