Is There Any Value Left In Brazil?

[Zuca]

It's hard to be bullish on Brazil in 2010. Despite the country's long-term attractive fundamentals - a rising middle class, an abundance of rich resources like oil and farmland, and more pro business government - Brazil's sizzling stock market performance will be hard to follow.

Party Like It's 2009

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 Senesex 30. With returns like this, it's hard to imagine that there is any value to be had. While many experts are bullish on Brazil for the beginning of 2010, a successful investment program must be more long-term oriented if it has any real chance of success.

As such, if you wish to consider Brazil today, you should be 100% willing to accept that any correction will likely impact even the most attractive investments today, and after 2009 it's very likely that a correction is ahead in the future. Secondly, as with any investment - especially those of emerging and developing markets - the real gain will come from a multiyear holding period. Countries like Brazil, Russia, India and China likely have years, if not decades, of tremendous growth in their futures when compared with the developed markets. But along with that growth will come inevitable setbacks. (For related reading, check out Go International With Foreign Index Funds.)

What to Like
For the most part, Brazil's best bets may be those in commodity, infrastructure, and even housing. As the nation changes its focus from rural to urban living, the basic demands of a growing middle class will need to be met. The big daddy state-owned oil company is Petrobras (NYSE:PBR), and shares nearly doubled in 2009. Yet Brazil's Tupi field oil discovery, which has the potential to contain several billion barrels of oil, would be the most significant of its kind in decades. Petrobras would likely be the ultimate beneficiary.

Steel company Gerdau (NYSE:GGB) will clearly benefit from any future infrastructure demand, but shares have leaped nearly 300% in 2009. Yet in terms of valuation, Gerdau remains attractive when compared with competitors elsewhere in the world. Of course, none of that matters if steel prices face another downward collapse. Gafisa (NYSE:GFA) is a large homebuilder in Brazil that produces luxury residences all the way down to entry-level housing for low income citizens. Like all things Brazil in 2009, its shares performed marvelously. Brazil Foods (NYSE:BRFS) is a $23 billion producer of meat and processed foods in Brazil and other countries. Look for this company to grow as more and more Brazilians settle into middle class lifestyles and enjoy a more protein-rich diet.

Not Cheap
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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By Sham Gad
http://stocks.investopedia.com/stock-analysis/2010/Is-There-Any-Value-Left-In-Brazil-PBR-BRFS-GFA-GGB0114.aspx

[rjc]

Bom dia,

Zuca,
Não sou muito fluente em inglês, mas, pelo que entendi, realmente, não está tendo empresas baratas para comprar... Mas, ainda encontram-se oportunidades na bolsa brasileira abaixo do valor intrínseco, é só procurar. Cabe salientar aqui, que esta valorização fenomenal do ano passado foi apenas uma valorização de recuperação da crise....E também que a bolsa brasileira não é só Petrobrás e Vale do Rio Doce...
Tem ótimas empresas de primeira linha , segunda linha que não são muito negociadas, mas são excelentes em fundamentos, lucratividade e etc. E outras de primeira linha que são "Blue Chips" e não tem nada de azuis..... OK!!

Abraços,
RJC.