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Tickers in this Article: BVSP
Brazilian stocks are the cheapest they've been in nearly 10 years. The last time they were this cheap, the Bovespa Stock Index (Brazil's version of the S&P 500) soared over 100% in less than twelve months.

Unfortunately, I bet many of you wouldn't think twice about investing in a country like Brazil. Most people simply dismiss the fifth-largest nation in the world as just another "ultra-risky" growth play.

To those investors, all I have to say is you're making a big mistake.

Here's why...

Prior to the financial crisis, Brazil was the darling of Wall Street. Not only was the country seeing rapid economic growth, but commodities -- Brazil's primary export -- were also in high demand.

Those tailwinds drove the Bovespa from less than 8,623 points in 2002 to 72,592 by 2008 -- a 741% gain in just under six years.

Flash-forward to today and Brazil couldn't be more hated. While the S&P 500 is up nearly 25% since January, Brazilian stocks have fallen 20% -- posting one of the worst performances among global stock markets year to date.

Why are investors down on Brazil?

For one, lately the country has been riddled with political turmoil. The Brazilian president -- a Marxist female by the name of Dilma Rousseff -- has proven terribly ineffective in quelling citizens' concerns about rising price levels. In fact, just this summer, 100 million people congregated in cities throughout the country to protest mounting public transportation costs.

But these struggles are nothing more than a by-product of a developing nation. As a country grows and its middle class expands in size and power, this segment of the population starts to demand more from their government. The recent unrest is merely a statement by the Brazilian people that they're tired of being treated like third-world citizens.

If that weren't enough, investors are also concerned about Brazil's slowing economy.

Chief Investment Strategist Andy Obermueller talked about Brazil's slowdown in the October 22 issue of Game-Changing Stocks. In his essay, he explained why the country's economic problems should be nothing more than a short-term obstacle. As he said:

[Brazil's] economy, which posted 7.5% growth in 2010, the best in a quarter-century, has slowed. But it hasn't stopped by any stretch of the imagination. Some of the forecasts I've seen call for growth of 2.7% for 2013, which exceeds what is expected and has been achieved in the United States of late?

But beyond a rather blah short-term, International Monetary Fund (IMF) projections thereafter look far better, as you can see from the table.

I mentioned one of the reasons for Brazil's positive economic outlook earlier -- the rising middle class.

According to The World Bank, Brazil's middle class has expanded 40% in the last 10 years, more than any other Latin American nation. The increase means this group now represents over 52% of the country's population.

That's a big deal. The middle class is the biggest part of any developing economy. As this group expands, so does the amount of money they have to spend on the country's goods and services. The more they spend, the more the economy grows.

Most emerging economies are nowhere near having an established middle class. For example, only 34% of Chinese households meet the grade. In India that number is even lower at 25%.

Yet with over half of Brazilian households currently belonging to this distinct group, the relative size of Brazil's middle class is now comparable to that of developed nations like Germany and Australia.

Growing income levels aren't the only reason we're bullish on Brazil either. In the next few years, two very big events are happening that will likely put South America's largest country on the map: The 2014 World Cup and the 2016 Olympic Games in Rio.

These are two of the most watched sporting venues on the planet. With Brazil in the global spotlight, both of these attractions will give the emerging giant a chance to showcase its economic progress. If nothing else, Brazilian companies should benefit from the increased attention these events draw.

Yet despite these positive catalysts, Brazilian stocks are trading at some of their lowest valuations of the last 10 years. The table below shows the price-to-book ratio for each country's major stock market index.

As you can see, stocks in Brazil are currently trading at a price-to-book value of one -- meaning right now you can buy Brazilian companies for exactly the cost of their assets.

For a country with the seventh largest economy in the world, that's ridiculously cheap. In 2003, the last time Brazilian stocks were this cheap, the country's stock market soared over 100% in 12 months.

The best part is you don't need to leave the U.S. to take advantage of this growing trend either. Thanks to new investment vehicles like exchange traded funds (ETFs), investing in foreign countries is easier than ever. You can buy ETFs just as easy you would shares of Apple (Nasdaq: AAPL) or GM (NYSE: GM).

By far the most popular ETF in this space is the iShares MSCI Brazil (NYSE: EWZ), an exchange-traded fund that invests over 95% of its assets in Brazilian large caps like oil giant Petrobras (NYSE: PBR) and Vale (NYSE: VALE), one of the largest natural resource companies in the world.

Since the beginning of the year, the EWZ is down 23%. After the pullback, EWZ is now trading at a discount to its net asset value, which means you can currently buy this fund for less than the price of its underlying holdings.

Of course, that's not to say it won't fall further. Even though Brazil's emerging middle class is pushing its economy towards self-sustainability, the country is still highly contingent on commodity exports for economic growth. If commodity prices continue to lag, Brazilian stocks could remain depressed in the short run.

But over time, all of Brazil's current problems will likely prove nothing more than temporary hurdles. Ten years from now, we won't be talking about global economic powers without mentioning Brazil. When that day comes, you're going to wish you had invested when it was still cheap.

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