5 Winners in Emerging Markets ADRs

NEW YORK (TheStreet) - Global indices ended in the red this week amid ongoing U.S. debt woes. Compared to the emerging markets, U.S. indices suffered bigger declines. India's Nifty slumped 2.8%, marking the highest fall. Brazil's Bovespa followed declining 2.6%, while China's benchmark Shanghai Composite Index dipped 1.9% at close last week.

The S&P 500 and the Dow Jones shed the most of 3.2% and 3.8%, respectively. During the past week, most of the stocks across the index declined as the U.S. government's failure to strike a deal on the national debt ceiling left the markets nervous.

For the week ended July 20, according to data compiled by international fund tracking firm EPFR, investors directed $322 million of fresh capital towards locally denominated emerging market bonds in order to snap up some quick gains from currency appreciation. Further, positive foreign exchange effects pushed the total assets under management at emerging market bond funds by $50 million over the past week.

India's Nifty closed the week with only two gainers. Sify Technologies ( SIFY) emerged the top decliner shedding 13.5% at close last week. Meanwhile, Rediff.com India ( REDF) nudged 8.9% lower after the company recorded a higher loss of $2.3 million as compared to $1.2 million in the year-ago quarter. iGATE ( IGTE) lost 8%.

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On the Shanghai Composite Index, stocks from the electrical components and equipment sector such as Advanced Battery Technologies ( ABAT) and Harbin Electric ( HRBN) plunged 22% and 15.5%, respectively. Meanwhile, pharma stocks Synutra International ( SYUT) and China Shenghuo Pharmaceutical ( KUN) erased 9.8% and 7.4%, respectively.

On the Bovespa, there were only four gainers last week. Braskem ( BAK) was the top loser erasing 11.8%. Embraer ( ERJ) followed, shedding 9.1%. Airline stocks Gol Linhas Aereas Inteligentes ( GOL) and TAM ( TAM) dived 8.1% and 7.0%, respectively.

Below, the stocks are stacked based on last week's gains, least to highest.

5. Petroleo Brasileiro (Petrobras) ( PBR), an integrated oil and gas company, operates in five segments: exploration and production; refining, transportation and marketing; distribution; gas and power; and international. The international segment oversees the company's activities outside Brazil. The stock accumulated 1.7% last week.

Of the 18 analysts covering the stock, 72% rated it a buy and the remaining suggested a hold. There were no sell ratings on the stock. A Bloomberg consensus expects the stock to gain an average 41.7% to $47.84 in the upcoming 12 months.

The company's board of directors approved the payment of own capital interest amounting to $1.67 billion, or 13 cents per ordinary or preferred share, to be distributed until Oct. 31.

The company announced last week that it plans to use new submarine technologies in the pre-salt from 2015. In fact, some of these new subsea technologies are already in practice tests and others are in the prototype stage. Petrobras' president said that these new technologies and the success of a few other developments would increase the company's production capacity by 2020.

4. Dr. Reddy's Laboratories ( RDY), is a vertically integrated pharmaceutical company focused on producing and delivering high-quality finished drugs and medicines through three business segments: Global Generics, Pharmaceutical Services and Active Ingredients; and Proprietary Products. The company has a research facility in Atlanta, Ga. The stock accumulated 2.6% over the past week.

Of the four analysts covering the stock, two recommend a buy and the rest suggest a hold. There are no sell ratings on the stock. A Bloomberg poll expects the stock to gain an average 17.5% to $41.80 over the next 12 months.

During the past week, it was known that the company entered into an agreement with JB Chemicals & Pharmaceuticals to acquire its pharmaceutical prescription portfolio in Russia and other CIS regions for $35 million. As per the agreement, Reddy's would acquire 20 brands from JB Chemicals including key brands Metrogyl and Jocet.

In a separate development, Fujifilm Holdings said it would be forming a joint venture with RDY to develop generic drugs with the intention to tap Japan's growing generic-drug market. Japan is seeking to make up 30% of the overall drug market by March 2013, raising interest from overseas firms. In the JV, Fujifilm would own 51%, while Dr. Reddy's would hold 49%.

3. Telecomunicacoes de Sao Paulo - TELESP ( VIV) provides fixed-line telecommunications services in the State of Sao Paulo and international and interregional long-distance services. It also provides audio, data, voice and other sounds, images, texts and other information. The stock leaped 3.5% over the week.

Of the 11 analysts covering the stock, about half recommend a buy and half rate it a hold.

This week, Brazil's telecommunications regulator Anatel said the country's mobile phone subscriptions increased to 217.3 million in June, up 1.06% from May. New subscriptions totaled 2.3 million in June with fewer cancellations from existing subscriptions. VIV has maintained its market leadership with a 29.47% share of subscriptions.

The company reported its second-quarter 2011 results this week. For the quarter, revenue increased to $5.25 billion from $4.93 billion in the year-ago quarter. Total accesses increased 12.2% year-over-year to 79.3 million from the second quarter of 2010. Net income for the quarter surged 30% to $0.74 billion.

2. Simcere Pharmaceutical ( SCR), is a manufacturer and supplier of branded generic pharmaceuticals in China. The company manufactures and sells 46 principal pharmaceutical products and distributes two additional pharmaceuticals that are manufactured by independent third parties. The stock gained 4.9% on the week.

Of the 10 analysts covering the stock, 50% recommend a buy and the rest suggest a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg expect the stock to gain an average 30.7% to $15.07 in the upcoming 12 months.

Last week, it was revealed that Merck would form a joint venture with Simcere, expanding its market presence in China. Both the companies have signed a framework agreement for establishing a venture focused on serving China's rapidly expanding health care needs by providing significantly improved access to quality medicines in major therapeutic areas.

Merck believes that this partnership is a step forward to the company's major strategy of growing business in China and is fully aligned with the local government's goal to increase access to quality products.

1. Baidu.com ( BIDU), a Chinese language Internet search provider, conducts its operations in China through its wholly owned subsidiary Baidu Online Network Technology (Beijing). Also, it conducts operations through Baidu Netcom Science Technology, the firm licensed to operate the company's websites and provide online advertising services. It also runs a Japanese search service. The stock leaped 5.4% on the week.

Of the 33 analysts covering the stock, 91% recommend a buy and 6% rate a hold. Analysts polled by Bloomberg expect the stock to gain an average 19.7% to $189.49 in the upcoming 12 months.

For the second quarter of 2011, the company recorded 78.4% year-over-year increase in total revenue to $528.4 million. Active online marketing customers increased 17.3% to 298,000. Net profit for the quarter was up 95% to $252.6 million or 72 cents a share as compared to the second quarter of 2010.

Looking ahead, the company estimates revenue to range between $611.1 and $626.6 million, exceeding the average estimate of analysts polled by Bloomberg. The range is an increase of 75.1% to 79.5% from the year-ago quarter levels.

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