James Dennin, Kapitall: Despite displeasure with the US and political unrest at home, these Brazilian stocks have solid inventory turnover.
Can you invest in Brazil? Should you even consider Brazilian stocks for your portfolio? It was certainly a popular choice a few years ago.
During America's dark days in 2009, investors were flocking to Brazil. Despite the ripple effects from American bank crashes, the Brazilian economy grew at a breakneck speed of 7.5%. Growth in the largest country in South America prompted analysts to coin the term BRIC, as an acronym for the four most important emerging economies: Brazil, Russia, India, and China.
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This prompted the country's voters to stay on course – electing the protég
of the very leader who presided over economic boom times. Unfortunately, things aren't going as well for Dilma Rousseff. Since taking over growth has lagged to less than one percent. This is partly due to falling commodity prices. But Brazil faces many other problems as well – it has some of the worst infrastructure in the world and a pension system that makes Detroit's look downright austere.
On the flip side there are a number of reasons why may be too early to write off this economic giant.
- Badly needed tax and legislation reform would help make the country more competitive for investment.
- Brazil stands to become a major oil exporter in the years to come – and is already a giant in food exports.
- The energy boom is helping to finance a growing local biotechnology industry.
- And Brazil will host to both the Olympics and the World Cup in the next few years.
With that in mind we decided to run a screen on Brazilian stocks - value investors in particular may find the results interesting, as they tend to buy during downturns. President Rousseff may still be plagued by
and a chilly rapport with President Barack Obama. But a number of companies based in Brazil are still performing very well.
We looked at the
among 30 Brazilian companies that trade on US exchanges. In particular we looked for stocks where inventory was decreasing as a total percentage of the company's assets. This means the company is selling its goods faster than expected – a potential indication of strong demand and future growth.
We were left with four companies on our list.