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
TheStreet Open House

Brazil's Hot Sectors

Stocks in this article: ITUB BBD BSBR

NEW YORK ( TheStreet) -- Brazil reported earlier this month a better-than-expected second quarter GDP growth of 8.8% year over year and a seasonally adjusted annual rate (SAAR) of 5.1%, outstripping expectations.

The strong growth rate prompted Roubini Global Economics to revise its 2010 growth forecast to 7.5% from 7.25% to 7.75%. However, growth has cooled from 9% year over year and 11.3% SAAR during the first quarter of 2010.

According to the Brazilian Central Bank, the country will record economic growth of 6.3% this year and 4.5% in 2011. Playing host to the 2014 FIFA World Cup and the 2016 Olympics, private and public sector spending in Brazil is bound accelerate beginning this year.

In terms of investments, banking stocks such as Itau Unibanco Holding (ITUB), Banco Bradesco (BBD), and Banco Santander (BSBR), and food & beverage stocks such as Brasil Foods (BRFS - Get Report) and Companhia de Bebidas das Americas(Ambev) (ABV) hold potential for the remainder of the year.

Since July, banking stocks have generated returns of 20% to 25%, while Ambev has gained 14%. This compares to a 14% increase in iShares MSCI Brazil Index (EWZ), and a 6.6% increase in the S&P 500. Banking stocks were discussed in our report on July 14.

According to Will Landers, portfolio manager of BlackRock Latin America A fund, Brazil's burgeoning middle class, with higher disposable incomes, is driving the loan market. Mortgage penetration as a percentage of GDP is 2% in Brazil, as compared to 73% in the U.S. and 70% in the U.K.

In an interview with Barron's, Landers said he expects Itau Unibanco, the country's largest private-sector bank, will benefit from offering a relatively new financial product: the long-term mortgage. On Ambev, Landers said, "Brazilians like their beer because the weather is so hot. As your purchasing power increases, you want to drink better beer."

During July, Landers' fund increased exposure to Brazilian equities from 68.7% to 72.1% month on month, while reducing in Mexico to 8.7% from 18.2%. The fund increased focus on Brazilian banks and cut exposure to Mexican telecommunications, which helped post a return of 11.9%. The fund yielded a 29% return during the past one year.

Karvy Global Services (www.karvyglobal.com), a subsidiary of the Karvy group (www.karvy.com), provides specialized research in asset classes including stocks, mutual funds and insurance to leading Wall Street firms.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

Jim Cramer's protégé, 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
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

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