South America's Best Stocks

Chinese and Indian stocks? They're so last year. At least that seems to be case among more than 60,000 investors participating in Motley Fool CAPS, the Fool's free investor-intelligence community.

In fact, there isn't a single Chinese or Indian company included in the top 50 stocks based on CAPS player ratings. Investors, it seems, are more bullish on stocks hailing from South America these days.

Christmas in July
And even though it's currently winter south of the equator, the returns have remained hot. The Brazilian and Chilean stock markets have risen 26% and 19%, respectively, so far this year.

A.F.P. Provida (NYSE: PVD), a Chilean private pension administrator along the same lines as Prudential's (NYSE: PRU) and Lincoln National's (NYSE: LNC) retirement services here in America, has risen 38% this year, following a disappointing 3% loss in 2006. Even the largest companies in the region, such as Banco Itau (NYSE: ITU) and Companhia Siderurgica Nacional (NYSE: SID), have continued to grow -- they've returned 21% and 88% year to date, respectively.

A.F.P. Provida is also the highest-rated South American stock in CAPS, with 74 of 75 investors who've rated it expecting the stock to beat the market going forward. The most common reasoning among the bulls centers on its low price-to-earnings ratio of 8, a healthy dividend yield  of 5.4%, and an impressive balance sheet.

Here are the rest of the top South American stocks right now.

Please bear in mind that these are not formal recommendations. I offer them here as jumping-off points for further research.

Bank rush
South American banks such as Banco de Chile and Banco Itau have thrived in recent years as inflationary pressures have largely come under control in the region. Banco Bradesco has not been an exception, and its stock price, up more than 1,000% in the past five years, has reflected its success.

With more than 3,000 branches and 24,000 ATMs in Brazil, Banco Bradesco has established a strong foothold in the growing Brazilian economy and should benefit from the budding consumer base there. In addition, CEO Marcio Artur Laurelli Cypriano has been with the bank since 1999 and has been at the helm during the company's recent expansion.

What do you think about Banco Bradesco? Or any stock, for that matter? More than 60,000 investors participating in Motley Fool CAPS are waiting to hear what you have to say. To make your voice heard, head on over to CAPS right now!

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Fool contributor Todd Wenning is ranked 530 out of 60,000-plus CAPS players. He does not own shares of any company mentioned. Petroleo Brasileiro is a Motley Fool Income Investor selection. Sadia is a Motley Fool Hidden Gems pick. The Fool has a disclosure policy.