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NEW YORK ( TheStreet -- 2010 has been very kind to Latin America with GDP growth of 6.3% year-to-date.

In 2009, the MSCI Latin America index had a total return of 103.8%, the best of all the equity asset classes. Jeff Applegate, Chief Investment Officer at Morgan Stanley Smith Barney, says the 2011 outlook for emerging markets is even better.

The asset allocation team at Morgan Stanley is currently overweight on emerging markets, stating that it is their most-favored asset class because: "These countries continue to lead the global economic recovery. They generally have cleaner government balance sheets, their equity market valuations are attractive and many of their currencies are likely to appreciate."

While this year's performance doesn't necessarily line stocks in the region up to be 2011's top performers, many of these names are highly favored by analysts to continue their upward trajectory.

Small jet builder Embraer ( ERJ) rose almot 37% for the past 12 months and the company continues to deliver positive guidance.

Credit Suisse analyst Luiz Campos gives the stock an outperform rating with a target price of $37.00. Campos thinks the company has become more efficient and less labor intensive. While he points to sales being 3% below his estimates, the net income was 107% above his estimate.

Campos also wrote, "further upward revision of Ebit earnings before interest and taxes guidance and maintenance of the top-line forecast should indicate a strong 4Q10 ahead." TheStreet Ratings designates the stock as a buy and notes that the gross profit margin for the third quarter 2010 increased over the previous year and that the stock is trading at a discount to its peers.

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