Investing: Playing the Brazil Boom

June 10, 2008

New wealth from commodities is fueling growth and expanding the consumer economy. And that presents great opportunities for investors

by David Bogoslaw
businessweek.com

The Brazilian economy is barely recognizable to those who knew it more than five years ago. In those days it was plagued by mountains of debt and boom-and-bust cycles. Now everything is different. Indeed, 2008 is quickly shaping up to be the Year of Brazil.

The economy is ready to burst at the seams—but this time the growth looks sustainable. And foreign investors are taking notice in a big way. Should you join them?

First, it’s worth looking at some telling figures. Brazil’s gross domestic product increased 4.5%, to $1.3 trillion, in 2007, and grew by 5.8% in the first quarter of 2008. The country’s benchmark stock index, the Bovespa, is up 5.9% thus far in 2008.

Brazil is on the right side of the global commodities boom. It has enjoyed a 65% price hike for the high-grade iron ore it sells to steelmakers around the world. In the midst of a staggering increase in world energy prices, Brazil stands ready to capitalize on newly discovered offshore oil deposits that may be part of one of the biggest oil fields in the world. Major credit-rating agencies have given their stamp of approval on its government debt by upgrading the country’s sovereign rating from junk.

What makes the story even more compelling is how Latin America’s biggest economy has largely kept a lid on inflation, even as central banks around the globe continue to battle it. The reason: Brazil’s self-sufficiency in many of the commodities whose price run-ups are causing consumer prices to soar worldwide.

Read the rest of this entry »


New Stock Picks

May 8, 2008

Water
NWPX – Pipes
CCC – Purification
INSU – Pipe rehab
LNN – Irrigation for Agriculture

Oil & Gas
CLR – Bakken
KOG – Bakken
ENB – Canadian oil pipeline
NGS – Nat Gas Service Equip (non-conventional production)
SGY – US Oil & Gas Producer
XTO – Oil & Gas Producer
CRZO – Barnett Shale
ATW – Deep water driller
RIG – Deep water driller
PBR – Brazilian Oil Producer

Agriculture/Commodities
MEA – Scrap Metal Recycler
TWI – Ag Equipment
MOS – Fertilizer
POT – Fertilizer
MTL – Russian Mining/Steel

Brazilian Banks (Brazil’s credit rating just raised to investment grade)
ITU
UBB
BBD

Others
ELMG – Wireless Communications/Defense (excellent weekly chart)
VISN – Chinese Mass Transit Ads (IPO off to a very strong start on major growth)
WGOV – Turbine and Electrical Controls for Alternative Energy Generation via Wind/Steam


%d bloggers like this: