Second quarter earnings season results in Brazil show weak data and a drop in companies’ earnings per share, according to a report from Santander bank.
In the current low interest rate environment where the strongest expansion is in emerging markets, there are three Latin American stocks investors seeking alpha should check for both growth and income.
Itaú BBA considers that utilities in Brazil will continue to be in the spotlight in 2012 and may well still be the golden goose for defensive investors.
Brazil is entering a four-year cycle in which it will become the focal point of billions around the world for hosting the World Cup and Olympics. Along with the greater attention of those from around the world will come greater investments in Brazil’s infrastructure to make it a showcase for both events.
Wind will continue to be the key in Brazil with the most profitable returns in the energy generation sector, according to analysts at Itaú BBA.
Wall Street is finally catching on to what we have been saying for months: the Latin consumer is one of the most exciting investment stories out there.
Deutsche Bank added some fuel to the fire by recommending that clients go overweight on the Brazilian consumer discretionary and residential construction sectors. That sounds like good news for the Brazil consumer ETF BRAQ (quote), which aims to give investors exposure to just those stocks:
Brazil’s leading airlines got special upgrades. Deutsche likes GOL (quote) for its high profit margins and TAM (quote) because it provides exposure to what the bank sees as emerging consolidation in the space throughout Latin America.
Although Deutsche cut Brazilian utilities to “neutral” to make room in its model portfolio, it still upgraded Brazilian power company CPFL Energia (CPL, quote) as one of its top picks in the group.
Utilities are sometimes considered too confusing for casual investors to get involved with, but in Brazil, a wave of consolidation could make this an exciting sector — if you can trade it!
Follow the moving parts and pick your entry point: regional power company Neoenergia is looking to buy rival Elektro in a deal that could be worth up to $4 million.
It is hard to trade Neoenergia, but you can pick up its corporate overlord, Spanish utility Iberdrola (IBDRY, quote) as a proxy. Likewise, Elektro does not trade in ADR form and is not even a major constituent of the Brazil infrastructure ETF BRXX.
(It will be a 7% component of Emerging Global’s emerging markets utilities ETF when it launches, but so far that offering is indefinitely delayed.)
Or buy into a basket of potential sellers via BRXX. The portfolio may not contain Elektria, but is 11% weighted to power companies including CPL and CIG along with several more obscure regional names.
The roll-up of Brazil’s telecom sector was a huge opportunity for investors several years ago. Rolling up the power companies could be equally exciting in the next few years.