Banco Itau

Banco Itau ( ITUB) is one of Brazil's largest banks (along with Banco Bradesco ( BBD)) and is a major player in both consumer and corporate banking. The bank garners solid returns in all economic climates. Return on equity fell to around 20% in 2008 and again in 2010 but has otherwise been in the 30%-to-40% range over the last decade.

An expanding economy translates into rising profits: Analysts at Raymond James sees EPS (per American depositary receipt, or ADR) rising 15% to $2.38 by 2013 and up to $2.71 by 2014. They think shares have more than 20% upside to their $26 price target.

Banco Itau also shows up on a recent list of 10 Latin American Stocks Soaring Up to 30% in 2012.

CFPL Energia

Millions of Brazilians have moved out of subsistence living and into the working class in recent years, and their rising disposable income has enabled them to buy a range of goods that run on electricity. That helps explain why utility CFPL Energia ( CPL) has been able to boost revenue at a roughly 10% annual average pace over the last five years.

To handle increased demand for power, CFPL sharply boosted spending on its grid, investing a cumulative $3 billion over the last two years. That should set the stage for string free cash flow in coming years.

In late February, CFPL also boosted its exposure to clean energy by acquiring wind power producer BVP. That firm has long-term supply agreements and is not subject to the harsh industry conditions that clean energy providers are seeing here in the U.S.

By virtually every measure, this Brazilian unity is undervalued in relation to most U.S. utilities. Look at the numbers comparing CFPL with Duke Energy (DUK), one of our nation's largest publicly-traded utilities. Not only is CFPL the better bargain, but it generates significantly stronger operating margins and has a much higher return on equity as well.

CFPL was also highlighted recently in " 5 Contrarian Blue-Chip Stocks That Could Pop in 2012."

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