This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Smart Investment Guide to Brazil

Stocks in this article: GOLTAMBBD

Banks

Brazil will likely see improved credit quality and delinquency rates for both individual and commercial loans, as the unemployment rate has been declining and companies' profits have been increasing.

Banking stocks Banco Bradesco (BBD), Itau Unibanco Banco Holding (ITUB), and Banco Santander (BSBR) will benefit from the higher interest rate environment because of the asset-sensitive balance sheet of these banks.

Chemicals

The Brazil chemical industry will face difficult times ahead, as the recent success of the global industry has been primarily due to cost efficiency and demand growth, which, in turn, shifted the industry's production epicenter to China and the Middle East. The industry is thriving in China because of a large domestic market and cheap labor, whereas the Middle East offers abundant feedstock supply and lower corporate taxes.

Brazil's Braskem (BAK) witnessed lower utilization rates, even during the first quarter when the economy grew 9%, due to unscheduled power outages and deficient energy supply.

The average utilization rate of ethylene crackers is already around 91%, providing little scope to increase production further. The current global oversupply of petrochemicals will pressure prices leading to overall declines in chemical companies' gross margins.

Food, Beverages

Growth of Brazilian retailers such as Companhia Brasileira De Distribuicao (CBD) will be driven by credit expansion, rising income levels, and low penetration of modern retail chains. Brasil Foods (BRFS) will benefit from increasing disposable incomes.

Increased disposable incomes boosted beer and soft-drink sales with beer sales tracking the 22% growth during the first quarter. Brewers such as Companhia de Bebidas das Americas (Ambev) (ABV), Latin America's largest brewers and controlled by Anheuser-Busch InBev NV (BUD), had to import beer for the first time in the company's 125-year history after local supplies were exhausted. The ongoing FIFA world cup will further increase the company's sales.

Metals and Mining

Major steel producers Gerdau (GGB) and Companhia Siderurgica Nacional (SID) are likely to experience a price pinch during the second half due to a worldwide demand slowdown, which prevents producers from increasing steel prices. However, Brazil's steel mills are better placed than their counterparts in China due to larger vertical integration that protects them from increasing raw material costs to some extent.

VALE (VALE) will likely outperform the other mining giants BHP Billiton (BHP) and Rio Tinto (RTP) on the price outlook for iron ore that accounts for around 60% of the company's revenues.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,788.61 +69.61 0.39%
S&P 500 2,061.96 +9.21 0.45%
NASDAQ 4,715.2680 +13.4010 0.28%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs