NEW YORK (
) -- Brazil is in the spotlight these days with the recent completion of the
, and there's reason to believe the country is poised for more positive headlines.
Citigroup analyst Geoffrey Dennis is a believer. He's bullish on emerging markets, Brazil in particular, which he believes will see improvement in the fourth quarter driven by stronger cyclicals. He has a 2010 GDP growth forecast of 7.6% for Brazil and recently raised his 2011 forecast to an increase of 4.5% from 4%.
"After trading in a range so far in the third quarter, we expect emerging markets to break out to a new high for the cycle early in the fourth quarter and so extend the new bull market," Dennis said in a recent research note.
3 Hot Brazilian Stocks
Another plus for Brazil is that Brevan Howard, the fourth largest hedge fund in Europe, recently opened an office there. Its flagship Brevan Howard Master Fund has more than $24 billion under management. The average hedge fund lost 20% in 2008, but the Master Fund, which invests in bond and currency markets, delivered 21% in 2008 and appreciated 19% last year.
Brazil should also see a boost from being chosen to host the 2014 World Cup, an event that is expected to spur $20 billion worth of infrastructure spending. Emerging Global Advisors launched a
Brazilian Infrastructure ETF
( BRXXX) just to capitalize on this spending. Richard Kang is the Director of Research at EG Shares and he shared with
his favorite Brazilian stocks.
Empresa Barileria de Aeronautica
Better known as Embraer, the company is like a smaller version of
or Airbus. Embraer is known for its smaller planes . It is a popular choice for regional airlines in the U.S. as well as many emerging countries. Kang pointed out that many emerging markets do not have the large airports that Americans are familiar with.
The mostly smaller airports have shorter runways and need smaller planes.
just ordered eight planes from Embraer and the stock is right around its 52-week high. The company also just won a $1 billion loan commitment from a group of 25 banks.
Vivo Participacoes SA
Wireless companies are always looking for new markets and Brazil is the latest. Vivo Participacoes is a joint venture between
and Spanish telecom leader
. It is the largest 3G WCDMA network in Brazil and expanding.
Telefonica, the past summer agreed to buy out Portugal's share for roughly $10 billion. It plans to merge Vivo with its Telesp unit in Brazil which, when combined, will have 69 million customers.
Cia Brasileira de Distribuicao Grupo Pao de Acucar
Cia Brasileria de Distribuicao Grupo Pao de Acucar, which is mostly known as just Grupo Pao de Acucar, is the largest retailer in Brazil. EG Shares's Kang says its business is based on a multi-format structure with a balance between supermarkets, hypermarkets, appliance stores and e-commerce operations.
The company operates 1,080 stores in 18 states and has nearly 88,000 employees. The stock is a play on the booming middle class of Brazil.
One of the largest companies in the Latin American food sector is Brasil Foods. The company operates 41 meat processing plants, 16 milk and dairy plants, two margarine plants and a single soybean plant all located near their raw material suppliers.
EG Shares's Kang notes that Brasil Foods has an advanced distribution system with 51 centers reaching supermarkets, wholesale markets and institutional clients in the domestic market as well as 110 other countries.
Companhia de Bebidas Das Americas
Companhia de Bebidas Das Americas, or AmBev, is another Brazilian stock near its 52-week high. AmBev owns 70% of the market share for Brazilian beer. Plus, it produces, bottles, sells and distributes Budweiser products in Canada. Three of its beer brands are in the top 25 beers consumed in the world.
The company is the leader in six of the countries it operates in, and has a presence in 14 countries throughout the Americas. The Brazil beer market is third behind the U.S. and China. A recent study showed that 32 million people moved from the bottom class to the middle class. Another 36 million are expected to move up by 2014. More middle class means more soda and beer drinkers.
Written by Debra Borchardt in New York
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.